Malaysia Retailer 2nd Issue by MRCA Malaysia Retail Chain Association

VOL 3 NO 2

RETAILING • FRANCHISING • BRANDING

E-tailing Treat or Threat?

Consumer Behaviour

To Buy or Not to Buy?

Social Media Can Your Business Afford to Ignore It?

Franchising A Weapon of Mass Expansion

Secrets of Successful

PP 13818/02/2013 (031900)

772289 337009

ISBN 977-2-28933-7009

VOL 3 NO 2

WM RM9 / EM RM11

Overseas Ventures

contents vOL 3 nO 2

10 6 PUBLISHER’S MESSAGE

20 Feature YFS: Fashion à la Mode

24 Figuring Out Finance

10 Feature Secrets of Successful Overseas Ventures

44 On The Cover E-tailing: Treat or Threat?

Social Media: Can Your Business Afford to Ignore It?

Franchising: A Weapon of Mass Expansion

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Be Prepared for the Unexpected

28 Tech Matters

14 Law & Order

M A L AY S I A R E TA I L E R

34 MEET OUR NEW MEMBERS 38 Events

8 Editor’s Note

50 ON THE SHELF

60 RetAIl Property Sunsuria: Creating Commercial Icons

52 LEAN & MEAN Eat Your Way to Good Health

56 INDUSTRY INTELLIGENCE Consumer Behaviour: To Buy or Not to Buy?

70 Expert Opinion Branding & Marketing Your Business with Government Assistance

64 Retail Aesthetics A Touch of Industrial Inspiration

68 Expert Opinion Your Business Money vs Your Personal Money

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M A L AY S I A R E TA I L E R

MALAYSIA RETAILER IS PUBLISHED BY

MALAYSIA RETAILER IS PRODUCED FOR MRCA BY

MALAYSIA RETAIL CHAIN ASSOCIATION

(1122321-M)

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CHIEF EXECUTIVE OFFICER

Aiveen Wong EDITOR

Tan Thiam Hock | editor@inthink.com.my

MALAYSIA RETAIL CHAIN ASSOCIATION

WRITER

Samuel Ngeow | sam@inthink.com.my

PATRON

SECRETARY-GENERAL

CONTRIBUTORS

Tun Dr. Mahathir bin Mohamad

Ms. Shirley Tay Bee Koo

FORMER PRIME MINISTER OF MALAYSIA

SUNRIDER INTERNATIONAL (M) SDN BHD

BOARD OF ADVISORS

DEPUTY SECRETARY-GENERAL

Lim Su Ye e Tan Sher Lynn Celia Alphonsus KC Lau Yap Keng Teck

YB Dato’ Sri Liow Tiong Lai

Dato’ Bruce Lim Au Choong

PRESIDENT OF THE MALAYSIAN CHINESE ASSOCIATION (MCA)

SEG INTERNATIONAL BERHAD

TREASURER-GENERAL

YB Dato’ Sri Mustapa Mohamad

Datuk Henry Yip Choong Hung

MINISTER OF INTERNATIONAL TRADE & INDUSTRY MALAYSIA

DRAGON-I RESTAURANT SDN BHD

YB Tan Sri Datuk Tee Hock Seng

COUNCIL MEMBERS Mr. Liew Bin

GROUP MANAGING DIRECTOR OF BINA PURI HOLDINGS BHD

BRILLIANT MERCHANDISING SDN BHD

Dr. Afendi Bin Dahlan

YB Tan Sri Barry Goh Ming Choon

DR GROUP HOLDINGS SDN BHD

CHAIRMAN OF MCT CONSORTIUM BHD

Dato’ Eddie Choon

Ms. Grace Chia Hui Yen

Datuk Albert Chiang

KLUANG STATION F&B SDN BHD

BONIA CORPORATION BHD

Mr. William Chow Ah Kaw

Datuk Lee Hwa Cheng

MALAYSIAN HEALTHCARE SDN BHD

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Dato’ Tay Sim Kim OSIM (M) SDN BHD

MYORTHO FOOTCARE SDN BHD

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Dato’ Syed Kamarulzaman bin Dato’ Syed Zainol Khodki Shahabudin

PERBADANAN NASIONAL BHD

FOCUS POINT HOLDINGS BHD

Mr. Edison Choon King Han

IMMEDIATE PAST PRESIDENT JP

HONORARY CONSUL OF THE REPUBLIC OF MOZAMBIQUE TO MALAYSIA NELSON’S FRANCHISE (M) SDN BHD

VICE PRESIDENTS Dato’ Dr. KK Chai KK SUPERMART & SUPERSTORE SDN BHD

Dato’ Garry Chua ROTOL FOOD-CHAIN (M) SDN BHD

Mr. Cheah See Yeong GOLDEN SCOOP SDN BHD

Mr. Seak Thean Pow BAGUS CURTAIN SDN BHD

M A L AY S I A R E TA I L E R

TH Lau | advertising@inthink.com.my PRODUCTION & CIRCULATION

Elaine Lok | elaine@inthink.com.my FINANCE

Su Sam CREATIVE SUPPORT BY

Mr. Ching Kok Cheong Hauslife furniture sdn bhd

PRESIDENT COUNCIL

ADVERTISING

FMC GREENLAND SDN BHD

POH KONG HOLDINGS BHD

His Excellency Datuk Seri Nelson Kwok

Annie Wong

Mr. Terry Lee Teck Tiong

FOUNDER PRESIDENT

Dato’ C.L. Liaw

BUSINESS DEVELOPMENT

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POH KONG HOLDINGS BHD

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DISCLAIMER Although every reasonable care has been taken to ensure the accuracy of the information contained in this publication, neither the publisher, producer, editors, writers, contributors nor employees and agents can be held liable for any errors, inaccuracies and/or omissions. The contents of this publication do not constitute business or any advice. It is intended only to inform and illustrate. No reader should act on any information contained in this publication without first seeking appropriate professional advice that takes into account their personal circumstances. We shall not be responsible for any loss or damage, whether directly or indirectly, incidentally or consequentially arising from or in connection with the contents of this publication and shall not accept any liability in relation thereto. The views by our writers and contributors expressed here are their personal opinions and do not necessarily reflect Malaysia Retailer’s views. The publisher and producer do not endorse any company, organisation, person, business strategy or technique mentioned in this publication unless expressly stated otherwise. The publisher and producer do not endorse any advertisements, advertorials or special advertising features in this publication, nor do publisher and producer endorse any advertiser(s) on their products/services unless expressly stated to the contrary. All rights reserved. No part of this publication may be reproduced in any form or by any means, including photocopying and imaging, without the prior written permission of the publisher and producer.

Message from the MRCA President

A Delightful Evening of Business & Leisure

he MRCA CEO Night is an annual event which serves as a collaborative avenue for MRCA members, business leaders and entrepreneurs. The purpose of the event is to provide a platform for members to share experiences and gain useful business tips, thereby enriching their knowledge. The target audience for the event is the top key management of the respective members’ companies and affiliates including the Chief Executive Officers, senior management and entrepreneurs. This year, the event will be held on 31st July at the Berjaya Times Square Hotel and I would like to thank Tan Sri Dato’ Seri Vincent Tan, Founder & Advisor of Berjaya Corporation Berhad, for graciously agreeing to be our guest of honour and also to share his success story with members.

Following this, we will be organising our business mission with more than 20 delegates to Manila, Philippines from 10th – 13th August 2015. This will be a 4D3N business trip with the objective of visiting shopping malls, retail chain operators and associations in Manila to gain a better understanding on how we can expand our business to the Philippines. The MRCA Youth Division was formed to provide development opportunities for our young members to interact and to learn together. To this end, our Chief and Youth Council are actively organising several events such as the MRCA Youth Networking Dinner, MRCA Youth Entrepreneur Visitation and others. The upcoming networking dinner will be with Dato’ Joshua Liew, CEO of Marrybrown Sdn Bhd on August 2015. Watch out for the news! The Malaysia International Retail, Franchise & Licensing Fair (MIRF) 2016 will be held from Thursday, 3rd March 2016 to Sunday, 6th March 2016 at the Mid Valley Exhibition Centre (MVEC), Kuala Lumpur. The MIRF is endorsed by the Ministry of Domestic Trade, Co-Operatives and Consumerism (KPDNKK) as well as Malaysia External Trade Development Corporation (MATRADE), and supported by the Ministry of Tourism and Culture Malaysia, Malaysia Convention and Exhibition Bureau (MyCEB) and Hong Kong Trade Development Council (HKTDC). Being the first ever largest and most exciting retail, franchise and licensing fair in Malaysia, it is expected to attract more than 250 exhibitors from across Asia with over 30,000 visitors locally. Throughout the exhibition, there will be an unbelievable host of activities, promotions and offers that are unavailable elsewhere. So, it will be worth your while to check out what’s on offer. BRIDGING BUSINESSES FOR SUCCESS! KEEPING AN EYE ON THE FUTURE!

Dato’ C.L. Liaw, JP

President 2014-2016 Malaysia Retail Chain Association

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Editorâ&#x20AC;&#x2122;s Note

From Bricks to Clicks or Vice Versa?

hen we first toyed with the idea of featuring e-tailing (electronic retailing) in this issue's cover story, we were under the impression that virtual shopping is fast gnawing into the brick-and-mortar retailer's business. However, after countless hours of research and several interviews later, we have come to realise that it could well be the other way around. Sure, traditional brick-and-mortar retailers are jumping on the e-commerce bandwagon but generally, their online sales are still lagging way behind their offline revenues, at least in Malaysia. Many of the retailers we approached (not featured in the article) were reluctant to talk about their virtual exploits and we suspect that their online ventures have not been up to expectations. For solely online retailers, the bigger slice of the offline retail pie (ballpark figure of 97% or even more) poses a mouth-watering temptation that is almost impossible to resist. Hence, even virtual shopping portals that are doing well are moving against the grain to establish their physical storefronts. Cases in point are Google, Amazon.com, Lelong.my and Zalora, just to name a few. On the local front, Lelong.my, a leading e-commerce portal in Malaysia, has even set up its own physical store called TouchPoint right beneath its headquarters in Puchong, while Zalora has upped the ante by setting up four physical stores spread across the country, with the latest one being at Mitsui Outlet Park KLIA Sepang. To conclude, it appears that e-tailing is still an infant in the country's mature retail market, making up a mere fraction (less than 3%) of total retail sales value. As such, it will take some time yet for it to pose a serious challenge to the massive offline market. No doubt, e-tailing will gain more prominence and command a bigger market share in the future. But for now, many shoppers still enjoy spending a leisurely day at the mall, and physically perusing through a wide selection of goods before making a decision, and then finally paying at the counter. Two channels are better than one, and moving forward, we envisage the growing importance for retailers to embrace a "multi-channel retailing" strategy that encompasses both the online and offline space. This would certainly be a more comprehensive approach to aid retailers in their basic quest for survival and on a grander scale, their aspirations for world dominance. Enjoy the issue and happy shopping!

Tan Thiam Hock Editor

M A L AY S I A R E TA I L E R

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Feature

Secrets of Successful Overseas Ventures Establishing a successful business in Malaysia is a commendable achievement but it’s a completely different ballgame on foreign soil. Two companies with their own set of overseas experiences, Oldtown Berhad and Erican Education Group, share their inspiring stories. By Samuel Ngeow

unning and sustaining a business empire is not an easy task. Expanding it, however, is an entirely new challenge. There are so many unquantifiable variables involved that if you fail to identify and understand them accordingly, you will be placing your entire business in jeopardy. Nevertheless, taking a leap of faith to venture into an unfamiliar market is a must if you want to grow big. Of course, as an astute entrepreneur, you must first have a thorough understanding of your business strategies and the overseas market before you even start expanding abroad.

