This paper is to analysis the Giant Hypermarket in Malaysia, focusing on their IT Position and future strategy that Giant can implement. In this paper the research will be done on the SWOT of Giant and Porte’s Five Model to identify their industry competitiveness. Identifying the IT position that Giant Hypermarket current implementing, identifying the problem it create and recommend a solutions for the problems.
1.0 Introduction and Aim
2.1 Overview of Giant Hypermarket
Giant Hypermart is one of the largest Hypermarket in Malaysia. In 2012 Giant has already step to its 68 year of its operational years. It was founded in 1944 by the Teng Family originating in Kuala Lumpur. It based of operation is located at Shah Alam Selangor. Giant Hypermarket store can be located in Malaysia, Singapore, Indonesia and UAE. The two major contributors to the success of Giant is its founder ‘Teng Family’ and Dairy Farm Giant Retail CEO John Coyle. Giant main operation activities are in the retail industry.
Its store is widely distributed from western Malaysia to eastern Malaysia and other expansion such as in Brunei. Giant main mission was always to provide and offer variety of goods and product at the lowest competitive price. This is to match with their Slogan which says “Everyday Low Prices, Big Variety and Great Value”. The first Giant Hypermarket superstore was opened in Shah Alam, Selangor in 1999. Till now it has already build its own empire or retail store by having around 100 hypermarket, Supermarket and store. Throughout the years Giant made a growth to its neighboring country such as Singapore, Indonesia and Brunei.
The SWOT analysis of Giant Hypermarket
SWOT analysis is a useful tool to measure and understand the current strength and weakness of the organization. This is to ensure the company ability to sustain its success in the competing market. Below is the SWOT Analysis that Giant Should Consider:
Giant are now well recognized by the public. This is due to the effort done by marketing team. The team is responsible to market and promotes Giant Brand to the public. The medium used by them are advertising through newspaper, distributing flyer, catalogue, and brochures and using billboard/signboard. From their promotion they’re able to attract low and middle income earner. Picture 1Picture 2
2.1.2 Good Relation with Its Supplier and Consumer
Giant Hypermarket ability to maintain good relation with its supplier has become their strong point. This will avoid them from ever encountering lack of stock in the future. By having a good relation with their supplier Giant at time are entitle for discount or free good if they purchase in bulk. Giant Hypermarket also support Malaysian local products. Giant are active in Campaign such as ‘Buy Malaysian-made Campaign ‘and the Taste of Malaysia Campaign and “Product Malaysia, Citarsasa Kita’. This campaign helps SME producer to reach Millions of Giant customer throughout the country. This in a way helps to Promote Giant Image to other Supplier and will always have option of supplier to choose from.
2.1.3 Variety of Product, Service and Own Brand
Giant provide variety of product from household item, electric items, sporting equipment and many more. These items are sold at affordable price and at time are lower than market price reason for this is that they wanted them to purchase other item by entering the Giant store. Giant Hypermarket also has its own Brand of Goods to be sold. These goods are produced by Giant itself rather that acquiring it from other Supplier.
2.1.4 Big Retailer
Due to its long establishment, Giant is already a major player in the retail industry business. Currently Giant has more than 100 branches and Store located throughout the 14 states of the country and other country. Because of this, they increase their market share and overcome their competitor slowly. The Advantage Giant had over TESCO, CARREFOUR and JUSCO is that they are located not only in Major cities but also in suburban area. The Picture 4 below shows that Giant has 24% of market share in the industry.
2.2.1 High Labour Turnover
It’s one of the main problems Giant is encountering now. Many of their employee’s quits only after working for a few month. This leads to high turnover rate for Giant. This will create problem for them especially when they need to find new employee. This normally occurs in the operation department. Another problem it can create is empty Cashier seat. Thus create more problems such as longer queue’s due to few people working it the cashier department.
2.2.2 Large Size and High Advertising Cost
Another problem creates by its large size it high advertising cost. They need to continuously come up with new marketing strategy and actively promote their Brand in order to overcome its competitor. Some of the Advertising and promotion might not be necessary and unrelated to some area.
