Increasing productivity of distributive trade through retail innovations: evidence from Malaysia

Abstract

The relationship between productivity improvements in distributive trades and new retail business formats has received considerable policy attention among developing economies. In recent years, fast-moving consumer goods are increasingly channelled through large, non-specialized retail outlets, such as supermarkets and hypermarkets. Among developing economies, increasing economic productivity through structural re-balancing of the distributive trade subsector within the services sector requires policy prescriptions to boost domestic consumption with the help of effective retail establishments. For future development direction and strategies, a clear understanding of the changes that have been taking place with large, foreign supermarkets, superstores and hypermarkets in relation to those of small, local retailers is needed. This paper questions some productivity improvement expectations regarding the role of large, non-specialized retailers as crucial retail format innovators within the distributive trade subsector, based on data from Malaysia. In particular, the aspirations of productivity improvements in distributive trades as structural transformation continues to take place are discussed. Lessons may be drawn for social, economic and political acceptance by stakeholders in markets of developing economies.