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Sun Tzu once said, “Know your enemy and know yourself and you can fight a hundred battles without any disasters.”

Oldtown White Coffee: From a Local Kopitiam to an International Café & Restaurant

Started as a traditional Hainanese coffee shop in Ipoh, Oldtown White Coffee is currently the “go to” place for a taste of authentic premium white coffees. The kopitiam chain, as we know it today,

“For the past nine years, we have been enjoying tremendous growth due to our brilliantly executed business strategies on the domestic front as well as overseas. In Malaysia, the early part of our expansion plan was to form Joint Ventures (JVs) and partnerships with other investors. By leveraging on this business platform, we managed to set up over 100 outlets locally within several years. Then in 2010, due to our enormous commercial success, we applied to become a full-fledged franchise company and opened up our franchise to the public.”

A Solid Foundation is a Solid Strategy

only began in 1999. Prior to that, the company was only focusing on fast-moving consumer goods (FMCG) such as its 3-in-1 instant white coffee mixes. Soon after, they began diversifying into physical retailing and franchising. According to Clarence Leon D’Silva, Chief Operating Officer of Oldtown Berhad, it was a natural progression for the company to venture into brick-and-mortar retailing. “We already had a very successful beverage formula in place. All we needed to do was to incorporate our famous white coffees into the menus of our cafés and restaurants.” Initially, things were not sailing as smoothly as they had hoped. D'Silva recalls, “When we started our physical operations, it was very messy because we did not have a central kitchen and were forced to source most of our food, such as toasts and chicken curry, from the other vendors. Since then, we have slowly incorporated our own central kitchens and menus. Today, we are proud to have successfully established more than 240 outlets in Malaysia, Singapore, Indonesia, China and Australia.”

The Secret Formulae of Success

In every successful F&B business, there is a proprietary recipe and Oldtown is no different. D'Silva was kind enough to share with us some little-known facts about Oldtown White Coffee. He begins by clarifying that their white coffee is actually black coffee. The “white” in white coffee is derived from the Chinese word ‘bai’, which symbolises purity. “Our white coffee is actually the purest form of black coffee, made from several high quality beans such as Arabica, Robusta and Liberica. They are freshly and adeptly brewed at our outlets to provide you with the finest possible quality of white coffee,” he explains. D'Silva also reveals that their franchise is currently thriving with a compounded annual growth rate (CAGR) of 30-40%.

Before even thinking of going overseas, D'Silva advises retailers to first create a strong business foundation. “Without a solid base, you will not be able to support your infrastructure. Be it locally or internationally, there will many repercussions if your core fundamentals are weak,” he warns and continues, “The reason why we became so successful so quickly is because we had already established an impeccable business model before we started moving forward. From manufacturing and warehousing to logistics and distribution, we have closely integrated our supply chains and placed tight controls on them. Once we were satisfied with our framework for franchising, we resumed our domestic and foreign expansion plan by opening another 140 outlets.”

The Beginnings of Oldtown’s Global Foray

It took Oldtown almost a decade to penetrate into the overseas market, because during those years, they had been steadily building themselves with a rock solid business foundation. In 2008, Oldtown finally initiated their global conquest by collaborating with Singaporean actor Mark Lee to set up their first overseas outlet in Singapore. After embarking on a successful business venture in Singapore, the company created an international division and brought in some key personnel to support and enhance their business operations. With a firm corporate infrastructure in place, Oldtown resumed their overseas venture into Indonesia in 2010, China in 2011 and Australia in 2014.

Adapting to Survive and Grow

D'Silva says that retailers would need to suit the local climate and market if they want to venture overseas. “Different business models are required for different territories and countries. In Malaysia and Singapore, we used direct ownerships and joint ventures as a way to expand our brand but in Indonesia, China and Australia, we assigned the rights to a master licensee instead. For those outlets that we do not own any stakes in, there is a buyback clause which we have inserted in our licence agreements, where we can, at any Vo l 3 N o 2

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Feature

point of time, purchase up to 49% in the company. The purpose of this clause is to safeguard our own business interests.” During their Singapore venture, D’Silva recalls that Oldtown had found huge success with their first outlet but was unfortunate with their subsequent ones. “The Singaporean market is slightly different from the Malaysian market, in the sense that the locals demand a comparable level of service for the price they are paying for. Regrettably, they have associated our cafés with the same level of a food court because they felt the prices of our food and beverages could not justify their standard of expectations. Thus, we had to undertake a major refurbishment to significantly improve our appearance and the level of our services.” Apart from that, D’Silva explains that the company’s greatest challenge in Singapore was the high rental costs and manpower issues. “In 2014, we had to revamp some of our outlets to create a brand new concept called the Basic Concept. Through this concept, we are able to address the problem of having labour shortages and

high rental costs. At the same time, we were able to cater to a new target audience, whom are very busy or prefer to have a quick meal.”

Understanding the Market is Key to Success

Oldtown, according to D’Silva, had a very challenging business venture in China. “We made a mistake when we entered China by not understanding the market and our business partners adequately. Although it did not cost us much capital, it had significantly slowed down our expansion plans for the country. Thus, my final advice to you is to take your time to understand the market before proceeding abroad. Conduct thorough market research, establish a solid groundwork and ensure that you have the capabilities to meet the demands of different markets and lifestyles. Even though you are a champion in your own territory, it is not reflective of you being a champion in other people’s territory,” he says, matter-of-factly.

A Goal Too Lofty

After a decade of establishing themselves with a strong foothold in the language market, Erican began diversifying into the education industry by providing pre-school education, corporate trainings and also tertiary education. Currently, they are considering setting up several international schools to complement their existing education arms.

Erican: If Eric Can, You Can!

Coming from a humble background, Datuk Eric Chong could barely speak a word of English as a teenager, long before he founded Erican Language Centre. Determined to help himself and others to learn and master the language, he set up a training centre in Ipoh, 25 years ago. ‘If Eric can, you can!’ That was the principle he used to motivate people to improve their language proficiencies. “There should not be any excuses for you not to be able to converse in English, because if I can do it, you can do it too. If you want to communicate and work well with others, you will need to have a good command of your languages,” he says, with perfect intonation. 12

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“Initially, we had envisaged ourselves to be Malaysia’s leading language provider by targeting a million students before 2020. However, along the way, we realised that it is almost impossible to achieve that objective by just focusing on language alone. You see, language is just a part of education. It forms the basis of learning because without it, you won’t have the capability to learn. Education, on the other hand, consists of knowledge and skill acquisition as well. Therefore, using the Erican spirit - anything, anywhere, anyone and anytime - we want to provide our students with a complete learning experience by redeveloping ourselves as a one-stop education provider.”

Birth of an Education Group

Erican started their venture into tertiary education by acquiring Practice Asia College (PAC), which was the sister college of Brickfields Asia College (BAC). After taking over PAC, they rebranded and reposition the college to create a more comprehensive learning centre. “We believe that education is not just about training and qualifying, but it is also about inspiring people. Through our core values, we have pioneered the first tertiary education concept in Malaysia that is blended with success training and motivation,” says Chong.

At first, Erican had a hard time incorporating their unique learning methodologies to their students. However, over a period of time, their students began to accept their teaching approach. In fact, their curriculums and training techniques became so popular that they are being exported to various education providers. “We are currently franchising our language and tourism programmes to several colleges and universities in Malaysia and Indonesia. One of our close partners, Tunku Abdul Rahman (TAR) University, sends at least ten of their professors and lecturers to our institutions annually for training purposes. Meanwhile, we have also enjoyed great success with our interior design courses, churning out thousands of interior designers since its inception.”

Revisiting China

Before Chong ventured into the education business, he conceived the idea of setting up a thousand English learning centres in China. “In 2003, I decided to step out of Malaysia to expand my business in the mainland. After setting up a small office in Beijing, I started exploring and studying the local market by speaking to students and professors from ten different universities. Eventually, a group of students from the Unions of Beijing was excited enough to help me to organise a road show called Speaking English with Eric Chong. The response was fantastic and after the event, I was invited to speak at a very important platform called Beijing Speaks English,” he shares. During Chong’s stay in China, he discovered a vital component required to succeed in the country, which is to have a constant physical presence. “At that time, I was not ready to change my lifestyle and to settle down in China. Therefore, instead of trying to set up my own English tuition centres, I decided to accept an offer to publish a series of my learning contents. When I came back to Malaysia later, I retired for a couple of years before diversifying my language business into the education industry,” he recalls. Currently, Chong is thinking about revisiting China to set up a network of international schools and hopes to materialise his plans in a few years’ time.

Early IP Protection is Crucial

When Chong was in China, he made an unexpected and costly mistake. “At that time, I had published a series of books called the Eric Chong English Learning Series. A few months later, after the release of the books, an English school was formed using my name. Ironically, I was not the legal owner of the school and it had become very popular due to my popularity. Hence, because of my negligence, it became a very unpleasant experience for me,” he laments. So, for those who are seeking overseas expansions, Chong stresses that they must first have their Intellectual Properties (IP) adequately covered. “International trademarks and protections are prerequisites, if you want to venture into a specific country. They can be very expensive and therefore, you need to be serious when considering penetrating into the overseas market. I would strongly advise you to enter the market discreetly and conduct thorough market research beforehand, to avoid incurring unnecessary costs.”

Find a Reliable Business Partner and Form a Good Team

According to Chong, it is also essential to have a good team because in business, managing things alone can be very daunting. “If you are handling everything by yourself, you will become the bottleneck to your organisation. Business is about identifying and recruiting the best people to help you to do the best job. As an entrepreneur, your role is to provide your team with vision, resources and mentoring,” he elaborates.

“Don’t make friends when you need partners, make friends when you don’t,” Eric continues, explaining that it is better to do business with someone whom you’ve known for long time than with someone you’ve just met on the street because if you partner with the wrong person, it is highly likely that you will face many difficulties in your business. He cites an example, “I had once entrusted my entire business operations in China to my personal assistant. At first, he was exactly the type of person I was looking for. However, when we went on a trip back to China, he revealed his true character. Just when you think you know a person very well, you actually don’t.” From this experience, Chong has learnt that human nature is the toughest factor to evaluate.

No Man is an Island

“It is not easy to penetrate the overseas markets. Not only do you need to develop a deep understanding of their culture, lifestyle and preferences, but you must be prompt in meeting their everchanging demands. This is where your reliable teammates and business partners come in, to help you overcome these cumbersome issues. Thus, when venturing abroad, you should never do business alone. Always remember to practice the Taiwanese Business Model because they always work together,” Chong concludes succinctly.

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Law & Order

Franchising: A Weapon of Mass Expansion

If youâ&#x20AC;&#x2122;re a retailer looking to expand your business in the fastest way possible but without the huge capital and considerable manpower required, franchising may be the way to go. Malaysia Retailer delves into the legal and business aspects of franchises. By Samuel Ngeow

lanning to expand your business but having capital and manpower issues? Why not consider franchising? It helps your business to overcome resource limitations, and at the same time, strengthens its brand and reach. By franchising, you allow others to use your business model and philosophy, in return for their investments and unwavering devotion to expand the business. Thus, it could be the arsenal for you to expand your business quickly and cost-efficiently.

Forming a Strategic Alliance

Franchising is more than just a method of doing business. It is a mutual relationship between two or more 14

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parties, where the franchisor provides the franchisee(s) the rights to use his business model, brand and systems to conduct business. In short, it is a strategic alliance between several parties to achieve similar objectives. As a franchisee, you are not just buying a business but you are becoming a part of a larger organisation. Conversely, as a franchisor, your intention is to share the risks and rewards with the others because you lack the capability or resources to expand your businesses further. However, you should be aware that the franchisee operates the business separately from the franchisor, and this relationship shall not be regarded as a partnership, service contract or agency.

