PETALING JAYA (April 7): The lack of increase in sales and profits had spurred some business owners involved in the Retail Stores Transformation Programme (Tukar) to sell or rent their premises to other parties.
According to the Auditor General’s Report 2013, 18 (26%) out of 70 retail stores of sundry shops involved in the programme has sported a decline in sales partly due to competition from other nearby supermarkets.
The report revealed that 18 out of 70 shops stores showed no tangible difference and also recorded a decline in sales, partly due to the competition from nearby supermarkets.
Furthermore, 10 stores had closed down their businesses, partly due to capital shortage.
“Besides that, the participants had difficulties in getting their supply because they did not maximise the returns on stock sales as a working capital for the next stock purchase,” the report stated.
“In addition, the participants also experienced difficulty in returning expired items due to absence of agreement between the participants and suppliers,” it added.
As a result, some of the business owners had to relinquish their stores by selling or renting out the premises.
According to interviews between some participants and officers from the Auditor General’s office, this was done as there was no clause in the contracts that specified against selling or renting our premises involved in the programme.
“Among the causes of the poor sales causing participants to close or sell their businesses are due to competition with a nearby supermarket, difficulties in obtaining goods as well as the reluctance of suppliers to accept faulty or expired goods, the unsuitable locations of the stores and the priority of the TUKAR programme on store upgrades rather than capital assistance to restock merchandise,” the report stated.
“Also, the closure or transfer of businesses is due to the lack of capital and a the lack of a clause in the loan agreement prohibiting sale of business while the loan is enforced.”
Participants also lacked due to distant locations of the training programmes, transportation issues and health problems.
Also, shopkeepers did not use the sales system under the programme, due to lack of training from suppliers and aging retailers who found it difficult to understand the system.
“As a result, the Point Of Sales system’s functions, such as monitoring the sales and stocks of goods, the use of bar code and inventory database that could be linked directly to the consultant, could not be used,” the report stated.
The Tukar programme is one of the Entry Point Projects (EPPs) under the National Key Economic Areas (NKEA) for wholesaling and retailing, supervised by the Domestic Trade, Co-operatives and Consumerism Ministry.
Launched on February 19, 2011, it aims to modernise traditional and existing sundry stores and to enhance its competitiveness in the retail store sector.
The programme was conducted through Bank Rakyat and five special cooperatives were approved by the Performance Management And Implementation Unit (PEMANDU) and placed under the supervision of the Cooperative Commission of Malaysia.
The participants of this programme were given loans as their source of funds.
Bank Rakyat will issue a loan to the applicant up to maximum of RM80,000 at the rate of 3% service charge and a maximum repayment period of 15 years.
A total of RM30,000 from RM80, 000 loan amount can be used for the purchase of stocks of goods sold.
Between 2011 to 31 December 2013, the Finance Ministry had approved an allocation fund of RM149 million to implement the TUKAR programme.
The implementation of this project was expected to contribute RM5.56 billion to the Gross National Income (GNI).
The auditor recommended that the Domestic Trade Ministry takes the following actions;
i. prior to any renovation of the participants? shop lots, a loan agreement should be signed first between the participants and the lenders so that the loan terms and conditions could be enforced.
ii. including a requirement in the offer letter or agreement for participation that the retailers should not change ownership or sell their stores to other retailers.
iii. ensure that appointed consultants perform their roles and responsibilities in monitoring the stores continuously in terms of advice, ensuring adequate supply; helping the store layout and providing adequate training.
iv. review the adequacy of training so that it is in line with the participants’ environment, and;
v. frequently conduct motivational programmes to encourage traders to commit fully to their businesses.
Read more: http://www.fz.com/content/ag-report-2013-retailers-under-tukar-forced-sell-or-rent#ixzz2yYS9aesm
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