SUCH is the sweet taste of achievement for Parkson Holdings Bhd that is
celebrating its 25th anniversary, after forging a luminary brand name for
itself along the way that is echoed far and wide in larger Asia. Nonetheless,
the growing pains and struggle have made this year's silver anniversary all the
more sweeter.
Following the spin-off of its
department store operations in China and Asean to separately-listed entities in
Hong Kong and Singapore, Parkson is setting its eyes on South-East Asia to tap
the region's growing affluence after expanding aggressively to 45 stores in
China. It now operates 125 stores across Asia.
Operating in markets with a total
population of 1.6 billion consumers, Parkson now serves more than 100 million customers
in all its stores, and is at least exposed to 200 million consumers of the
populace.
In a recent media luncheon, Datuk
Alfred Cheng, who is the managing director of both Hong Kong-listed Parkson
Retail Group Ltd and Singapore-listed Parkson Retail Asia, says that after
reaching such a matured age, the company is still raring to go for more and
ride along the dragon wave of economic growth experienced in Asia.
“While we have seen our fair
share of frustrations and road bumps, we are happy to see some of our
milestones. 25 years is a long time, and what is important is that this year is
the time for us to reflect a lot on what we have done, and what we need to do
for the next 25 years.
“It would be much more difficult
and hopefully the brand would stay for the next 100 years to come,” says Cheng,
who is now spearheading the company's strategy to tap into Myanmar, which had
just opened its door to foreign investors, while also charting a steady
expansion-cum-branding drive in countries the company has presence in China,
Indonesia, Sri Lanka, Vietnam, and soon Cambodia.
Parkson Holdings rang up
RM376.08mil in net profit for its financial year ended June 30, 2012, a solid
7% growth in bottom line compared with the previous financial year. Revenue
rose to RM3.44bil from RM2.92bil previously.
The earnings of Parkson Retail
Group which manages its China operations fell 17% year-on-year to RM136mil due
to weak same-store sales growth in the fourth quarter. Meanwhile, its Asean
operations under Parkson Retail Asia is still buzzing with activity, with
Malaysia recording same-store sales growth of 9.2% year-on-year, Vietnam 9% and
Indonesia 9.3%.
Carrying an extremely diverse
range of brands from men's wear Alain Delon to skincare ZO Skin Health, not
only Parkson experienced an influx of European brand enquiries seeking for
exposure in the Asian market, it has also seen the emergence of Asian designer
brands as well from Malaysian contemporary designers Key Ng and Melinda Looi.
Meanwhile, in China, lingerie Aimer
and sportswear Lining are making inroads to other markets too by leveraging on
Parkson.
Currently, it plans to open a
40,000-sq-ft departmental store in Yangon, the capital city of Myanmar, by next
year. The population of Yangon accounts for 45% to 55% of the buying power of
the entire country.
Likening the company's strategic
store location in Yangon to the golden triangle of Bukit Bintang, Cheng says
the company wants to have the first-mover advantage and be the first to put its
name out there due to great advertising value while leveraging on that
opportunity to understand consumer preferences.
“The country is not ready yet for
a full-fledged departmental store. Give us two years and we will have all the
opportunity to learn the market and train the people to be ready for a
big-scale store,” he says.
Cheng says that right next to the
current planned store is another piece of land, which Parkson will be working
with the same friendly parties in Myanmar to develop a full-fledged
departmental store.
Naming Thailand's retail giant
Central Retail Corp and South Korea's Lotte Co Ltd as its biggest potential
competitors to fight for a bigger slice of the pie in Asia, Parkson is bringing
its A-game on the table to meet the competition.
The company has also ventured
into Indonesia with a platform of six stores under the name Centro Lifestyle
Department Store, while similar ventures has been done in Sri Lanka with 17
stores under the name Odel.
“We need to understand the market
a bit more before we eventually introduce the Parkson brand. I think one of the
most important lessons we have learnt over the years is that what works in one
country should never be assumed to work in another. That is why some companies
fail when they attempt to expand overseas,” he says.
He says consumers today are
remarkably similar from country to country but there are also dramatic
differences between them.
Describing its learn-and-train
strategy as the most understated reason for Parkson's success, Cheng says it is
also why the company's ears are closer to the ground.
“When the Americans expand
overseas, they can send a full team of expatriates over to the country, but we
can't. These expatriates would just mixed among themselves but for our staffs,
they have to socialise and make friends if we just send him alone to a new
country.
“That is how we learn the culture
after mixing and working with the local people and learn about their habits,”
he says.
Despite a chain reaction from the
woes in the eurozone and the fragile economic recovery in America, which has
triggered softening retail sales, Cheng still paints a rather rosy picture for
Asia.
“If I have to choose, this (Asia)
is still the place to be as it is still growing. And compared to the numbers of
our competitors in Europe and the United States, the majority of them are
experiencing negative sales growth on a same-store basis,” he says.
According to him, everyone still
looks at China and India to drive the global economy, but both have floundered
in the last six to 12 months.
“All these effects are relative
as we still expect strong growth of 9% to 10% overall, and perhaps not 12% to
13% like in the yesteryears. We expect similar recovery to resume in China, but
it would not be like what it used to be,” he says.
Even in Malaysia which is a
relatively small market for the company, Cheng says the Malaysian market had
experienced a commendable 9% growth last year.
“The growth in the local market
is still very much intact, and I think we intend to expand our presence in the
Klang Valley as we still do not have presence in many pockets of the area, and
also extend our reach to Sabah and Sarawak.
“Our plan has always been to open
two local stores a year, two to three in Vietnam, four to five in Indonesia and
eight to 10 in China,” he says.
On the need to differentiate
itself from the competition, Cheng says this has always been a favourite
question among analysts and investors but radical changes are not what the
consumers are looking for. “There are always innovation out there that we can
adopt every year. But we have been in this business long enough to know that
your most comfortable coffee, no matter whether you like it or not, is
Starbucks, because it's consistent, expected and no surprises,” he says.
“Just 3% to 5% that you do that
will keep it fresh for customers, but in reality its more evolutionary than
revolutionary. Innovation is always the talking points that a lot of retailers
use to differentiate themselves, but evolutionary changes in the way we do
business is minimal and that is how consumer wants it to be.”
And that, he says, is the reality
of life. “If you look back 10 years ago, changes might seem radical but if it's
just compared year on year, it is just the tweaking of brand merchandises, the
customer is not looking for dramatic changes,” he says.
Tapping the Internet virtual
economy, Cheng says that with technology and the ready accessibility nowadays,
retailers will eventually have to look at multiple-channel platform to
communicate with customers.
“In today's world, with
technology and accessibility, retailers have to look at all channels,
multiple-channel platform eventually, to communicate with customers.
“We are now testing our online
site and expect to launch it sometime next month concurrently in both China and
Malaysia for a start.
“This is just a step-by-step
process to learn, just like our Myanmar store, and develop a full-fledged
platform,” says Cheng.
He says the time is ripe for
Parkson to venture into e-commerce, as only over the last two to three years
that the world experienced a surge in Internet sales.
“Today, a good e-commerce site
for a departmental store does anywhere between 8% and 12% sales of the overall
company. It is an important extension of operations and when you have more
business virtually, it will spill over to the physical store too.
“Three years down the road, with
our presence across Asia, the e-commerce site might just be our biggest store
yet,” he says.
CHOONG EN HAN
Business & Investment Opportunities
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