Go Global with a Master Franchise

with the Registry before it may operate or offer to sell its franchise to any person or entity, unless exempted by the Minister. Meanwhile, the franchisee shall pay the franchise fees, royalty, promotion fees or any other payment as provided in the franchise agreement and is required to give a written guarantee to the franchisor. In this guarantee letter, the franchisee, including its directors and employees, and their immediate family members, must promise not carry on any other business similar to the franchised business and cannot disclose to any person information contained in the operation manual or training sessions during the franchise term and for two years after the termination of the franchise agreement,” says Tan.

Another shrewd tactic to proliferate your business domain is by creating a master franchise agreement. This is an agreement where the master franchisor grants the master franchisee the authority to manage and subfranchise his business in a specific location. Take for example Bryan Loo, the managing director of Loob Holding Sdn Bhd. He is the embodiment of a successful master franchisee. When he brought Chatime from Taiwan to Malaysia, the local demand for bubble teas exploded. Today, due to its enormous success, there are over 100 outlets of Chatime in Malaysia. Hence, master franchising could be a very reliable and effective strategy to internationalise your business organisation.

Governing Franchise Watchdogs

Franchising activities in Malaysia are governed by the Ministry of Domestic Trade, Co-operatives and Consumerism (MDTCC), according to Dennis Tan Chia Min, Partner of Tan Chia Min & Partners. The ministry was established on October 27, 1990 with the aim of encouraging ethical trade practices and protecting consumer interests. Under the ministry, an agency named Permodalan Nasional Berhad (PNS) was established to develop and improve the local franchise industry. PNS envisions being a leading corporation in providing total franchise solutions to both aspiring and established entrepreneurs. As such, other than being the implementation arm of the Malaysian government’s franchise development efforts, PNS also provides financing facilities for franchise businesses.

The Franchise Act 1998

Franchising arrangements in Malaysia are governed by the Franchise Act 1998. Tan mentions that the Act provides for the registration of regulations and incidental matters relating to franchises. “Under the Act, the franchisor is required to register its franchise

Dennis Tan Chia Min

Criteria for Franchising

Zafrul Azman, Head of PNS Business Operations division, explains that you have to fulfil certain conditions to be a qualified franchisor. “Pursuant to the Franchise Act 1998, your business must have at least three years of track record before it can be franchised. It is not possible to franchise your business without any proof and acknowledgement, as the stability of your business cannot be reliably ascertained,” he says. Zafrul also points out the importance of having a financially healthy and stable company. “Even though Vo l 3 N o 2

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the Registrar of Franchise does not impose any financial requirements relating to franchising, nevertheless, it will be much easier for you to franchise a business with good financial credentials. For example, the F&B industry has an average net profit margin of 20% to 30% per annum. So, how do you ensure the survivability of your organisation if you have a business that fails to meet the benchmark, or worse, is losing money? Not only will your creditors be worried, investors will be reluctant to invest in your business as well. Thus, despite the popularity of your franchise, it is doomed to fail if it is not profitable,” Zafrul warns.

The Franchise Registration Process

Tan states that to register as a franchisor, you must first prepare an application in a prescribed form together with the disclosure documents. A sample of the franchise agreement, the operation and training manual of the franchise and a copy of the latest audited accounts, financial statements and reports of the auditors and directors should be included together with the application. After preparing and compiling the required documents, you can submit them manually to MDTCC. Alternatively, you may choose to register electronically through their express portal, MyFEX. The registration process has been simplified to the extent that you just need to scan and upload the documents to the website and fill in your business details. Prior to registration, Tan explains that you have to enter into a licensing agreement until you completed a minimum of three years of business operations in Malaysia before you are eligible to apply for the franchise registration. “The licensing agreement can qualify as a franchise agreement but the licensor cannot offer to sell or provide a franchise until his franchise is registered in Malaysia,” he says. It may take up to three months to process your application because the officers from the franchising division will need to physically inspect your retail outlets. You will receive your franchising licence 16

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thereafter, provided that you have furnished the proper documentations and your business premises have been duly verified.

Franchise Fees

There is no such thing as a free lunch in the business world. “As a franchisor, you are entitled to charge royalties, franchise fees and advertising and promotion (A&P) fees to those who wish to acquire your franchise rights. As the law demands, the chargeable amounts must be declared in the disclosure documents registered with the Registrar of Franchise,” Tan reveals. “If you are charging your franchisees for the marketing activities of your franchise, you are required to set up a Promotion Fund under a separate account, which must be solely used for A&P purposes. Within thirty days after the conclusion of the last financial term, a financial statement of the fund, endorsed by a registered Public Accountant together with the annual report must also be submitted to the Registrar of Franchise,” he continues.

Financial Assistance is Readily Available

Tan goes on to state that our Malaysian government has established the Credit Guarantee Corporation Malaysia Berhad (CGC) to provide guarantee cover for small and medium enterprises (SMEs) and introduced a scheme known as Franchise Financing Scheme (FFS). “FFS is a jointly participated scheme between CGC, KPDNKK, Maybank and CIMB, which is specifically designed to help passionate entrepreneurs who are interested to venture into the franchise business. Through this scheme, they can obtain financing from the above-mentioned participating banks.” Additionally, bumiputeras may obtain Islamic financing from PNS. They offer 70%-margin financing at 4.75% profit sharing over five years, according to Zafrul. “However, you’ll have to fulfil certain criteria to obtain financing from PNS, which is the first financial institution that provides ratings for franchisors. We

incorporate the ratings practiced by SME Corp with the inclusions of certain distinct parameters for franchisors. Thus, for you to receive financing from us, you will have to be rated by us as we only provide funding for those with good credit ratings,” he elaborates.

Zafrul Azman

Education & Training are Provided

Besides financing, institutions such as PNS also provide other assistance such as training and education to foster the growth of franchise industry in Malaysia. “We implemented the BIT programme to aid and nurture microbusinesses such as hawker stalls and small retailers. One of our success stories is Takoboy. It began as a hawker stall selling Takoyaki, a type of Japanese snack, in a night market. Through our BIT programme, Takoboy became very successful and is currently looking to expand its franchise to shopping malls. Although the business had started small, we offered them the opportunity to develop the business. Hence, it is a good reflection that such a small-scaled business could turn into a formidable franchise,” says a beaming Zafrul.

training academy was set up. Through our academy, we will guide and support you to run and expand your franchise successfully.”

Are You Ready for Franchising?

Before deciding to start a franchise, Zafrul recommends that you ask the following questions: “How strong and popular is your brand? Do you own several outlets or just a single one? Do you have the capability to manage your franchises?” He also reveals that when you venture into the franchising industry, your brand and management skills becomes a crucial factor. “Regardless of the great accomplishment you had achieved with your initial outlet, you may find it difficult to emulate that success in other locations. Thus, it is wiser for you to set up several branches first before franchising your business. That way, you would be a more mature entrepreneur and have a better understanding on managing and growing your organisation,” he advises. To be a successful franchisor, you must also possess a unique selling proposition (USP).“Yes, there could be other brands selling similar goods and services such Takoboy and Takotao. However, it is alright to be identical because we are living in an environment with healthy competition. What matters the most is the ability to redefine your products so that it becomes distinctive from the others. For example, Takoboy uses their own ingredients and only imports the octopus from Japan. Through improvisation, they managed to enhance the taste of their food to suit local preferences. Research and development, therefore, plays a vital role in helping your business to evolve and stay relevant in this competitive industry,” Zafrul shares.

An Invaluable Business Expansion Tool

Franchising is an invaluable tool for you to expand your retail business. Instead of shouldering all the burden alone, you can share the risks and costs of expansion with other interested parties by franchising. However, when considering franchising, make sure that you have created a simple but yet effective business system which ensures that the outlets can run smoothly. Additionally, you should be careful to whom you are giving the rights to because the goodwill of your brand could be negatively affected if it falls into the wrong hands.

“In PNS, we aim to educate and enlighten local business owners that franchising is the best strategy to expand their businesses. That is the main reason that our Vo l 3 N o 2

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Advertorial

Take Your Kitchen Abroad EXIM Bank Malaysia encourages local eateries to venture beyond local shores

ne of the many things Malaysians miss when they go abroad is the local cuisine; after all we are a nation that enjoys its food almost any time of the day. In fact, it is an act of blasphemy if food is neglected or not present at any function. This being the case, Malaysians will only heave a sigh of relief upon sighting a familiar looking Malaysian restaurant or even a dish on a menu that remotely resembles their beloved country cuisine.

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Seeing as there is immense potential to export this brand of products or services from the country to the world and assisting such business folks to do so, Export-Import Bank of Malaysia Berhad or EXIM Bank has the MalaysiaKitchen Financing Facility (MKFF) in its portfolio of products that will assist Malaysian entrepreneurs in obtaining credit or financing facilities for the purpose of setting up or expanding their existing Malaysian restaurants overseas. Music to everyoneâ&#x20AC;&#x2122;s ears or enticing aroma to your palate, this facility will spell the birth of a good chain of local eateries abroad, as the country is famed for its local delights to tourists and citizens alike.

KITCHEN FINANCING

Since funding a business expansion is always a cause of concern for many entrepreneurs, the facility from EXIM Bank does bode well for those who already have such ideas in mind and are keen to put their plans in motion. For a start, the Bankâ&#x20AC;&#x2122;s margin of financing is up to 90% of the project cost, which is inclusive of three months working capital. This makes the foray into another country for such eateries even easier than previously anticipated. The tenure of the facility is up to five years from the date of the first disbursement, which is inclusive of a grace

For further information on the MalaysiaKitchen Financing Facility, visit EXIM Bank Malaysia at www.exim.com.my. EXPORT-IMPORT BANK OF MALAYSIA BERHAD Level 1, EXIM Bank, Jalan Sultan Ismail, 50250 Kuala Lumpur, Malaysia Tel: +603-2601 2000 Fax: +603-2601 2469

A Great Platform

Providing a great finance facility and understanding what food and beverage (F&B) operators need is what attracted Tabco Group to venture into EXIM Bank’s MKFF programme.

period that can go up to twenty four months inclusive of 3 months payment holiday from the first disbursement depending on the merit of the case. For business takeover, the grace period may be less than twelve months. This serve as a breathing space for the Customer to build up their cash flow. While the facility itself sounds good to such aspiring chefs and restaurant owners, it is eligible to Malaysian-owned and/ or controlled companies with minimum shareholding of 51% incorporated in Malaysia. The facility is also ideal for those who have the related working experience of either one year in managing overseas restaurant or three years locally. It is also open to Malaysian-owned franchises. Besides the eligibility of the business owner to take on MKFF, even the type of food served at these restaurants are taken into account seeing as it is a MalaysiaKitchen Financing Facility after all. According to EXIM Bank, the restaurant must serve Malaysian food and defines such food as one that is traditionally and customarily consumed by Malaysians, read local favourites. In fact, the facility covers much of the expansion plans for such F&B business and they include the expenditure of the opening of new restaurants overseas, the expansion of existing restaurant or opening of new branches, exporting food and raw materials from Malaysia to Malaysian restaurant overseas, company operating warehousing facility or trading house overseas that distribute Malaysian product or supply of raw material/food product to Malaysian restaurant overseas, operating retail business or supermarket overseas that promotes Malaysian product, as well as the development of Malaysian food franchises internationally.

