Sustaining the Business: What is the Next Step?

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3^rd International Halal Management Conference (3^rd IHMC 2021)

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INTERNATIONAL HALAL MANAGEMENT CONFERENCE (IHMC 2021)

Sustaining the Business: What is the Next Step?

Sumaiyah Abd Aziz Nur Qamarina Sharom Azreen Jihan Che Mohd Hashim

Faculty of Economics and Muamalat, Universiti Sains Islam Malaysia (USIM), Bandar Baru Nilai, 71800 Nilai, Negeri Sembilan Malaysia

Tel: +606 798 6406 E-mail: [email protected]

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1. Introduction

COVID-19 has a huge impact on the world economy. Most of the business industry reported losses, declining revenues and the worst part is had to close the business. Tourism related business (hotels, tourists attraction places, flights etc.) is one of the most affected industry during the pandemic since most of the countries closed their borders and did not allow tourists to come to their countries. In Malaysia, travelling interstates are also not allowed and domestic tourism businesses are also suffering from this situation. Apart from that, brick-and-mortar businesses operations are also affected due to the movement restrictions and social distancing measures enforced by the government based on the current COVID-19 situation. It affects shopping traffic to the stores and shopping complexes. The pandemic led to a reduction in salary for many workers, together with cautious consumer spending because of the soft economy and resulted in declined average spending per person (The Edge Markets, 2021). Those affected in salary reduction will buy fewer goods with less income they got. Many others also cut the unnecessary expenditures and avoid spending on high-priced items.

Retail industry central goal is to provide goods to end customers and a marketplace is the location where goods and services are exchanged (Technofunc, 2013). There are some models used by the retail industry in delivering goods to end customers: convenience stores, specialty stores, department stores, supermarkets, hypermarkets, discount stores and multichannel stores (Technofunc, 2013). However, one of the businesses that is not significantly affected with the current pandemic situation is small grocery retail business especially in essential retail business which handled food and necessities. The businesses are operating as usual, not affected by the pandemic because the sales are still there. One of the reasons for this is that food is necessities and people still need to eat regardless of the situation and since it was lockdown, the demand for food has increased tremendously. No matter what happened, people need their basic groceries. Movement restrictions caused restaurants and cafes dine-in were not permitted for many months and this leads to home-cooking trends with many online platforms have been sharing cooking videos and recipes. More ingredients have been purchased to try new dishes. In addition, readymade food also become important for parents who are juggling between working at home and making sure that the kids are not starving with less preparation and serving times needed between each meal session.

Still, movement restrictions implemented by the government to combat COVID-19 reduce the number of customers coming to the grocery store. Thus, this study is looking at how small grocery retail store can survive in this pandemic situation. The focus of the study is on the sustainability of the business and what is the next in line for them to ensure this. Grocery retail business need to find other alternative to reach their customers. Should the business opt to add online platform or just maintain operating as brick-and-mortar business?

2. Methods

Qualitative interview was chosen because this method provides space for researchers to explore the views of our subject in the study and consider the views given are the status of reality that needs to be respected (Silverman, 2016).

Thus, a face-to-face interview was conducted with the respondent (owner of the shop) on 8^th April 2021 at her grocery shop at Nilai, Negeri Sembilan. The questions had been prepared in advance and sent to the respondent before the interview. It aims to give the respondent an overview of the issues being studied as well as give her opportunity to prepare with the necessary information.

Throughout the interview process, the researchers also do a process of "probing" that is asking and researching further following the answers received from the interviewed. Apart from that, researchers also look at non-verbal cues exhibited by respondents such as any discomfort, stress or problems faced through facial expressions such as frowning, tapping nerves and other body language (Cavana, Delahaye & Sekaran, 2001).

The interview process was recorded and after that the transcription process was done by the research assistant.

This transcription process (interview record is transferred into the form of typed document) is done several times to ensure that no important information is left out and until the researchers were satisfied with the results of the

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170 transcription.

3. Results and Discussion

From the interview conducted, the researchers presented the findings according to three main topics arise: 1) the history of the store and owner; 2) the current operations and 3) challenges, opportunities, and the way forward.

3.1 History of Indah Store and The Owner

Ms. Hannah Hamid is the owner and backbone of Indah Store, a small grocery retail company that focusing on selling and distributing Muslim products such as frozen halal chicken and livestock, frozen food such curry puff, keropok lekor, nuggets, instant cooking paste and many other products. The store is located opposite Masjid Dato’ Klana Petra (known as Masjid Putra Nilai), Nilai, Negeri Sembilan. The location of this corner lot shop is very strategic with ample of parking spaces, next to a laundry shop and Islamic private school and restaurants are also nearby. Indah Store opens every day from 8.00 a.m. till 8.00 p.m., closed for only 2 or 3 days per year including for Hari Raya Aidilfitri and Aidiladha celebrations.