This is the area where giant are still lacking compared to its competitor. Retail chain such as JUSCO and TESCO has already introduced e-commerce into their service. Customer are able to view and purchase item their interested in from JUSCO. Currently JUSCO are starting with item such as Beauty care set, Babies corner and Perfumes. TESCO can be considered the most successful retain chain using the online shopping in its industry.
2.3.1 Explore New Location
Giant have opportunities to expend its influence broader than it currently have. They need to look for other strategic area to do their business.
2.3.2 Increasing The No of Good and Its own House Brand
Like Carrefour and Tesco they are well-known for their home brand comparing to Giant. Giant should see this as a challenge and generate growth in this area.
2.3.3 Venturing To E-commerce Business
This are area which giant are really lacking in, so there’s an opportunities for Giant to grow here, Giant can learn from other Competitor such as from TESCO and JUSCO which have already implement Online-shopping into their store.
Giant are not the only Hypermarket that are available in Malaysia. There are others established retail chain in Malaysia such as TESCO, JUSCO, MYDIN, PARKSON, E-mart and others. Some are internationally established like JUSCO and TESCO. MYDIN is already a establish retail chain Hypermarket in West Malaysia. They have the same concept which Giant offering Reasonable and Affordable Price’ to the consumer. As shown in Figure 1 TESCO is controlling the market share by 30%, JUSCO 22% and Carrefour 15%. There are possibility of Giant Customer might even migrate to these other Hypermarket in the future.
2.4.2 Home Brand
The Customer still prefers other home brand compare to Giant own home brand. This is probably due to its quality and image. The reason of it might be because Its Brand are more internationally recognize and have better quality comparing to Giant Existing Brand name. Brand from Carrefour, Tesco and Jusco are well received by the people of Malaysia.
3.0PORTER’S 5 FORCES
As the retail industry sells products of daily common use, there are no direct substitutes; the only substitute products that can be threat are the products from gray market, which can harm the sales of branded products. The most common substitutes for Giant Malaysia are the mini market stores and convenient shops which are spread throughout the country. Examples include Seven11, KK and 168 stores among various others. Some of these small shops operate 24 hours a day and 7 days week. Nonetheless, their prices are a bit higher than Giant’s and Giant has a lot of offers and more choice for the consumer. Conclusion: Threat of substitutes is low
Because of the diverse product range that is distributed by retailers there are many different suppliers. Suppliers include both domestic and international manufacturers and as the products are more or less standardized in nature, retailers and wholesalers have low switching costs. Giant Malaysia has a lot of suppliers to choose from and the suppliers compete for better prices to offer Giant. Conclusion: The power of suppliers is moderate to low.
3.3Competition between the rival companies
The world retail industry is highly competitive and in the past few years major acquisitions had taken place. The top retailers in Malaysia include TESCO, Jusco and Carrefour, which is the eighth largest global chain (1998 Sales: US$ 28.3 billion, Number of stores: 4,921, with presence in Argentina, Brazil, China, Colombia, Hong Kong, Indonesia, Italy, Malaysia, Mexico, Poland, Portugal, Singapore, South Korea, Spain, Taiwan, Thailand and Turkey). These competitors offer low prices and are strategically located across Malaysia which makes the competition very stiff. Giant has to keep up with massive advertising campaigns and try to open more stores across the nation. Conclusion: Rivalry is high
The consumers are now more sophisticated and mature. As said by Carrefour, they want it now and they want it with the best service and the best qualityµ. Consumers enjoy increasing choice of products and increased price competition, and they demand better and wider choices. They also exert pressure on manufacturers and retailers to give more relevant product information Conclusion: The bargaining power of buyers is moderate to high as the consumers have more choices of retail supermarkets.
3.5Threat of new entrants:
The global market has been experiencing significant growth in retail industry in recent years. Strong economy, stable government, favorable government policies for foreign investment and well-developed infrastructure and with introduction of a common currency and same international laws, makes Malaysia a very attractive place to be in. The entry and exit levels are high because of the stiff completion in the industry, some companies do close shop. Conclusion: Threat of new entrance is moderate to high.