Says Dato’ J.J.C. Rajan, CEO of Tabco Group: “Like any other business, financing facility is the main reason why we approached EXIM Bank. However, what makes the Bank more appealing to us is its special funding exercise for F&B businesses that want to expand abroad, which was in line with our mission. “We wanted to expand our brand “NOOODLES” internationally and MKFF was a good platform as our business fits the requirements set by the Bank. We are a 100% homegrown brand that promotes Halal Malaysian food.” In 2011, Tabco’s vision became a reality when it was given the approval to operate at the Melbourne International Airport. Hence, making the group the first Malaysian company to have been given a lease to operate in an Australian Airport. Besides the brilliant funding, EXIM Bank also promotes its clients as well. According to Rajan, the Bank helps promote many Malaysian F&B businesses in its marketing campaigns. On top of that, the operators are also given exposure at international events that are organised by the various ministries and their agencies, such as Tourism Malaysia. Sharing his good fortune of connecting with EXIM Bank, he says: “I feel EXIM Bank’s MKFF is a good initiative to promote Malaysia and its food to the world. Tabco Group does hope that EXIM Bank’s customer service can play a much more important role in helping more successful Malaysian F&B operators to venture into other countries in Europe and US.” To date, the brand “NOOODLES” has already set its foot in Australia, namely at the Melbourne International Airport and Perth Domestic Pier. Having been in the market for more than 20 years, the group is looking forward to expand its business to Bali, Surabaya, Brisbane, Abu Dhabi and Dubai with the aid of EXIM Bank.

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Feature

YFS

Fashion à la mode Up-and-coming local fashion label YFS is giving other comparable brands a run for their money. Malaysia Retailer talks to the group’s CEO and fashionista Nicholas Chong at his YFS Concept Store in IOI City Mall, Putrajaya. By Lim Su Yee

ven as you are reading this, one particular home-grown fashion label by the name of YFS is hot on the heels of an expansion trail. The YFS Group of Companies, whose acronym stands for “Young, Fabulous & Sassy”, is helmed by CEO Nicholas Chong, a young, bespectacled 35-year-old self-styled fashion guru who interestingly, used to work in the pharmaceutical line. YFS isn’t exactly a new kid on the block in the Malaysian fashion industry as it has already been fulfilling its customers’ fashion cravings a few decades, and most recently through its distinct K-pop style, trendy apparel, quality materials and value-for-money pricing.

Humble Beginnings Followers of YFS would probably know that the company started way back in 1979. “My father-in-law founded YFS in Johor Bahru, but progressively in 2010, things began to change for the better as we started to locate ourselves properly. We used to be in street shops but ever since then, we have shifted our outlets to shopping malls. We set up our first mall outlet in IOI Mall, followed by Putra Mall and now, YFS concept store. Each year, we upgrade ourselves without 20

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fail. Our concept store was formed based on feedback given by our loyal customers,” Chong reveals. Chong adds that in the early stage, the YFS chain of fashion outlets were set up at small neighbourhood malls. “To enter the big malls, quality is very important. We hope to get into Grade A malls in the Klang Valley.” Chong confesses that YFS’s designs are more towards streetwear and K-pop. “We are influenced by the whole environment of Korean dramas and K-pop music. We offer a wide range of choices and are different from others. I admire Korean K-pop as their style is colourful and daring. Their cutting is also very nice,” he commends.

Catering to All Age Groups For now, Chong lists a few varieties of designs from his company that target different age groups, from children to adults. “We have kids wear ranging from the ages of three to 10, teenagers from 10 to 25 years of age and ladies from 20 to 25. One thing we have noticed is that the ladies always want to look younger. They tend to hunt for bold and fabulous types of dresses. Due to good reception, we can happily tell you that our

target age group has been extended from 25 to 50 years old. Some of our customers are 50 and above and we are happy to say that our designs have grown to higher age groups.”

Affordable Middle-Class Prices Chong states that the standard retail prices for YFS garments are from RM29.90 to RM159.00. “The prices for men’s and ladies’ apparel are almost the same. We want to provide quality and value-for-money clothing for our customers. Every single item of our clothing is developed in China and manufactured by our own team.” Fashion Tips from a Fashionista To be in the fashion line, one has to look young, sharp and portray themselves as fabulous in the eyes of others. “Therefore, personal grooming is very important,” stresses Chong, who goes on to share several fashion tips for people who want to improve their fashion sense. “First of all, one must start with their own personality and wear clothes that suit them. A basic tip is tidiness, for example, tuck in your

Nicholas Chong

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and China. The company is also looking for partners in Singapore, Cambodia and a few other places. It hopes to set up its first overseas outlet this year.

clothes properly so that you will look smart and tidy. Secondly, cleanliness is a priority before choosing the right colours to suit one’s personality. Colours are important but we can’t force a person to wear a certain colour just because it is the “in” thing at the moment. For example, the colour red might suit some but not others. One must also be aware that when a man starts wearing pink, this means that he has accepted this brand new personality,” he says with a smile. The fashion guru adds that the fairer sex are good in cosmetics whereas men tend to go for lighter makeup. “But most importantly, go for a good haircut, tidy up your clothes and keep your nails short and clean.” Chong says that once someone is done with the basics, they will move on to experiment with other elements such as colours. “For example, those who have fair skin should go for sharper colours. As for those who have darker skin, they are recommended to choose something lighter. All and all, it’s not about dark or light as the contrast brings out the colour. Everyone should find something that suit themselves. But once someone have changed their personality they will be attracted to buy the right clothing. For example, those who regularly go for workouts will find something tight, figure flattering and energetic to suit their personality and lifestyle. When they wear something that flatters their figure, they will feel very confident and show off their physique more.” Chong cites an example of a customer who used have a bursting 44-inch waistline but 22

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has since slimmed down to 38 inches. “This customer told me that he is proud to wear YFS pants as it is slim cut and also make him look slimmer and younger. I am glad that with lifestyle changes, these people are still wearing the YFS designs.”

Constantly Improving For YFS, it’s a never ending journey of continuous improvements. “We renovate our outlets once every three years and sometimes, even 18 months. We are trying to upgrade ourselves and give confidence to our customers. For example, every month we will pick a store for a makeover. For this month (May), our City Square outlet will be undergoing refurbishments followed by two more new stores; one in Bintulu (in June) and the other in Alor Setar (in July). Our target is to set up a new store every two months. Currently, we have 50 outlets with seven more coming up this year,” he says. This year is about consistency and new concept by making YFS a one-stop shopping avenue for all the consumers. “For example, our Alor Setar outlet in Aman Central spans 15,000 square feet but we aim to have the largest store in KL at 20,000 square feet. We hope to make a name out of a Malaysian brand. As some may know, local brands such as Bonia are already considered a legend as it can even go international. Here, our leader is Padini. We hope to make Malaysia proud by being one of the fastest-growing fashion outlets in Asia. If possible, we want to go even further beyond Asia.” In line with its international expansion plans, YFS has engaged partners in Indonesia, Vietnam

From Employee to Entrepreneur Currently, there are two popular fashion brands under the group, namely AD jeans and YFS, in the market. Chong explains that ‘AD’ stands for ‘American Denim’ while the other one which is known by most people as YFS is operated on a wider, larger scale. AD jeans is targeted at a smaller mid-upper market where the prices are slightly higher than YFS. However, the majority of YFS’s products are targeted at the middle-class. We plan to move up further by buying more brands in. We are opening a franchise which will be a good opportunity for both AD jeans and YFS. We plan to establish our franchise both locally and overseas, hopefully by this year. For example, we currently have two franchised outlets, one each in Ipoh Parade and Kuantan. These two outlets are our very first internal franchise programmed for our staff. We are giving our employees the opportunity to be business owners. This is open to anyone who wants to be a franchisee both internationally and locally. We are also looking for potential brands to be brought into Malaysia. Teamwork & Trust Chong emphasises that YFS is not a oneman show. “Without the team, there is no YFS,” he says modestly. “One has to work closely and trust the team. My passion alone would not suffice without my team. Through my experience, there are three keys to success. Number one, train yourself to not make excuses. Secondly, put confidence into yourself. There is no excuse to failure. To have success, there is no excuse for failure. As you know, YFS started from a small company. There needs to be trust among one another. We also believe in transparency. If you love the company, you will support it. So far, we have been receiving a lot of positive comments and support. So, love you job and have fun with it,” he says, ending the interview on a high note.

Finance

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Be Prepared for the Unexpected Your business may be running smoothly and all is well but unfortunately, life is not always filled with sunshine and rainbows. Are you adequately insured to weather an unexpected storm? By Samuel Ngeow

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s an astute entrepreneur, you should be well aware that insurance is an integral part of a sound financial plan. It is crucial to insure your business because there could be times when your business may encounter unforeseen disasters and perils, resulting in loss of revenue or even a lawsuit taken against your company. If your organisation is not adequately insured, the consequences could be very dire. Thankfully, for the retail sector, there is a wealth of options available in the market to mitigate and manage your business risks. From life to general insurance, if you want to secure the longevity and prosperity of your business, you will need to have an adequate level of insurance protection.

Key Areas of Retail Insurance Getting a suitable and cost-efficient insurance coverage requires you to first identify and determine the types of protection your business needs. According to Justin Ng, Senior Vice President of Broking & Partnerships for AmGeneral Insurance Berhad, retailers should look at four basic areas before seeking to insure their businesses against losses or damages. They are property, liability, people and transit of goods.

shields your assets from the risks of fire, lightning, natural disasters, riot and strikes, malicious acts and other perils.” Apart from fire and disasters, Ng explains that your business assets could also be susceptible to thefts and burglaries. “You will need to purchase burglary & theft insurance if you wish to eliminate such risks. Although it could be quite costly, obtaining the insurance coverage is essential, especially for those retailers who are dealing with small and valuable inventories such as jewellery or smartphones.” He continues, “When it comes to thieving, you should also consider insuring your cash because as a retailer, you may have a lot of cash in hand. There are two ways to do so. The first is by purchasing money insurance and the second is through fidelity insurance. Money insurance protects your cash from thefts and burglaries while fidelity insurance safeguards your cash from embezzlements and frauds committed by your employees, which could be within your business premises or during transits.” Other notable protection for property include coverage for glass panels, signage and machinery breakdowns. Ng points out that these types of insurance are normally purchased by large organisations because the cost of replacing new glass panels and machineries could be very significant indeed.

Don’t Overlook Your Potential Liabilities

Safeguard Your Assets First Ng says that the property section is the best area to begin your search for insurance. It covers the most significant parts of retail insurance, which are physical properties such as buildings, machineries, inventories and equipment. “Regardless of the property ownership - whether they belong to you or are under your custody, you must adequately insure them because they involve a huge amount of capital outlay to you. One way to protect properties is by acquiring fire and perils insurance. This is perhaps the first and the most important protection you should get for your business because it

Besides protecting physical properties, Ng mentions that retailers should be aware of the potential liabilities that could arise from their businesses as well. These liabilities include bodily injuries or damages caused to the general public, employees and their properties due to the negligence of their business operations. “You may have insured your glass panels, but if don’t have a public liability insurance, you will be held responsible for any injuries or damages caused by the falling glass shrapnel.” Ng elaborates, “Take the following case for example. While playing the hotel’s radio, there was an American kid who was jolted by the static charges emitted from the stereo. The hotel, after receiving numerous complaints from his parents, decided to compensate the family with free meals and accommodation. However, feeling unsatisfied, the family filed a lawsuit against the hotel when they returned to their country. Fortunately for the hotel, they had already purchased a public liability insurance to indemnify their losses, and Vo l 3 N o 2

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Hence, Ng advices you to list down and categorise all your insurable assets, after understanding the four basic areas of retail insurance. He also furnishes the checklist below as a general guide:

Your Employees are Your Assets too You may insure your business properties and liabilities, but you must not forget to insure your employees as well because they are your business assets too. If they were to fall sick or meet with an unfortunate accident, your business operations could be interrupted, thus, causing loss of revenue for your company. By opting for insurance such as group hospital & surgical, group personal accident and workers’ compensation policies, you can protect your employees and at the same time, secure the wellbeing of your business operations. These policies will cover the costs of medical treatments and loss of wages resulting from work-related injuries, illnesses or accidents.