The journey of Ms. Hannah venturing to the business started in 2014 when she was still holding the position of General Manager in her workplace. She began with opening a small store at Acacia Avenue, Nilai. The store acted as her first platform for her to venture into the business world even the world is no stranger for her as she holds a bachelor’s degree in business administration from Universiti Malaya and she was raised by her late father who had his own retail business back in Sungai Petani, Kedah. She had 14 years of working experience, began her career as junior Marketing Executive and the last position that she held was General Manager (GM) in one of the original equipment manufacturers (OEM) company that specialized in producing health and supplements food and beverages located in Nilai 3, Negeri Sembilan.

Ms. Hannah has lots of experiences in joining many international business’s exhibition in Malaysia and international such as in China, Australia and Europe during her time with the company. Promoting the business enabled and exposed her with many opportunities and gain more knowledges, especially in entrepreneurship. Her position of GM and working with the same company for no less than 10 years had impressed many entrepreneurs out there. They expected there must be ‘something special’ when one person can stay a long period of time loyal in one company. Her experiences and involvement dealing with many people, advice entrepreneurs in doing business made her believe that she also can be one of them. Not long after that, she decided to resign and give 100% focus on her own business.

The concept of her first setup was more on toko jamu (herbal shop) concept. With initial capital investment of RM15K, the store focused on selling health, beauty, and supplement products. The concept is like GMH Health and Beauty outlets available in Tesco and Giant shopping complex. Even the store is small, it started to have regular customers since Ms. Hannah listened to the customers’ recommendations by selling frozen food too at the same time. The revenue from selling frozen food that is known for its low margin but high in demand was helping Ms.

Hannah to cover the rental and utility costs at that time.

In 2015, the herbal shop concept store was showing to have a declining trend. Most people buy from GMH because it is easier for them as after they did their groceries shopping at Tesco or Giant, they just stop by the GMH shop to search for their needs. Ms. Hannah realized that the location of the store really matters. Even though her shop had sufficient parking space, the location of her store is considered far from the center of Nilai. Still, Ms.

Hannah continued to remain the shop at Acacia Avenue till 2019. It is just that the focus of the store had changed, from selling health, beauty and supplements products to frozen foods. The products mostly produced by Muslim’s small and medium enterprises (SMEs).

Since the focus of the store changed, Indah Store is now operated in retail industry, decided to focus in selling groceries to customers. In this case, the operations direct to the end users. The business is doing so well, and Ms.

Hannah needed to install more freezers for storing the frozen foods. But there was an issue of limited space and the shop started to feel very cramped and crowded. She started to think of moving to a new shop lot. Initially, she aimed to rent an empty shop next door to Restoran Mansalwa, but she was late. The shop was taken by another tenant.

The searched continued till Ms. Hannah found a vacant corner shop lot which previously rented as a restaurant, near to Masjid Dato’ Klana Petra. The negotiations with the owner of the shop on rental matters started and finally the owner agreed to rent it out to her RM3,500 per month for the ground floor. It is quite expensive renting shop at Nilai area, and the development of AEON Nilai Mall has caused surges in property price. As compared to six years ago, the rental cost was RM1800. The owner requested for 3 months deposit plus 1-month utilities, which the total amount is roughly RM15K.

Ms. Hannah did not have enough money to pay for the rental deposits. With the little amount of time that she got, she went to borrow some amount of money from her family and friends. She was so fortunate to have very supportive family and friends. They were keen to support her decision to expand the business by moving to a bigger shop, perhaps more strategic to attract more customers. Ms. Hannah always feels blessed to be able to move to the current location with the help of her family and close friends and of course, she said that Allah s.w.t. granted her wishes and ease the processes. She was very thankful for that, indeed. Indah Store moved to a new location in December 2019 and fully operated on 1^st February 2020, after two months of minor renovations.

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171 3.2 Indah Store Current Operations

Since its establishment, Indah Store created many loyal customers and keep on attracting new customers with the available products and Ms. Hannah and her workers are very selective in choosing which products are going to be in their freezers and on their shelves. She chose only the best among the best products. Most of the products were recommended by their loyal customers and their own choice too. Sometimes, they even needed to spend upfront payment to the supplier to secure the products for placement. A few applications like WhatsApp, Facebook and Instagram are being used to promote and market their business. They shared about the current availability of products and new products that they sell. Customers’ testimonials had also been highlighted in the applications. The social medias contributed Indah Store to boost their sales revenue without fail.

When Indah Store began its operation at the new location on 1^st February 2020, they never expected that the COVID-19 pandemic would turn worst, and the lockdown decision was made by the government to take place in the middle of March 2020. Ms. Hannah is very optimistic with the current location of her shop because the biggest bazar Ramadan in Nilai is situated along the road near to Indah Store. She hopes that this will attract more customers to her shop. However, due to the Movement Control Order (MCO), bazar Ramadan was cancelled in 2020 and Ms. Hannah wishful thinking did not come true. Nevertheless, this did not break Ms. Hannah’s spirit to succeed in her new venture.

As for Indah Store, the sales increased tremendously during the pandemic. At the same time, they need to stock up double and even triple the number of regular stocks that they have. Even though bazar Ramadan was not happening in 2020, Indah Store still going strong and was not affected during that period. Ms. Hannah is so glad and never stop thanking Allah s.w.t. for His blessings.