4.0 IT Position of Giant
Here are the few IT or any system that are being used by Giant 4.1T Position 1 and Problem 1: Shelf pricing system
These are pricing systems that are being traditionally used by most hypermarkets in Malaysia. For Giant, they would normally tag the prices of the product on the shelves which are near to the product itself. The problem with this system is that sometime the price is unclear, lost and price are being mixed with other item. This matter at not seen as a seen serious by the management or worker since it’s been repeating itself. This create problem for the customer when they are making the payment. Unfortunate customer would encounter experience such as paying more than what the price at shelf is displaying and might have to wait awhile, to get actual price. This increases customer dissatisfaction and unhappy customer. Complains were made in regarding this situation.
4.2 It position 2 and Problem 2:RFID Technology
RFID (Radio-frequency Identification) is an automatic identification method RFID tags are used to store and remotely retrieve information.The RFID tag has an antenna which responds to the transponder (reader) and sends the information.The information in the tag can be read many times .In some tag types the information in the tag can also be rewritten. The main division of RFID tags is between active and passive tags
•RFID tags operate using different frequencies
•Low frequency tags (30-300 kHz)
•High frequency tags (3-30MHz)
•Ultra-high frequency (300MHz-1GHz)
Most likely the suitable tag type for IKEA would be passive HF tags (13.56MHz)
The problem it create is that GIANT company deals with a lot of customers everyday and thus a lot of transaction just happening one day. The use of their information system is also complex because the machine themselves are of up to date technology thus it requires IT personnel and also training before one can fully know how to operate the machine. This might sometimes force the company to wait until employees with proper skills to come even though the job opportunity exists. Thus brings delay to the operation of the business thus the company might undergo setbacks which will affect their business negatively.
5.1 Solution 1: Digital Price or Electronic Shelf Labeling
Giant should implement Electronic Shelf Labeling (ESL). It is a system where small electronic unit with display screen are used to replace the old traditional method of manual written or printed price. The system concept is by having a server which will be located in the Hypermarket back office which will communicate with each of the label and with the supermarket Electronic Point of sale price information database that used by the store checkout. Prices displayed at the shelf can be updated remotely therefore there isn’t any need for staff to manually change and check prices. Because the Electronic shelf labeling is linked wirelessly with the store’s checkout prices database, the prices the customer are charged at the checkout will be the same as the price that are displaced at the shelves.
This is a ways that Giant can try strengthen their appealing factor and attract back those unhappy customers by implementing this technology. The different with Electronic shelf labeling is that it’s not printed, not a sticker, not printed on paper like the any other normal price tag. Giant won’t need any more paper to do their pricing. The item price can be installed in to the product shelf. If they want to make any changes and update the price. This can be done by using the system that linked them altogether. The best thing about the digital price is that it doesn’t only display the price but also the detail of the item.
5.1.1 Benefit of Implementing
126.96.36.199 Ongoing Label and/Printing Cost
Should Giant implement this system, They will be able to eliminate the need of manually modifying the paper label in the shelves since now it can be done automatically from a room that are handling the system. This would save the cost of label printing and papers.
188.8.131.52 Increasing Revenue and Provide discount rate for Customer
Because Shelf label can be update remotely and quickly this means that prices can be adjusted in order to suits a certain situation.Here are the number of product-decision based price changes that Giant can use: 1. Promotional Prices at product launch to boost sales
2. Promotional Prices at other times to tie with a particular event such as Hari Raya and Chinese New Year. 3. Reduce Prices to clear stock of an end of line product
This all can be done if Giant is to implement the Electronic Shelves Labeling. From the system room the person in charge will be able to update the price accordingly to the situation Giant is in. For Giant it will be able to boost their sale and for the customer they will be able to get clear information for any promotion price since it will be update in a proper manner. This in a ways will also eliminate any customer dissatisfaction that experience different price from the shelf and the price when they are paying in the counter since the price will be wirelessly synchronize by the system. Price from Electronic Shelf Labeling will be the same as price in the electronic point of sale.