Goods in Transit Could Become Goods Lost in Transit Another key area to protect is your goods in transit. Transit of goods insurance is divided into two categories. The first is land transit, where the delivery of the goods is within Peninsular Malaysia, and to or from Thailand and Singapore. The second is through sea or air transportation, usually for overseas shipments or consignments. Ng states that most retailers, especially the smaller ones, are not bothered about getting this insurance coverage. “Most of them just leave the duty of insuring the goods to the shippers, forwarding agents or somebody else. If you allow them to buy the insurance on your behalf, they will charge you an additional premium for it. For instance, they can help you to buy marine cargo insurance of say RM300, but they will charge you RM500 instead. Hence, most of the large organisations will purchase their own insurance, and so should you.”

Before Insuring Your Business, Plan & Seek Advice Sometimes, getting insurance coverage is not a choice, it is an obligation. When you acquire a mortgage loan, for instance, the bank will require you to purchase a fire insurance policy. Additionally, some shopping malls such as Mid Valley and Sunway Pyramid will make it compulsory for you to buy a large coverage of public liability insurance if you plan to set up an outlet in their malls. The insurance premiums, if added up, can be very costly and therefore, you will need to plan and insure your business wisely. 26

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thus, decided to pay the victim’s family for the damages incurred. So, in conclusion, I would advise you to adequately cover all your business liabilities if you want to have peace of mind.”

All risk

Fire & Peril

Justin Ng

Personal Accident

General Insurance Checklist Public Liability

“Retailers should look at four basic areas before seeking to insure their businesses against losses or damages. They are property, liability, people and transit of goods.”

Building Furniture, Fixtures, Fittings Stocks in Trade Plant & Machinery / Tools Rental Equipment- Office, Electrical, Electronic Glass & Signboards / Signs Movement of Cash Cash In Premises Cash In Bank Exposure to Third Party Risk All Staff Present Transits- Import Transits- Export Land Consignments

After listing down and categorising your assets, the following step is to place a value on your business assets, according to Ng. “You may value your office building at RM500,000 and your inventories at RM200,000, for example. That will be the basis of your insurance coverage. However, that is not the amount of protection you need to get because you only need to insure your assets according to its value at risk. Let’s say that your inventories were purchased at the cost of RM200,000, and currently, its value can only be realised at RM100,000, you will only need to buy an insurance coverage worth RM100,000 for your inventories and not RM200,000,” he says. Once you have determined the necessary amount of insurance required to protect your assets, Ng explains that your next step would be to indemnify your liabilities. “When we talk about liabilities, it is a very subjective matter. How do you identify the amount needed to insure for liability damages? It really depends on the size, location and nature of your organisation. If you are a small and simple retailer, RM100,000 - RM300,000 should be sufficient. However, if you own an outlet in shopping malls such as Mid Valley

or Sunway Pyramid, for instance, you might need to get up to RM3 million - RM5 million worth of public liability insurance.” As simple as it may look, it would be wiser for you to seek professional advice from an insurance agent, consultant or intermediary because insurance could be a very complicated area. They can assist you to assess and identify the types of insurance product that will best suit your retail business requirements. You would be charged for their services, but it does not really matter because they will be worth your money.

Insurance Is Complicated, Why Not Make It Easy? John Yep, Head of Commercial Business at Allianz General Insurance Company (Malaysia) Berhad, states that every business is unique and insurance is important to protect every business owner. “Their insurance needs may vary depending on a number of factors

insurance policy that offers various insurance protection for retail businesses. It is a combination of the most vital insurance protection consisting of Fire, Burglary, Money, Plate Glass, Public Liability and Employer’s Liability. “The savings made by combining these policies into a single policy make it an effective and efficient way to insure your business assets. Because retail insurance could be very expensive and complicated, we want to create a simplified and cost-friendly insurance plan for you.”

Allocating the Right Amount of Expenses for Insurance When it comes to insurance, Yep says that it could be difficult for you to determine the exact amount of coverage needed to insure your retail business. “The allocation of insurance coverage for your business should take into consideration your business portfolio against the extensiveness of loss incurred in the event of a mishap and the type of insurance coverage that can provide total protection for your business.” This means that if you are in the jewellery industry, your business is more susceptible to burglary and theft, while if you are in the food & beverage (F&B) industry, the risk of fire hazards and accidents are much higher. Besides that, there is also another approach, which is to allocate a portion of your total business expenses for insurance purposes. You may, for instance, set aside 2% of your total business expenses for your insurance coverage.

Tips When Purchasing an Insurance Policy Yep tells retailers to always seek advice from the insurance intermediaries before purchasing insurance for their organisations. “Before insuring your businesses, always consult with the insurance experts. They will save you tons of money and headache. Also, make sure that you have prepared a checklist of everything you need to insure. This includes buildings, equipment, inventories, cash and other important assets. After acquiring your insurance policies, it does not end there. You would still need to review your policies with your agent or broker at least once a year and at any time when there is a significant change to your business such as new product lines and additional employees, to ensure that you have sufficient coverage. John Yep

such as the size and type of the business owned. It could be buildings, renovations, equipment, inventories, money or goods in transit. Hence, they must accurately assess the risks against losses that may occur to their businesses and decide on the coverage that best suits their needs,” he says. According to Yep, Allianz Malaysia provides a “Package Insurance” which is a specially designed and comprehensively packaged

Insurance in a Nutshell As a retailer, you must deal with various kinds of risks on a daily basis. Therefore, having insurance coverage will help you to manage and mitigate those risks. Sadly, many retail businesses fail to have adequate protection, and when a major disaster occurs, it often leads to the closure of their businesses. Instead of taking the risk of being uninsured, it would be wiser for you to allocate some of your business expenses for insurance purposes. Be it risk management or opportunity cost, insurance will help your business to grow and succeed in the future. Vo l 3 N o 2

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Tech Matters

Social Media: Can Your Business Afford to Ignore It? A new advertising and interaction channel has emerged in a big way, and it is called social media. Malaysia Retailer ponders on how retail businesses can leverage on this sprouting phenomena. By Celia Alphonsus

ocial media has swept through the internet like a firestorm these past few years. What started out as a social network between university students soon gave entrepreneurs, start-ups and businesses a direct link to engage with their target audience in a less formal manner (think Facebook). However, for the uninitiated, navigating the labyrinth of social media platforms and dealing with the confusion of exactly how to leverage on it for business development can be rather daunting. At the very least, many Malaysian retailers and service providers do have a presence on Facebook but the vast potential social media management is often left unexplored and for some, even ignored simply because business owners do not know how to maximise their exposure on these platforms.

How Marketers are Using Social Media to Grow Their Businesses

Marketers who have decided to focus on building social media campaigns for their businesses have reported significant improvements in their businesses. According to the 2014 Social 28

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Media Marketing Industry Report published by the Social Media Examiner, 92% of close to 3,000 marketers surveyed worldwide indicated that social media has improved their businesses. Facebook and LinkedIn were the two most important social networks for marketers and if forced to choose only one platform, 54% picked Facebook followed by 17% who chose LinkedIn.

What are the Benefits of Social Media?

According to 92% of the marketers who responded to the survey, the biggest benefit they received from investing time and effort on social media was increased exposure, while 80% said that it was increased traffic to their websites. Moreover, 72% used it to develop a loyal fan base while 71% found that they could also gain credible market intelligence from social media. One thing that all these respondents had in common was that they spent considerable time and effort in building their social media strategy and it took at the very least a year before the benefits could be seen. The mistake many companies make is expecting fast results

just by having a Facebook page. That alone is not enough as you need to craft a campaign or a social media strategy consistently over a few years to gain exponential results from social media.

How Companies are Rocking Social Media Air Asia – Raising Brand Awareness

When Air Asia wanted to launch a new flight from Australia, they had to battle fierce competition from other airlines. The company also lacked the financial resources to launch an effective mainstream advertising campaign. Yet they needed to raise brand awareness in a market where they were relatively unknown, and they needed to do it quick.

What they decided to do instead to reach and connect with their target audience was to build an integrated social media strategy. At the core of this strategy is their website and blog where they invested time and effort in creating great content. Then they shared the content onto their Facebook and Twitter accounts which then drove traffic back to their website. They encouraged feedback from their customers and offered lots of discounts. They were also very active in responding to messages on social media and replied with urgency. Basically, they were building rapport with their customer base through their active involvement on social media. After two years (note not overnight) of consistently tweaking and investing effort in their social media strategy, Emerson Salon – a typical small- to medium-sized enterprise – found that it garnered a 400% increase in revenue, derived 75% of their customer base from the internet, and had 13,818 Twitter followers and 1780 ‘likes’ on Facebook.

5 Tips for Social Media Success

When you are pondering on what makes a successful social media campaign, it basically boils down to these five points:

# What they decided to do was to launch a Facebook competition to give away a free plane, almost. The winner of the competition could choose 302 of their Facebook friends to fly with them from Australia to Malaysia. The competition allowed you to choose the friends you wanted to take with you and tag them in the seating plan. A snapshot would then be shared with the tagged friends, allowing the competition to go viral pretty quickly. And it did. Through this Facebook competition Air Asia reached over 2 million people on Facebook, generated PR worth an estimated US$1.5 million, grew their fan base by 30% AND doubled the number of flights from Australia. Pretty impressive but what if you are a regular retailer with a stand-alone outlet; nobody knows you and you don’t have a fancy plane ride to give away?

Emerson Salon – Reaching Target Audience

Give things away

People love free stuff. The only thing they love more than free stuff is sharing the good news of free stuff with their friends. If you want your social media presence to go viral, create a campaign where you are offering things or services for free.

Rub shoulders with influencers

Hop on trends

Stalk and eavesdrop where your customers gather

Brand positioning is key. Follow, comment and engage influencers in your industry or leaders that your target audience look up to. Simply by associating with market leaders on social media, you will be able to leverage on the ‘eyes’ that are watching them.

Be quick to piggyback on trends that are going viral. Memes and witty copywriting on topics that are trending at the moment have high potential of going viral. In Malaysia, no one does it better than Nandos as they are swift in ‘pecking’ up trends that are causing a flutter in cyberspace.

Emerson Salon is a small hair salon based in Washington that is run by two entrepreneurs. After buying and renovating the outlet, they were left with practically nothing to afford an all-out advertising and promotions campaign.

Emerson Salon’s strategy Facebook Website

Traffic Twitter

Content Blog

Keep an eye out in forums, Facebook groups, etc. for potential customers and swoop in to engage with them as soon as you notice buying signals. Avaya, an American IT company closed a US$250,000 sale 13 days after they picked up on this tweet, “… shoretel or avaya? Time for a new phone system very soon.” Vo l 3 N o 2

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Tech Matters

Create a winning strategy and stick to it

It takes time to build a winning social media strategy, so you need to be prepared to invest time, money and effort to find the mix that works for you. Once you do, stick to it.

The Future of Social Media Marketing

Based on the social media industry report by the Social Media Examiner, social media marketing is here to stay and for those who have found their niche campaigns, the effects are impressive. For many marketers, social media has reduced traditional marketing expenses and with consistency over a few years 66% of respondents are enjoying better lead generation and improved search rankings. Companies are now focusing their attention on content creation and have increased spending on outsourcing written and visual assets. Statistics show that Facebook and LinkedIn are going to be taking a back seat for most marketers as they focus their efforts on creating original content for blogging and videos for YouTube. One of the key challenges that companies face is in trying to measure the ROI on their social media investments. Understandably companies want quick returns, especially if they have outsourced their content and social media strategy. For some, the returns may be quick but for others, like service providers of big ticket items, there are different sets of challenges.

