For neighbourhood chain of supermarkets, Lucky Supermarket, switching product price tags to the riel was a gamble that paid off. Sales transactions in riel, to the surprise of its owners, shot up!
The Lucky Supermarket chain experienced a 15 per cent jump in sales transactions in riel last year when products were displayed in riel, even though buyers had the option to pay either in the local currency or in US dollars.
“In 2017 we started to display the riel currency price (tags), a requirement by the NBC [National Bank of Cambodia] and we see more spending in riel because the customers’ perception is that (products) in riel is less expensive compared to the US dollars,” Patty Heng, chief operations officer of DFI Lucky Private Limited, which manages the Lucky Supermarket chain in Cambodia told The Post.
In 2017, the Ministry of Commerce issued a prakas to all business outlets to tag their products and services in riel, as part of the government’s campaign to promote a wider usage of the national currency.
So what contributed to the jump in sales?
Heng explains: “It is because the Cambodian riel is now being promoted, the exchange rate of the riel is stable and it is a good move by NBC to promote the domestic currency. So, when the price displays are in riel, the perception among the customers is that it is cheaper."
“This is the feedback we received from our customers after our own survey in our stores. Our products are better quality and our pricing is about five to ten per cent different from prices when compared to the wet markets."
“So when we display the price tag in riel, customers think our price is competitive and this is advantageous for us. It is very positive. That’s why in our fresh (produce) division, the riel sign is a lot bigger now,” added Heng.
Although shopping malls and supermarkets are beginning to display their prices in both riel and dollars, following NBC’s directive, ironically many of the retail transactions are still being carried out in the greenback, which has become the norm in the local business scene.
But, Lucky Supermarket has bigger plans to promote the riel at its outlets – not only to abide by the NBC directives but also to reach out to the increasing domestic Cambodian supermarket customers,who easily make up 85 per cent of its shoppers.
Heng said that the management is even contemplating making all pricing in the riel after noting the positive trend but is currently unable to do because of the system limitations which does not accept too many zeros.
“We are exploring the possibility of a system upgrade and once we have made the changes we will be able overcome this problem. Maybe in two years it is possible to have all pricing in the riel because we, as a group, want to identify with the local culture and local currency. We arehere to serve the local community. That is our goal,” she added.
Lucky Supermarket, a member of the Hong Kong-based Dairy Farm International Group, has 18 stores and another four more outlets will be opened within the next eight weeks. It employs 1,300 workers.
According to Heng, the company operates in nine countries and the national currencies of those are used.
“We also operate in Vietnam and we use the Vietnamese dong,” she added.
The supermarket, which began operations in 1993, has taken its riel usage a step further. It sources its fresh produce, such as melons and pineapples from local farmers through contract farming and they are paid in riel.
“About 30 per cent of our fresh products are paid in riel. We have contract farming with farmers and they prefer to accept payments in riel,” said Heng.