5.2 Solution 2
Giant has to be willing to spend money on IT specialists who can efficiently operate and maintain the information systems and who are also able to upgrade the systems as time passes by. In the long run this approach will be cheaper as the expert will easily train other employees how to perform the functions on the job. Giant needs to apply an integrated point of sale system to cater for the problem of too many customers handled in one day. This will automate all sales quickly and the transaction time will be lower thus the customer will be happy and Giant increases profits.
6.0The Important of system risk, security and recovery
The risk for Electronic Shelf Labeling or Digital Pricing can be collateral for Giant as a Whole. It would affect Giant operational activities. Here are the risk that could happen:
One of the risks would be virus infection. There is a possibility of the system/server being compromise by Virus. Because the system/server are working wirelessly if the system is infected the whole database pricing system will be affected. The possibility is that price may change, price detail missing and price detail different between the Electronic Shelf label and the electronic point of sale at the counter. This is how virus works nowadays, if one file is infected that other will soon follow. The virus can now be easily come from the internet and thumb drive when Giant staff wanted to enter data and file to update the file. The possibility of them inputting virus without being aware of it
6.1.1 Security 1
As a security measure Giant should installed the best anti-virus security into their system whether it Kaspersky or Symantec. It’s important for them to install this system to protect themselves against virus attack or any hackers. Other important thing that Giant Hypermarket has to keep in mind is that they have to keep on updating their anti-virus. They have to do this in regular basis as nowadays new viruses are created and Protection against it is necessary to ensure the effectiveness of their system. Keep on regular contact with those who provide them the Anti-virus system to ensure they are
being updated with new technology or system.
6.1.2 Recovery 1
If the Anti-virus didn’t work it would be better for Giant to come up with another solution. Preparing a Backup file would be the best alternative for Giant Hypermarket. Giant could use the SQL backup and restoration to minimize the risk of data loss. With this backup engine it gives giant the option to back up their data on a daily basis. It could back up a specific database or the complete server of what Giant intend to save. They can then restore the data when the threat is gone. Resource: http://msdn.microsoft.com/en-us/library/ms187048.aspx
6.2 Risk 2
COMPUTER SYSTEM FAILURES
Computer system failure is another systems risk faced by GIANT Company. This includes the use of wrong types of hardware and software, defective and poor quality of devices such as printers, scanners, fax machines, keyboards, mouse and routers. This can cause the system to crash and can result in the loss of the organization’s vital information. 6.2.1 Security 2
Security Measures by employing Secure Infosys.This is a professional information security consulting company specializing in IT security assessments as well as security training services and policy development. Giant can hire the services of Secure Infosys which will keep the company protected from the latest security threats and assist in achieving the highest security levels. This might help Giant to be able to secure its information.
6.2.3 Recovery 3:Recovery Procedure.
After a disaster has occurred in an organization, it does not mean that the organization has to stop its daily business activities and operations. Therefore, in order for the organization to continue with its activities despite the disaster, it must have a disaster recovery plan. Disaster recovery plan is also known as business continuity plan or contingency plan. “Business continuity planning (BCP) is a rigorous and well-informed organizational methodology for developing a business continuity plan, a step-by-step guideline defining how the organization will recover from a disaster or extended disruption of its business process.” (Haag & Cummings, 2008) DISASTER RECOVERY PROCESS
Figure 3 below is a diagram of a disaster recovery process. First the organisation operates smoothly and when disaster strikes the organisation, operations are interfered with and daily business operations are disrupted. It is the work of the Disaster Recovery to restore the operations as soon as possible and once the disaster is cleared, the operation can continue as usual. Figure 3
Disaster Recovery Process (Cisco Systems Inc., 2009)
Giant Hypermarket can continue to be the leading retail Hypermarket in Malaysia in their keep on improving and maintaining the concept of selling at affordable price to the customer. They could try to implement the new strategy mention to improvise the current IT position they are practicing. This could great benefit Giant and the Customer if they are able to do so. To conclude all Giant Hypermarket have the potential to lead the in the industry as keep on penetrating other international Market as what they have done in Singapore and Brunei. As long as they stick to their pricing strategy, Giant Hypermarket will be in the industry for many years to come. (Word Count 3408 excluding Table of content and reference)