Can You Afford to Ignore Social Media?

Eleven years ago, our lives didn’t revolve around status updates, videos of cute animals and babies, tweets and filtered photos of our food. Since Mark Zuckerberg launched Facebook on February 4, 2004 in Harvard, the world as we knew it has changed considerably. It has transformed the way we communicate tremendously. People are using their gadgets to voice opinions, to share pertinent information (yes, amidst all those cat videos), shape opinions and compel people to take action. The world saw the exponential effect of social media by how it sparked the Arab Spring in Tunisia in December 2010. Twitter played a large role in raising awareness and drawing people to the streets to protest repression, not just in Tunisia but it spread to Egypt and Libya as well. Last year, there were 1.3 billion active Facebook users, with 82% of them from outside of the US and Canada. eMarketer projects that by 2020, 2.44 billion of the world’s population will be on social networks. In 2014, Twitter had 270 million active users who send about 500 million tweets a day. Four billion videos are viewed on YouTube daily and 60 million photos are uploaded everyday on Instagram. Do you think your business can afford to ignore this allencompassing phenomena?

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QUICK-START GUIDE TO SOCIAL MEDIA FOR MARKETING

1. Ensure your website has big and clear call-to-action buttons 2. Make sure that the buttons to your social media platforms are clearly visible on your homepage 3. Identify your target audience clearly and define the kind of ‘voice’ your social presence will take 4. To begin, choose one or two social media platforms that suit your company’s needs 5. Create original content that will interest your target audience on your blog 6. Share content from your blog to your Facebook or LinkedIn page 7. Apart from original content relating to your industry, share curated and trending posts surrounding a theme 8. Always ask for feedback 9. Respond to comments quickly 10. Create original visual content, i.e. photographs, videos

OVERVIEW OF COMMON SOCIAL MEDIA PLATFORMS Facebook – ideal for casual engagements, brand announcements, competitions and to build a loyal fan base for brand awareness LinkedIn – suitable for creating thought leadership on industry issues

Twitter – good for engaging and following industry leaders and top influencers Instagram – ideal for retailers, F&B outlets, etc. where the product or service has rich visual appeal Pinterest – great for creating visual boards surrounding a particular theme and for keyword tagging to help in search engine rankings SlideShare – ideal for keyword tagging as well as creating thought leadership

Interview with Davidson Abishegam, CEO & Founder of KCOM Academy Pinterest and SlideShare as well. We are also moving towards creating the KCOM Academy blog as the focal point of our SM strategy.

What kind of contents do you post?

When we first embarked on SM marketing, we were mainly sharing curated content from the web to gauge the online behaviour of our target audience. However, now we have steadily grown to include more original content, created by KCOM Academy.

Davidson Abishegam (seated, middle)

KCOM Management Sdn Bhd was established in 2003 as a corporate training provider. It organises more than 40 workshops locally and internationally for listed companies, government organisations, as well as SMEs. In 2014, they launched their flagship brand, KCOM Academy, as a springboard for potential blended learning opportunities using the digital platform. Davidson Abishegam, CEO and Founder of KCOM Academy shares his thoughts with Malaysia Retailer on the company’s journey with social media as a service provider for the B2B market.

on Social Media (SM) for KCOM Academy at the first quarter of 2014.

Why did you do it?

To be honest, it was firstly more of hype than anything else. But after careful study of the market, I have come to realise that this is the future of online marketing. SM will help us reach potential customers that we didn’t know existed. And as with anything else online – you have a global market base where anybody from any part of the world can be a follower or customer. It was also fairly inexpensive and not very hard to do.

Are you managing your social media internally or have you outsourced management? We have outsourced content creation and management of our SM marketing to an independent consultant.

What social media platforms are you using and how frequently do you post content on it? Malaysia Retailer: When did you embark on social media for KCOM Academy? Davidson Abishegam: We embarked

We first started on Facebook and LinkedIn but as we developed our SM strategy according to how our target audience was responding, we are now creating a presence on Twitter, Google+,

Do you see any positive impact in terms of brand awareness, revenue & engagement with your target audience?

Definitely. The more visible and consistent we are on SM, the better the brand is known to followers. This in turn increases sales and revenue with our target audience. As SM becomes a platform for a total online marketing solution, customers become more engaged with us “personally” because they now have an avenue where they can connect with us, and this in turn helps build a relationship with them. It does not happen overnight though. It done right, this positive impact can be seen after a few months.

Are you planning to increase your presence/investment in social media? Why?

Yes. I believe it will help improve market share and also to stay ahead of the competition. The more connected you are with the customer, the more engagement you are going to get and this in turn helps build your brand. There are also constantly new technologies and platforms being introduced for SM and moving with these technologies would be the right thing to do in order to stay ahead, especially with platforms that really adds value to the customer (e.g. Slideshare).

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New memberS

AIA Bhd. AIA Bhd. is a leading insurer in Malaysia, where we have been privileged to do business since 1948. We offer a suite of high-quality products including Protection, Health, Personal Accident, General Insurance, Employee Benefits, Retirement and Family Takaful solutions to meet our customers’ protection and financial security needs at every life stage. Through our wide and diverse distribution footprint which comprises a 16,000-strong Life Planner force, our exclusive bank partner’s branches nationwide as well as corporate sales teams and brokers, we give our customers the choice of deciding how, when and where they connect with us. Part of the AIA Group, the largest independent publicly listed pan-Asian life insurance group, AIA Bhd. has the financial strength, experience, service centre network and a well-trained team of more than 2,000 staff to serve our 3 million customers nationwide. As at end 2014, AIA Bhd.’s total asset worth was RM46 billion, with a paid-up capital of RM767 million.

Lovy Pharmacy At Lovy Pharmacy, we think out-of-the box to approach health differently. Our focus is pivoted on value-added pharmacy health services, provision of professional information on medicines and supplements to the public, and pharmacy convenience. Our culture encourages the public to seek pharmacist consultation regarding their health and medicines. How do we do it? We work together and synergise with our diversified team of healthcare professionals at BP Diagnostic Centre. Leveraging on the advancement of technology to meet the health needs of a hectic society, you can enjoy online pharmacy shopping with free delivery, pharmacist consultation through webcam, drop an enquiry with “Ask Our Pharmacist” tool and drive-thru pharmacy. Our focus this year will be on providing education on nutritional aspects of food and behavioural aspects of eating. Inspired by the needs of our customers, we have tailored a range of supplements to address specific nutritional needs of our population. 34

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Jaben Audio (M) Sdn Bhd “The little headphone store” is Jaben’s slogan and philosophy as we work towards equipping ourselves to offer everything audiophiles need. Jaben was founded in 2006 and has expanded to a total of 26 stores throughout Southeast Asia. We provide both auditioning set-up and professional advice to our customers and allow them to try out and decide what is best for them. We look forward to expanding and sharing our passion for sound and music.

Munchworld Marketing Sdn Bhd Munchy’s was established in Malaysia in 1991 with a mission of providing fun, cheeky, yummylicious, and affordable biscuits and snacks for everybody around the world. Headquartered in Malaysia, Munchy’s manufacturing plants are located in Johor, Malaysia; Shandong, China and soon in Bogor, Indonesia. Lauded as Malaysia’s No.1 homegrown biscuit brand*, Munchy’s is renowned for its expertise in producing all sorts of delicious biscuits, crackers and wafers. It proudly holds number one** industry positions in the oat-based biscuit, wafer bar, and assortment biscuit segments, both in terms of volume and value. Munchy’s range of product portfolio includes Oat Krunch, Lexus, Munchy’s, Muzic and Captain Munch. In 2011, Munchy’s acquired Kellogg’s biscuit business in Shandong, China. Munchy’s is now the second largest biscuit business in the province. Munchy’s products are distributed to more than 50 countries worldwide. * & ** Source: Nielsen Retail Index Corporate Value Share, MAT June 2014

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VSMS Sdn Bhd V, as VSMS since 2005, offers award-winning and futuristic designs which are practical yet simple, for exhibitions, interior and advertising display industries. Being cost-effective and innovative has enabled us to provide our services and expertise across the globe. For every project that we undertake, we make every effort to comply with the timeline given. Backed by our talented inhouse production team, quality is emphasised, and all agreed designs are built for inspection prior to delivery to eliminate any quality issues. The BUILD RESPONSIBLY campaign is our utmost effort in maximising the efficiency of our in-house production to reduce carbon footprint by working tirelessly on professional training, ever continuous improvements and professional knowledge sharing to ensure a sustainable future in the fields of exhibition, retail interior and advertising display. Our most important assets are our customersâ&#x20AC;&#x2122; trust and confidence in our abilities to bring their ideas and visions into reality!

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EventS

MRCA Meetings

18th Annual General Meeting

April Monthly Meeting

May Monthly Meeting

MRCA’s 18th AGM was held on 26th March 2015 at the MRCA Secretariat Office, Sky Park One City, Subang Jaya.

MRCA’s April Monthly Meeting was hosted by Maxis Berhad at its premises on 27th April 2015. Ninety-six MRCA member representatives were present at the meeting.

On 20th May 2015, Samsung (Malaysia) Electronics (SME) Sdn Bhd played host to MRCA’s May monthly meeting at the company’s premises, which was attended by 97 MRCA member representatives.

MRCA Academy Seminar Series

MRCA Youth Networking Event: Blue Ocean Strategy Renowned speaker Professor Dato Dr. Dominic Lau Hoe Chai generously shared his knowledge on “Why soak in the bloody red ocean fighting with countless competitors?” and offered some invaluable tips on how to “Discover a new realm of business opportunity in the uncharted Blue Ocean” on 14th April 2015. Admittance was free for MRCA Youth members and RM50 for non-members.

Seminar 1: Visual Merchandising Presentation - The Silent Sales Person Held on 15th April 2015 at the MRCA Secretariat, this seminar was presented by En. Nasron Abd Rahman.

Seminar 3: Volume 1 HR Challenges in Retail Sector

Seminar 2: Maximising Performance via Inventory Management Strategy Seventy-four MRCA members attended this informative seminar with speaker Ms. Wong Siew Fong on 29th April 2015 at the MRCA Secretariat. 38

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Part 1 of this seminar was held on 22nd May 2015. RetailCOACH speakers Mr. Jason Teh and Mr. Vincent spoke on “Employers’ Branding” and “Defining Online Goals and Budget for Digital Marketing Strategy (How Good is Your Company in the Job Market)” respectively.

From left: Ng Ti Kheng (Sato Auto-ID Malaysia Sdn Bhd), Roys Tan (Adverasia Sdn Bhd), Dato Dr. Edmund Lee, Chief of MRCA Youth (Myortho Rehab Sdn Bhd), Dato Choi Wei Yee (Sunlight Taxi Sdn Bhd), Prof. Dato Dr. Dominic Lau (SQC Consulting Group), Estee Leong (Beauty Majesty Sdn Bhd), Ong Kim Hwa (Goldsoft Sdn Bhd), Sam Rye (TYK Agency), Calvin Lim (Myzsm Sdn Bhd), Ms Tan (Myzsm Sdn Bhd).

