In a bid to ascertain the factors contributing to the steady growth of Malaysia’s retail sector, the Franchise International Malaysia 2014 Conference gathered professionals to gather insights and explore opportunities within the local retail market.

1. 1
Is Malaysia’s
local market saturated?
Jeffrey Bahar
Deputy Chief Executive Officer
Spire Research and Consulting
PWTC, Kuala Lumpur
14 June 2014

2. 2
Topic
Malaysia Retail and F&B Market
Is Malaysia’s local retail market saturated?
Food & Beverage Retail
Clothing & Apparels Retail
Mass Grocery Retail (MGR)
Agenda

3. 3
Malaysia Retail and F&B Market
A sizable market with healthy growth (2006 – 2013)
Source: Department of Statistics, Malaysia
51%
27%
RM434
billion, 2013
SERVICE
industry
contributes to
Malaysia GDP
RM114 billion, 2013
Wholesale & Retail Trade
as part of Malaysia Service Industry
RM20 billion, 2013
Accommodation & Restaurant
as part of Malaysia Service Industry
4.50%
7.70%
6.00%
5.40% 5.70%
1.70%
8.30% 7.10%
4.80%
6.40%
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
9.00%
10.00%
2009 2010 2011 2012 2013
Accommodation
and Restaurant
Wholesale and
Retail Trade
Wholesale & Retail Trade and Accommodation & Restaurant Growth Rate (2009 – 2013)

4. 4
Is Malaysia’s local
retail market saturated?

5. 5
Wholesale & Retail Sales
Total Value, USD
Wholesale & Retail Sales
Growth, %
Wholesale & Retail Sales
Per Capita, USD
Wholesale & Retail Sales
Contribution to GDP, %
Total Population,
in million people
How is Malaysia doing?
Better than Indonesia and Vietnam; Singapore is ahead
Source: Department of Statistics Malaysia, Department of Statistics Indonesia, General Statistics Office of Vietnam, Department of Statistics Singapore, World Bank
$35b 15% $1,188
14% 29m
14% 89m$16b 17% $178
18% 5m$50 b 0% $9,373
11% 247m$100b 12% $404

6. 6
Sizable retail market; healthy growth
Malaysia retail sales value, 2008 – 2017
Malaysia ALL Retail Sales in Value, in million USD
Expanded Retail Sales Category
(F&B, Apparels, Luxurious Goods, Electronics, Others)
59,009 56,500
66,715
76,767
85,591
94,329
103,810
114,378
118,381
122,525
2017 F2016 F2015 F2014 F201320122011201020092008
+8%
Source: Spire Analysis

7. 7
Is Malaysia’s local retail market saturated?
Food & Beverage Retail

8. 8
Where do Malaysians dine out at?
Food & Beverage retail, by category
Source: Department of Statistics, Malaysia and Spire analysis
Food Service by Value
3%
89%
8%
(RM 11.2 billion)
Rural
43%Urban
57%
Ratio of Urban vs Rural household
expenditure on Restaurant and Hotels
284
239
213209
145
+18%
2009/102004/051998/991993/94 2014/15e
Average of monthly household
expenditure on restaurant and hotels
(RM)

9. 9
Is Malaysia’s local retail market saturated?
Clothing & Apparels Retail

10. 10
4.6
5.8
10.3
13.3
44.0
Kuching
Penang
Sabah
Johor Bahru
Klang Valley
Retail Space
(2013, in million sq ft)
Occupancy & Space Supply Growth
Focus area: Supply-Side indicators
General retail sector: Clothing and apparels
Source: Retail Property Report, Spire Analysis

11. 11
Tourism plays a key role in Retail & F&B (1)
Higher tourist arrivals, steady growth in spending
Foreign visitor expenditures contributes to
Malaysia’s retail and F&B sales RM xxx billion per year
153 158 165 172
148
+2%
2013
458
294
2012
444
285
2011
433
280
2010
424
276
2014
465
293
RetailF&B
Average Foreign Tourist
Expenditure per day per person (RM)
Malaysia Tourist Arrival and
Total Expenditure
10,428,758
10,706,599
11,106,641
11,791,334
24,577,000
24,714,000
25,033,000
25,720,000
24,000,000
25,000,000
26,000,000
27,000,000
28,000,000
29,000,000
30,000,000
8,000,000
9,000,000
10,000,000
11,000,000
12,000,000
2010 2011 2012 2013
Total Tourist Expenditure ('000 RM)
Tourist Arrival (person)
tourists/year‘000 RM
Source: Department of Statistics Malaysia and Annual survey by SPIRE, 2010-2014, on the same
sport event in KL, Malaysia, sampling the tourist spectators to the event
Source: Annual survey by SPIRE, 2010-2014, on the same sport event in KL,
Malaysia, sampling the tourist spectators to the event

