KUALA LUMPUR, Nov 23 — As more and more Malaysians start feeling the pinch in these financially-challenging times, many will convert to in-house brands when shopping for groceries.

While every retail chain from Tesco to Giant have these in-house brands, one — Kedai Rakyat 1 Malaysia (KR1M) — is confident that they offer consumers the best prices when it comes to their 1Malaysia in-house brand.

“Yes, KR1M offers a better deal in terms of pricing for similar products based on similar quality, specs and ingredients. 1Malaysia branded products are at least five per cent cheaper compared to similar in-house products offered by competitors,” the mini market chain’s main operator Mydin Mohamed Holdings Berhad told Malay Mail Online in an email interview last week.

Citing its recent market survey conducted nationwide, Mydin claims that KR1M is able to edge out rival convenience stores in price comparisons of the same products under well-established brand names.

“1Malaysia branded products are 30-40 per cent cheaper compared to other national brands and for national branded goods, KR1M offer 10 per cent cheaper prices compared to the nearby convenience stores,” it said.

Last week, Malay Mail Online carried out a random price check on a limited sample of essential items sold at a KR1M outlet, a Mydin Wholesale Emporium outlet, two outlets under convenience store chains KK Supermart and 7-Eleven — with all four located in the same neighbourhood, and an outlet under the Aeon Big hypermarket chain also in Kuala Lumpur.

The check showed that KR1M did indeed offer lower prices according to its claimed range of 30 to 40 per cent for items such as canned sardines, bleach, and dishwashing liquid under the 1Malaysia brand when compared to branded items of equal volume.

When some of the branded goods offered at KR1M such as Clorox bleach (1 litre) and Dynamo detergent (1.9kg) were compared against the same offerings at the convenience stores surveyed by Malay Mail Online, KR1M exceeded its given competitive pricing edge of 10 per cent.

When it comes to 1Malaysia brand products against house brands, they either stayed close to the estimated 5 per cent range or surpassed that mark such as in the case of a chocolate malt drink (1kg) and rice (10kg) where the 1Malaysia brand was cheaper by 11 per cent and 19 per cent against Aeon Big’s BiG Value brand.

KR1M customers can choose from the 250 types of 1Malaysia products on its shelves, with the chain recording a ratio of 55 per cent to 45 per cent in sales turnover for 1Malaysia products to other branded goods, Mydin said.

Malay Mail Online wrote to Mydin for information on KR1M’s pricing model and business operations, following a recent survey by financial comparison site CompareHero.my which showed that KR1M may not always offer the cheaper price for branded goods.

The only retail category that KR1M acknowledged would be hard to beat in terms of pricing are the hypermarkets, noting that KR1M’s business model differs from those of such large retail outlets.

“KR1M can only be compared with other convenience stores in the vicinity and not hypermarkets where the range of products are much larger and they can make their margins by selling non-essentials like textile, electrical products etc,” its operator said.

Confirming that Mydin does not make any profit when supplying KR1M stores, the company also disagreed that it sold  branded goods in KR1M outlets at a higher price than other retail chains, explaining that location plays a part in driving up product prices.

“Yes, KR1M’s suppliers are same as MYDIN’s but KR1M prices are slightly higher than hypermarkets as KR1M branches are located at rural areas (especially in East Malaysia) and the costs of logistics are higher,” the operator explained.

Shoppers at one of the existing 170 outlets under the KR1M retail chain. — Picture by Choo Choy May

KR1M also confirmed that it keeps its prices low without any government subsidies for the products sold in its outlets.

“However, the government only subsidizes the renovation cost to set up these stores amounting to RM500,000 in West Malaysia and RM 1 million in East Malaysia. Expenses for stocks, operational cost and store rental are borne by KR1M,” it said.

The prices for 1Malaysia products are the same in KR1M outlets in the whole country, while the prices for other branded goods available nationwide in KR1M outlets in peninsular Malaysia and east Malaysia would differ, it said.

“Our mandate is to open one in each parliament area. As for East Malaysia, we are open in the rural areas and this is very beneficial to the rakyat because they do not have to travel far to the cities to get these products,” Mydin said.

There are currently 170 KR1M outlets nationwide — 119 in peninsular Malaysia and 51 in east Malaysia, with plans to open nine more outlets by the end of this year.

Mydin said it operates 164 out of the existing 170 KR1M outlets nationwide, while the remaining six are operated under franchise.

On October 29, Domestic Trade, Co-operatives and Consumerism Deputy Minister Ahmad Bashah Md Hanipah reportedly told Parliament that the KR1M programme has recorded total sales of RM829 million since it was initiated in 2011, with the government’s cost totalling RM82.5 million for the same.