Meanwhile, year 2021 continued with the same pattern of business situations. Malaysian government is still tackling the COVID-19 pandemic, hoping to reduce the number of COVID-19 daily cases. MCO is the main preventive measure taken, but bazar Ramadan was allowed with stricter controls and Standard Operating Procedure (SOP) being implemented. Still, travel interstates were prohibited, and the government decided to implement full lockdown again (MCO 3.0) starting on 1^st June 2021. One of the drawbacks of full lockdown is the operating hours of retail shops such as supermarkets and mini markets were being reduced and it should close by 8.00 p.m. instead of 10.00 p.m. (normal operating hours). Plus, this round of lockdown allowed only essentials products can be sold, and supermarkets needed to close non-essential department stores.

Indah Store opened 8.00 a.m. to 7.00 p.m. during MCO 3.0. They still received quite a steady stream of customers during weekdays, and even more were coming on weekends. Indah Store also accommodated order received through WhatsApp and arranged runner services according to the request of their customers. The customers can also collect their orders placed through WhatsApp. Apart from that, Indah Store also involved in community charity events such as donation, Ramadan food package program (prepare and deliver the food packs consisting of rice, sugar, flour, milk etc.) and the latest is by having a food bank corner at their store to help the needy. Indah Store customers contributed to this food bank as well.

3.3 Challenges, Opportunities and The Way Forward

Even though Indah Store’s sales are considered not affected by the COVID-19 pandemic, this small business is also experiencing some challenges. As for MCO, when stockout happened, it takes quite some time to replenished.

MCO affected the producers and suppliers of Indah Store as well, since the current operations need to consider the regulations imposed in term of working hours and the number of workers allowed in productions. For a small grocery store, they need to make sure that customers get whatever they want when they want it to gain customer satisfaction.

MCO also affected shopping traffic, minimized the number of customers allowed in store due to social distancing requirements. The customers are also advised to have less time spent outside, thus online shopping is the available alternative and is perceived safer. As a small grocery shop, Indah Store experienced heavy competition from supermarkets and hypermarkets because the giant stores can offer more competitive prices. In addition, the pandemic also resulted loss of job for workers in certain industries and some of the workers are experiencing salary deductions.

Thus, customers are extremely cautious about their spending so average spend per person has declined.

Apart from that, there is also opportunity gained by Indah Store when the Buy Muslim First campaign or known as

#BMF was promoted and hit the market. The trending hashtag in social media platforms has an impact on Indah Store because the customers are looking for Halal and Muslim products. During this period, Muslims became selective in shopping groceries and frozen food, always search for Halal logo of the products, questioned the ‘halalness’ of the products that available in the market and want Muslims in the production of the products. Indirectly, this campaign contributed to the increase in Indah Store as well.

The pandemic has not yet showed the decreasing trend; thus, Ms. Hannah and her workers have been thinking of having the online platform for Indah Store. Having an online platform will help customers to reduce the time spent coming to the store and at the same time, reduce their movement as required. Indah Store should enhance the delivery process and deliver the orders to the customers at home. Indah Store aware that nowadays, customers prefer online shopping based on the feedback received from the customer outside Nilai, such as from Salak Tinggi and Sepang. The main problem is that Ms. Hannah and her workers did not have enough team and expertise to create and manage the

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172 system. They are still pondering of which platform, considering Shopee as one of the options. They are also thinking that it would be better off having own website, as what have been used by other grocery supermarkets and delivery service is set to cover a 10-kilometre radius. And this online platform is now becoming the priority of Indah Store.

4. Conclusion

Pandemic COVID-19 impacted most of the business as whole and changed the landscape of how business is being conducted. Online platform becomes necessity for brick-and-mortar business in reaching their customers and most of the physical operating business embrace this online platform as well. However, for small scale business, not having the expertise in doing and maintaining an online platform is one of the problems that hold up the process. This preliminary study was conducted on only one small grocery retail shop in Nilai; thus, the findings cannot be generalized to all grocery retail industry as whole. Further research should look at other industry as well, so that comparison can be made and the impact of pandemic for the industry would be known.

5. References

Cavana, Robert & Delahaye, Brian & Sekaran, Uma. (2001). Applied Business Research: Qualitative and Quantitative Methods. Silverman, D.

(Ed.). (2016). Qualitative Research. SAGE.

Technofunc (2013). Retail Industry Sectors: Types of Retail. Retrieved from https://www.technofunc.com/index.php/domain-knowledge/retail- industry/item/retail-industry-sectors-types-of-retail, 5 August 2013.

The Balance (2021). The Retail Industry and Its Impact on the Economy. Retrieved from https://www.thebalance.com/what-is-retailing-why-it-s- important-to-the-economy-3305718 , 11 June 2021.

The Edge Markets (2021). Cover story: Grocery retail boom. Retrieved from https://www.theedgemarkets.com/article/cover-story-grocery-retail- boom, 13 May 2021.

The Edge Markets (2021). Retail industry could take up to four years to recover. Retrieved from https://www.theedgemarkets.com/article/retail- industry-could-take-four-years-recover, 29 March 2021.