Malaysia's Retail Sector Embraces AI to Combat Rising Costs and Boost Margins

Malaysia's retail sector faces significant pressure from prolonged increases in operational costs, squeezing profit margins for businesses dependent on stable labor, supply chains, and domestic purchasing power. Rising labor and logistics expenses not only threaten business sustainability but also fuel concerns about inflation, inventory efficiency, and overall retail ecosystem uncertainty, directly affecting the cost of living.

In response to global market volatility, major industry players are strengthening operational resilience through technology integration, digital transformation, and enhanced data governance. Malik Murad Ali, Director of Mydin Mohamed Holdings Bhd. (Mydin), highlighted the substantial returns from investing in artificial intelligence (AI) for retail businesses. AI optimizes supply chains, cuts costs, and boosts workforce productivity. He noted that post-pandemic digital applications have drastically reshaped the industry, as consumers across generations now demand faster, more responsive shopping experiences.

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AI serves as a key tool enabling retail businesses to grow and increase productivity. This technology helps us optimize the supply chain to achieve small savings of around one to two percent, which is very meaningful for overall margins.

"AI serves as a key tool enabling retail businesses to grow and increase productivity. This technology helps us optimize the supply chain to achieve small savings of around one to two percent, which is very meaningful for overall margins," Malik stated during a recent Media Roundtable on the Impact of AI on Retail Margins & Cost Pressures. He also addressed challenges in the local retail market, including rising recruitment costs due to a competitive landscape and changing habits of younger consumers. However, he views the current cost crisis as an opportunity for the retail sector to accelerate structural reforms in talent acquisition and physical store management.

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If a recruiter could previously interview only two or three candidates a day, we can now screen up to 100 candidates daily.

Mydin is employing AI in its initial employee screening process to enhance talent pipeline productivity. "If a recruiter could previously interview only two or three candidates a day, we can now screen up to 100 candidates daily," Malik explained. Beyond talent, Mydin emphasizes the importance of physical automation in distribution centers due to increasing foreign labor costs and strenuous tasks. "The use of robotics enables the implementation of a goods-to-person (G2P) system. Employees aged 50 and above no longer need to walk 30,000 steps a day to pick items, making the task safer and easier," he added.

Meanwhile, Low Ngai Yuen, Managing Director of Aeon360 Sdn Bhd, shared that the company is taking a comprehensive approach to mitigate market uncertainty through big data consolidation and customer service modernization. Aeon360 is now focused on integrating data to better understand and serve its customers.

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The use of robotics enables the implementation of a goods-to-person (G2P) system. Employees aged 50 and above no longer need to walk 30,000 steps a day to pick items, making the task safer and easier.