12. 12
Tourism plays a key role in Retail & F&B (2)
Singapore: declining spending on shopping and F&B
Source: Department of Statistics Malaysia, Department of Statistics Singapore and Annual survey by SPIRE, 2010-2014, on the same sport event in KL, Malaysia, sampling the
tourist spectators to the event
<
25.6 million
tourists/year
RM 465
tourist spending on
F&B + retail per tourist
RM 11.1 billion
tourist spending on
F&B+ retail
14.5 million
tourists/year
SGD 471
tourist spending on
F&B + retail per tourist
SGD 6.8 billion
tourist spending on
F&B+ retail

13. 13
Is Malaysia’s local retail market saturated?
Mass Grocery Retail (MGR)

14. 14
Good balance in Mass Grocery Retail (1)
Wholesale vs. Retail, Modern vs. Traditional
Source: Department of Statistics, Malaysia and Spire’s analysis
Mass Grocery Retail Value
(RM 106.9 billion)
1%
56%
43%
73%
45%
31%
27%
69%
2013e
55%
2003 2009
Traditional vs Modern Market Ratio
1.5%
Wholesale
Retail Trade
17.7%
12.5% 15.8%
Expectation of the Gross Revenue of
Wholesale and Retail Trade
(Q1 - Q2 2014)
Traditional MarketModern Market

15. 15
Former PM Mahathir had an
intention to do modernization
of the retail industry for
country’s economic growth
First modern retail (Dept
store) set up by Jaya Jusco
Stores as a request from PM
First convenience stores was
open as 7-Eleven
Government had set up the
maximum ownership in
international modern retail as
much as 70%
Entry of International
Modern Retail Brand,
Carrefour, Econsave, Giant,
Mydin, and Tesco
60% of growth
convenience stores
were happened in
Malaysia
Good balance in Mass Grocery Retail (2)
Evolution Journey of Wholesale & Modern Retail in Malaysia
1984 19931983 1995 1996

16. 16
The grocery retail
market is reported
worth around USD 9.8
billion compared to
USD 7.6 billion in 1999
Hypermarket in all states except Kedah,
Kelantan, and Teranggu have operation hours
from
10 am – midnight on Friday – Sunday
Others from 10 am – 10 pm
Operating hours for Kedah, Kelantan, &
Terangganu
10 am – 10 pm on Sunday, Wednesday and Saturday
10 am – midnight on Thursday and Friday
Aeon Co officially announced the
purchase of France-based
Carrefour The deal is expected to
be priced at around (US$250mil or
RM764.8mil) one of the biggest
detail in retail industry
Despite the weak economic
growth Malaysia’s Consumer
Spending rose by 7% YoY or
translated At USD 4,270 of
personal disposable income
It was a significant year for
Malaysian retail sector
where consumer
confidence was the highest
since 2007 at 122.9 point*
Good balance in Mass Grocery Retail (2)
Evolution Journey of Wholesale & Modern Retail in Malaysia
2010 20112004 2012 2013

17. 17
Major Convenience Store:
7-Eleven
Total hypermarkets 2012: 121 outlets
Total Supermarkets 2012: 113 outlets
Total Department Stores 2012: 133 outlets
INDONESIA MALAYSIA
How is Malaysia doing?
Niche opportunity for local and traditional retailers
Total hypermarkets 2011: 154 outlets
Total Supermarkets 2011: 1,230 outlets
Total Department Stores 2011: 300 outlets
Total Convenience Store: 15,538 outlets
Major Convenience Store:
Indomaret
Established in 1988
9,096 Outlets by March 2014
Grow by ~1,000 outlets per year
60% self-owned 40% franchised
Provides ~4,800 SKUs in average 200m2 size
Store Categories Available: 2 categories
Established in 1984
1,497 outlets by 2014
Targeting 600 more stores in the next 3 years
Provides ~2,200 SKUs in average 200m2 size
Store Categories Available: 1 category
7-eleven provides delivery
Indomaret Point
(combined with café)
Source: Indonesia (by 2011) by APRNDO (Association of Retail Indonesia), Indomaret official Website, 7-Eleven official websites, Malaysia Productivity Corporation and other
secondary sources
Regular Indomaret 7-eleven outlet

18. 18
Is Malaysia’s local
retail market saturated?

19. 19
Spire Research and Consulting Sdn. Bhd.
Level 42-C, Vista Tower, The Intermark,
348 Jalan Tun Razak,
50400 Kuala Lumpur, Malaysia
www.spireresearch.com
DID: (62-21) 5794 5801
M: (62-812) 1005 940
jeffrey.bahar@spireresearch.com