MRCA Charity Mount Kinabalu Climb 2015 Once more, MRCA members have made it to the top of Mount Kinabalu on their fourth Charity Climb and contributed towards MRCA’s charity donation objective! MRCA President Dato’ Liaw Choon Liang led a group of 16 members at MRCA’s Mount Kinabalu Charity Climb from 30th March to 2nd April 2015. The objective of this mission trip was to plant the MRCA flag with its’ Members logos on the peak of the mountain. It is also Dato’ Liaw Choon Liang’s way of encouraging members to embrace a fitness health lifestyle. In addition, in continuing their passion towards corporate social responsibility and giving back to the needy, MRCA member trip participants made charitable contributions. A donation of RM10,000 was made to Seri Mengasih Centre, RM2,000 for Rumah Bukit Harapan and a special cheque presentation was held in the centre.

Mercedes C Class CKD Preview Night

MRCA MSME Charity Golf 2015

On 24th April 2015, Hap Seng Star held a special C Class Preview Night at its Jalan Sultan Ismail Autohaus branch.

A highly anticipated event for the year – the “MRCA MALAYSIA SME (MSME) Charity Golf 2015”, was jointly organised by MRCA and MALAYSIA SME at the resplendent Kota Permai Golf & Country Club on 6th May 2015. A total of 132 elite entrepreneurs took part in the golf tournament.

From left: Mr. David Khor (Chief Operating Officer, Hap Seng Land Group), Mr. Wong Chun Keong (Dealer Principal, Kinrara Autohaus, Hap Seng Star), Mr. Sunny Tan Boon Teck (National Sales Operations Advisor, Hap Seng Star) and Mr. Wilson Wong Wai Loon (Dealer Principal, Jalan Sultan Ismail Autohaus, Hap Seng Star)

Meanwhile, Dato’ CL Liaw, President of MRCA stated that the main objective of the “MRCA MSME Charity Golf 2015” was to raise RM100,000 in cash donations, with SEGi University & Colleges committed to fund an additional RM200,000. The funds raised will be used to offer the staffs and family members of the MRCA and MALAYSIA SME community scholarships at SEGi University & Colleges. In his speech, he also thanked all the sponsors for their generous contributions. Vo l 3 N o 2 M A L AY S I A R E TA I L E R

EventS

Introducing MRCA’s First Retail, Franchise & Licensing Fair 2016

Opening ceremony by VIPs, from left: Mr. Robin Lim (Ashley VP Sales - Asia), Datuk Seri Nelson Kwok (Executive Director), Tan Sri Barry Goh (Corporate Advisor), Dato’ Liaw Choon Liang (MRCA President), Mr. Ching Kok Cheong (Managing Director), and Mr. Yu Kong Cing (CEO of Hauslife)

From left: Mr. William Chow, Datuk Henry Yip, Datuk Albert Chiang, Datuk Seri Nelson Kwok, Dato’ CL Liaw, Mr. Liew Bin, Dato’ Garry Chua, Ms. Shirley Tay, Dato’ Choi Wei Yee, Mr. Terry Lee and Mr. Ricky Thye

The MRCA will be hosting its first ever Malaysia International Retail, Franchise & Licensing Fair 2016 (MIRF 2016) at the Mid Valley Exhibition Centre (MVEC), Kuala Lumpur, from 3rd March 2016 to 6th March 2016. Being the sole and largest retail, franchise and licensing fair to be organised in Malaysia, MIRF 2016 aims to attract more than 30,000 visitors and 250 exhibitors across Asia, with the intention to create an interactive platform for international business collaborations and opportunities. For those who are interested to take part in the event, the raw and standard booths will cost RM4,800 and RM5,000 for MRCA members while for non-members, it will be priced at RM5,800 and RM6,000 respectively. For more information about the event, you may contact 03-5882 4333 or visit the official website at www.mirf.my or email to mrca.secretariat@gmail.com.

Grand Opening of World’s Leading Furniture Store Outlet in Malaysia Ashley Furniture Homestore, the world’s leading furniture store brand, celebrated the opening of its maiden store in Malaysia on 15th June 2015. Located at Citta Mall, a contemporary lifestyle-oriented shopping mall in Klang Valley, it is the first outlet outside of the United States to feature the brand’s latest store layouts and designs. From dining and bedroom sets to rugs and accent pillows, it is the ultimate shopping destination for home improvements in Malaysia. The licensee and operator of the 800-sqm outlet in Malaysia is Hauslife Furniture Sdn Bhd, a local furniture expert that specialises in producing high quality and affordable goods. Ashley Furniture HomeStore is currently the #1 selling furniture store brand in the world, with more than 550 outlets internationally. Celebrating its 70th anniversary this year since its inception in 1945 in Chicago, the retailer is an exclusive provider of furniture from Ashley Furniture Industries, Inc., the largest furniture manufacturer in North America and one of the largest in the world.

Best Foot Forward: Grand Opening of MyORTHO Care Mediplex Outlet 20th May 2015 was a memorable day for Dato’ Dr. Edmund Lee, founder and group CEO of MyORTHO Care, and his team as they launched their second outlet at the Mediplex in Subang Jaya Medical Centre (SJMC). Several popular local celebrities such as Vanidah Imran and Raja Atilia graced the event, while Julie Woon played host.

From left: Raja Atilia, Dato’ Dr. Edmund Lee, Datin Emily Lee, Vanidah Imran and Julie Woon.

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Following Dr. Lee’s speech, a brief Q&A session was held to shed some light on the common foot problems that Malaysians face but tend to overlook, which can be treated at MyORTHO Care centres. Customers are welcomed to visit the new MyORTHO Care at: Lot 5 Ground Floor Mediplex , Subang Jaya Medical Centre. For more information, please log on www.myortho.com.my.

MRCA Nepal Earthquake Disaster Relief MRCA urges every member of the community to stretch out a helping hand to victims of the catastrophic double Nepal earthquake disaster (7.8 and 7.3 on the Richter scale on 25th April 2015 and 12th May 2015 respectively) which has killed more than 8,500 people, injured more than 21,000 people and destroyed over 400,000 homes. As the leading retail chain association in Malaysia, the MRCA has taken immediate initiatives to help those affected by this disaster. Current MRCA President Dato’ Liaw Choon Liang said, “We are raising funds mainly to provide medical relief and shelter to those affected, with hope of contributing timely assistance to the survivors. We encourage more donors to come along side to contribute to our foundation, namely the MRCA Branding Education Charity Foundation, with 100% of the proceeds channelled for Nepal relief works. We thank our members for their gracious heart in giving to this honourable cause.” In the first initiative on 3rd May 2015, MRCA sponsored medical supplies of RM31,429.57 and sent a team of six medical staff co-sponsored by Dato’ Loh (RM12,000 cash for ground expenses) and Dato’ KK Chai (RM22,000 air plane tickets). The medical team was led by Mr Ravichandran Tharumalingam from Global Expedition Club Malaysia (GECM) and local NGO Nepal Migrant Unity

Distribution of MRCA shelters for 750 earthquake survivors in remote village Judigaun Kavre, 3 hours outside capital Kathmandu

Network (NeMUN) to treat over 1,000 villagers in Sidhupalchowk and Kavre South Lalitpur. In the second MRCA initiative on the third week of May 2015, the MRCA and Dato’ Loh jointly procured and sent one tonne of shelters. It was successfully rolled-out to 1,500 earthquake survivors in Kavre (3 hours away from Kathmandu) and in earthquake epicentre Gorkha (7 hours away from Kathmandu) which was headed by Dato’ Loh on the ground in Nepal. Dato’ Loh has procured Cziplee Group Malaysia to sponsor 200 schoolbags and kits worth RM20,000 to Shree Sharada Secondary School in Gorkha. MRCA Foundation funded the freight and transportation logistics, and topped up another 70 pieces of schoolbags, thus benefitting over 270 remote school children back to school drive in Gorkha. To date, the MRCA Foundation has funded medical aid to over 1,000 villagers, provided shelters for over 1,500 people and helped over 1,000 school children in remote areas get back to schools. These various initiatives have covered more than 1,000 km in ground travel logistics. MRCA’s members and partners have graciously stepped up to contribute to the MRCA

Distribution of MRCA shelters for another 750 earthquake survivors in remote area Gorkha earthquake epicentre, 7 hours outside capital Kathmandu

Branding Education Charity Foundation and to date, have succeeded to raise in total RM227,438 cash directly and RM62,500 cash indirectly and in kind for the MRCA Nepal Earthquake Disaster Relief. For those who are keen to help together, be it through company or personal donation, our bank details are as follows: UOB Bank Account: 174 303 339 1 “MRCA Branding Education Charity Foundation”. For further enquiries, please contact the MRCA Secretariat Office at 03-5882 4333. Vo l 3 N o 2 M A L AY S I A R E TA I L E R

COMPRISING MORE THAN 280 LEADING RETAIL BRANDS & COVERING MORE THAN 20,000 OUTLETS IN MALAYSIA

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GST Compliant

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On The Cover

E-tailing Treat or Threat? The emergence of e-tailing (electronic retailing) has transformed the entire retail landscape in a major way. But how is this affecting the retail players, both online and offline? Will e-tailing complement or cannibalise brick-and-mortar retail businesses? By Samuel Ngeow

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elcome to the 21st century, where the advancement of technology and internet has facilitated our daily lives. No longer do we have to bear with the primitive postal systems and limited internet connectivity. Today, searching for information is a breeze and interactions are made much easier with the existence of websites such as Google, MSN, Facebook, and Twitter. Even business transactions are going through the wires, with online trading and banking becoming increasingly indispensable due to the ease of transactions and lower costs.

50% credit and debit card penetration rates and the availability of comprehensive logistic and delivery systems.” He continues, “The Malaysian government also strongly advocates the growth of the e-commerce industry. For instance, Multimedia Development Corporation (MDeC) is working closely with e-commerce and IT players to provide businesses with various incentives and trainings to promote the pervasive use of e-commerce and online retailing.”

Emergence of Online Behemoths

With the emergence of multi-billion dollars e-commerce giants such as eBay, Amazon and Alibaba, the barriers of entry to online retailing have been shattered. These web portals are not just convenient online trading platforms but they are also vital marketing channels in helping businesses to promote and distribute their goods and services. In Malaysia, e-tailing is gaining popularity with the introduction of websites such as Lelong, Lazada and 11street. Simple and yet affordable, these virtual marketplaces provides a quick and easy approach to venture into the online retailing business.

11street: The Online Marketplace with a Taste of Kimchi 11street was first established in Korea by e-commerce service provider SK Planet. Since its inception in 2008, the pioneering online shopping platform has grown tremendously to become one of the largest and most popular online marketplaces in Korea. Launched in April 2015, 11street in Malaysia is hosted by Celcom Planet Sdn Bhd, which is a joint venture between Celcom Axiata Berhad and SK Planet. It is the latest online marketplace that offers an optimised merchandising ecosystem and various training programmes to promote and support the growth of e-tailing in Malaysia. From Fashion, Electronics, Groceries, Health & Beauty, Kids & Baby, Leisure & Sports, Home & Living and Books & Services to deal offerings such as E-vouchers, you can search for almost anything through this online web portal.

Embracing E-tailing

According to Hoseok Kim, CEO of 11street, the Malaysian online retail market is driven by many factors. “Firstly, Malaysia is equipped with three key infrastructures to boost the e-commerce market. This includes a high level of internet connectivity with more than 70% of the population either subscribed to fixed internet lines or data plans, a mature payment landscape with over

Hoseok Kim

The Merits of E-tailing

There are many benefits that e-tailing can offer retailers. Kim explains that by having an online business presence, traditional brick-and-mortar retailers can overcome any geographic challenges in terms of access to markets. In addition, they are able to rationalise their business processes which could improve their business efficiencies and reduce operating costs. “Based on the feedback garnered from our sellers, e-tailing will help retailers to stay on the cutting edge of competition and to develop efficacious business strategies. More importantly, retailers will have the opportunity to access a wider pool of buyers, adopt new business practices and change the ways they interact with their buyers in the marketplace,” he explains. Vo l 3 N o 2 M A L AY S I A R E TA I L E R

On The Cover

He continues, “Against such a backdrop, education will be a very crucial element to foster and support the Malaysian e-commerce ecosystem. By setting up Seller Zone, we demonstrate our desire and commitment in nurturing and developing the Malaysian e-tailing community. We hope the other major e-commerce players will do the same as well.”

