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Symposium 2013

Proposal - Generating Winning Strategies for Sustainable Societies: The Wholesale and Retail Trade Sector

The Challenge

As the profound interdependencies of social, environmental and economic systems grow, policymakers and experts alike are struggling to respond in kind with effective sustainability strategies. In an i ...

As the profound interdependencies of social, environmental and economic systems grow, policymakers and experts alike are struggling to respond in kind with effective sustainability strategies. In an increasingly globalized world, the authority to set strategic priorities and the capacity to establish the essential framework conditions for a sustainable and fair socioeconomic system continue to rest primarily with governments.

Globally, the history of modern retailing began more than 150 years ago with differing formats to outcompete the traditional small and independent shops. The hypermarket format emerged in the 60s, in the French territory with a large assortment of food and non food products which radically changed the French retail landscape and enabled the retailers to conquer the world, becoming one of the most powerful countries in the retailing sector. Competitive landscape increases with internet retailing pushing players to rethink their strategies to remain relevant and was further exacerbated with globalization where local retailers found themselves targeting niche markets in dire competition with large foreign players. Retail life cycle theorist suggests evolution of this retail concept in several states and tries to evoke some managerial and strategic issues in efforts to understand the phenomenal change in the economy. Underpinning the Wholesale and Retail Trade sector is its sensitivity to changes in technology, global trade, business practices, and consumer tastes. This in turn leads to changes in job conditions and job turnover that eventually impacts overall productivity and safety and health issues undermining sustainability of national and global economies.

The effects of globalization in Asian countries, for instance, have caused Malaysian retailers to be ill prepared in meeting the challenges that follow due to inadequate resources and insufficient knowledge. The meager financial resources and the inability to withstand the deflationary pressure of the market have put these local retail operators in a fix, whether to downsize, merge or exit the industry. Similarly, trade liberalization pacts such as the ASEAN Free Trade Area (AFTA), further aggravate the plight of provision shops, sundry shops and mini-markets, as they are without the resources and bargaining power to source for cheaper food products in the region. These retailers will not be able to withstand the full impact of AFTA and may be forced to close down eventually.

Incidentally, the contribution of domestic consumption to Malaysian Gross Domestic Product (GDP) is recognized as it plays a crucial role in driving Malaysia’s growth over the next decade towards the country’s 2020 GNI target despite the ongoing global economic slowdown. Essentially Retail is the fourth biggest contributor to GNI among the 12 National Key Economic Areas (NKEAs), contributing RM100.6 billion in 2010 and RM114.4 billion in 2011.NKEA is one of the two components of the nation’s Economic Transformation Programme (ETP) launched in 2010 across all sectors of the economy. Its goal is to elevate the country to a developed nation status by 2020, targeting GNI per capita of US$15,000.

One of ETP’s aims is to realize mutually beneficial strategies among stakeholders in society to ensure improved wellbeing of the community is spread fairly across populations. Strategy-making for sustainable development in the context of retailing to address the problems facing provision shops, the mom-and-pop shops and the like, is the Retail Shop Transformation Project or CHANGE which is an Entry Point Project (EPP). It represents a key achievement in the interim review with participants reporting an average 30 % increase in sales. The implementation of the model developed during the ETP’s NKEA lab, saw the role played by the corporate sector which was led by the national brand hypermarket towards national economic wellbeing.

Internationally, retailers may have to continuously reconsider conventional approaches to remain relevant in view of the retail life cycle and develop new initiatives in the interest of other stakeholders. Operationalising nation building strategies such as the Malaysian EPP project in the trade and retail sector presents collaborative efforts between the public and private sectors that help contribute towards sustainable development. Specifically the Malaysian government's role is that of facilitator, coordinating, tracking and monitoring the programs and projects. The strategy is such unlike conventional practice in which the government prioritises its policies and spending, in the context of ETP however, the bulk of investments, targeted at 92% by 2020, are to be financed by the private sector. The private sector, therefore, has been placed in the driver's seat in the implementation of the ETP. (See more at: http://etp.pemandu.gov.my/About_ETP-@ Overview_of_ETP.aspx#sthash.AQwGeb6Q.dpuf).

In the final analysis, instead of more competition, it appears that collaboration and the lending of expertise have turned out to be image boosters which enhance corporate reputation and eventually capture consumers and the general public alike. The EPP is a project that can globally be adapted and adopted by alleviating the difficulties facing them in the wake of stiff global competition in the trade and retail sectors. This ultimately helps them to better adapt and device innovative formats in attempts to differentiate themselves in the highly competitive environment. This form of expansion in participation opportunities, in turn, ensures fair development, realizing synergies for all, and serves as a holistic pursuit of sustainability.

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