Overcoming Obstacles & Challenges

The journey into the online business is one filled with many hazards and treacheries. To begin with, many of the local retailers are clueless when setting up their own websites and payment gateways. Apart from that, they are having a torrid time trying to convince people to buy from them due to lack of trust and brand awareness. With limited marketing budgets and capabilities, most of them are also failing to market their online businesses effectively.

E-commerce: Expanding or Fading?

According to 11street’s latest internal research study, the Malaysian e-commerce market account for less than 2% of the total local retail market. Compared to more technologically established countries such as Korea, Japan and the US, the local e-tailing industry is very small. Nevertheless, Kim is expecting the industry to develop swiftly at a double-digit compounded annual growth rate (CAGR). “Presently, more than one-third of Malaysians have made online purchases through their mobile devices. In line with the rapid growth of tablet and smartphone users, more Malaysians will start adopting e-commerce in their daily business transactions. On top of that, the voracious users of social media are promoting the usage of e-commerce as well,” he reveals.

Top Online Transactions

According to Kim, the top categories for online spending are #1 Airline tickets, #2 General Insurance, #3 Fashion and Accessories, #4 Books and #5 Computer Hardware. Meanwhile, the most popular items purchased online are clothing. Although other segments such as sports equipment, groceries, and services are not in the top tier list, sellers are advised not to overlook the rising opportunities within those segments.

Venturing & Nurturing E-tailing

“Today, more and more entrepreneurs are seeking new opportunities in the local e-commerce market. Although the industry is still very young, we see it expanding by 400% in ten years’ time. By 2025, at least a quarter of the local retailers will have their own online presence,” Kim predicts. 46

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To overcome these challenges, Kim advices retailers to work together with e-commerce providers such as 11street and Lelong.my because these web hosting companies can provide them with an optimised end-to-end platform to start their online businesses with. “By leveraging on these electronic marketing channels, retailers can build a high level of trust around their products and services very quickly. This in turn, improves the confidence and trust levels among the buyers. Simultaneously, retailers are able to attract more visitors to their online stores at a lower cost due to a higher volume of traffic.”

Lelong.my: The Locals’ Favourite Virtual Auction House Lelong.my is the premier auction and e-commerce website in Malaysia, providing an affordable and robust avenue for e-tailing. Debuting in 1998, the web portal has a similar style and function as eBay, an international online auction site. Unlike others, Lelong. my incorporates some local flavours into its trading platform, providing a sense of belonging for its members and visitors. Today, it is the leading e-commerce site in Malaysia with more than 7 million visitors per month. Richard Tan, co-founder of the web portal explains that Lelong.my was originally a forum for people to trade used computer hardware and accessories. However, people quickly began to post different types of products and services in the forum, some of which are brand new. Due to the surging popularity of the website, Lelong. my re-invented itself from being a secondary product forum to become an online trading platform providing Consumer-toConsumer (C2C) transactions. Currently, it is progressing towards becoming a channel for Business-to-Consumer (B2C) dealings because of the growing importance of e-tailing.

retailers shy away from exploring e-tailing because of the weak demand from the local community, mainly due to lack of exposure, knowledge and trust.

Richard Tan

A Useful Marketing & Distribution Tool at Your Disposal

Lelong.my is an excellent advertising platform for retailers, according to Tan. Firstly, you can feature your products and services at their homepage. By doing so, you are increasing the visibility of your brand and electronic store. Together with its strong team of marketing experts, Lelong.my can help you boost your internet sales. For instance, Lelong.my regularly conducts online shopping events such as Black Friday sales and Boxing Day sales to entice people to browse and spend at their website. Alternatively, you may choose to launch your own advertisement and promotional (A&P) activities but it could be very costly and ineffective.

Personalising & Popularising Your Brand

“At Lelong, we allow you to personalise your own brand and online store. How you create your own identity is entirely up to you. With our tools and assistance, we will help you create a reputable brand so that people will start engaging with you and promoting your products. More importantly, by joining the Lelong ecosystem, you can benefit from our huge user traffics. We recorded the largest number of online transactions in Malaysia with over 7 million visitors per month,” Tan reveals. “Over the years, we have enlisted many successful members and one of them is Max Audio. They began as a username selling audio and car accessories, but today, they have become a highly prominent brand in the e-commerce scene. DirectD is another fine example. They became one of our members and are well known for selling the most affordable mobile devices in the market. Due to their phenomenal commercial success, they have recently opened a megastore in Petaling Jaya,” he continues.

From Online to Offline

Presently, most retail sales are carried out via offline transactions. Online sales, Tan reiterates, only account for 1-3% of the RM96 billion retail volume in Malaysia. Hence, many brick-and-mortar

According to Tan, Lelong.my are themselves venturing into the offline business by setting up their own physical outlets. “Why do you only sell your goods and services through a single sales channel when you can have the best of both worlds? Despite the fact that online sales are not encouraging, you need to have an online presence because people might want to research and browse your goods through the internet. Besides that, you must also have a physical presence because it will significantly boost your sales revenue.”

Others are Following Suit

Recently, there was another major local e-commerce player that started moving offline. They are Zalora and the launch of their first physical pop-up store in Johor Bahru’s City Square Mall on June 25, 2014 has officially marked their entrance into the brickand-mortar industry. Since then, they have continued with their expansion spree by setting up their second outlet in CityOne Megamall, Kuching and their third outlet in 1Borneo Hypermall, Kota Kinabalu. Having achieved their objective of conquering the whole of East Malaysia, they have shifted back their focus to Peninsular Malaysia by opening their latest store in Mitsui Outlet Park, KLIA Sepang. An excellent example of how a pure online player can become a powerful and successful offline player, Zalora is truly a force to be reckoned with. If you think local online players are the only ones moving offline, think again. At the global level, international juggernauts such as Google and Amazon are opening their very own physical stores as well, destroying the traditional barriers between offline and online retailing. These business titans are now targeting a new group of consumers called “Omni-channel shoppers”, which have emerged due to the advancement of technology. These shoppers are techsavvy, demanding and more sophisticated than the traditional shoppers and will make up the bulk of retail shoppers in the future.

Amalgamation of Offline & Online Businesses

Having perused through the examples above, it is evident that many of the pure online players are moving offline because they realise the importance of having more than a single source of sales revenue to be successful. The same goes to the offline retailers as many of them are now venturing into the e-tailing business to exploit the huge potential of the untapped market. Hence, we are now witnessing the consolidation of offline and online businesses, resulting in an entire new type of business strategy called “multichannel retailing”.

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On The Cover

Going Online as a Traditional Brick-and-Mortar Retailer

just a click of a button, saving yourself from the hassle of carrying your own groceries using our own swift delivery services.”

Many traditional brick-and-mortar retailers have realised the importance of e-tailing and are encouraging online sales transactions. According to Daniel Ruppert, founder and managing director of Presto Malaysia, internet retailing is on the rise and fast becoming very influential. “E-commerce will never be a direct replacement to physical shopping but it will be another significant sales channel. Right now, more and more retailers are going online. Thus, if you do not wish to be left behind, you must have an online presence. Although there might be some niche retailers who can afford to be a pure offline player, nevertheless, nobody can deny that e-commerce will play a major role in future as it provides you with the opportunity to penetrate into areas where you don’t have a physical store, without incurring much costs.

E-Commerce: Opportunities & Risks

Ruppert views e-commerce as an opportunity to grow their business in the grocery segment, albeit in a very challenging manner. “Online grocery, based on my opinion, is the most difficult e-commerce business to venture into, because of the fulfilment problems. For instance, when you sell something in Lelong such as a toaster or an electronic gadget, your goods can be easily delivered to the buyer because you can choose to outsource the fulfilment job to the courier companies. In our case, we can’t do that. This is because when our customer orders a premium ice-cream for example, it has to be freshly delivered to their doorsteps. That means we must customise our own unique logistic systems which could be very complex and costly due to the uncertainties in traffic and weather,” he says. On the other hand, online grocery is the easiest business to execute, in terms of sales. Ruppert explains, “Firstly, how often do you buy a toaster compared to a loaf of bread? When it comes to groceries, you are a repeat customer. This is because you have to replenish your supplies when they are low, which could be weekly or monthly. While some may consider it as opportunity to go shopping, others think of it more as a chore than a choice. Due to this particular reason, internet shopping has become very appealing to them.”

Traditional Grocery Shopping is Now Moving Online

Daniel Ruppert

Big Things Come in Small Packages

Presto Grocer is a locally based supermarket chain located in the Klang Valley. Similar to their counterparts such as Jaya Grocer or Village Grocer, they are a premium supermarket focusing on midto high-income earners. “Currently, we have a total of four outlets including an online store, which mainly serves the Klang Valley population. Our aim is to deliver an unforgettable urban shopping experience to our customers by providing them with a variety of high quality and freshly produced goods and services, from Malaysia and imported,” Ruppert proudly explains. Ruppert resumes by saying that Presto aims to be Malaysia’s top grocer in terms of innovation, service and value. “We always try to be at the forefront of any innovative new technologies so that we would have a richer, more meaningful and interactive grocery shopping environment. Through our online supermarket, you can browse through and purchase our fresh food and merchandise with 48

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The local e-tailing industry is it still quite far behind compared to other more developed countries, with less than 1% of groceries being purchased online. While e-commerce may not be very popular in Malaysia, the total online retail market is very huge with an estimated value of more than £40 billion in the UK where, according to Ruppert, e-commerce is fairly dominant with almost a quarter of all typical grocery shopping transacted electronically. This is due to the fact that public transportation is widely used in the country, making traditional grocery shopping very inconvenient and unpleasant. “You wouldn’t want to do your weekly shopping and go through the subways with all your bags and merchandise.” He also mentions that big players like Tesco have seized the chance to exploit the market by venturing into the online business very early on. Today, because of the first-mover advantage, they are the largest online grocery retailer in the UK. Soon after, other players such as Ocado began joining the industry to get a slice of the pie. “It took Ocado quite some time to be profitable but they have proved that it is not impossible to become a pure online player.”

Going Online Now, Later or Never?

Ruppert says that not all brick-and-mortar retailers are so enthusiastic about going online. Pure offline players will always exist to a point where they will have to decide, whether or not, they want to venture into the e-tailing business. Tesco for example, are

facing this problem where they have too much real estate on the ground and are thinking about closing some of their stores due to the increasing influence of internet shopping. “The shift is not only happening in the UK but also in other parts of Europe and the world as well. However, for it to happen in Malaysia, I think it will take a while. Right now, it is the complete opposite. Our competitors are mushrooming like crazy in terms of physical stores,” he observes.

Growing Influence of E-tailing

The online market is still very young in Southeast Asia but it is growing and faring much better than other places in the world, in terms of grocery retail. Retailers should therefore be relieved and motivated to commence their online business within the region. Ruppert foresees that e-commerce will be of great assistance to them in the long run. “Right now, online sales are much weaker than physical sales. However, going into the future, e-commerce will help retailers to penetrate into their rival’s market and provide them with an extra competitive edge by having a greater brand reach and circle of influence,” he predicts.

Jumping onto the E-commerce Bandwagon According to Euromonitor, an international research house, the Malaysian internet retailing is expected to record a constant CAGR of 10% from 2015 to 2018. “Based on our research report, the local e-commerce industry registered a stronger growth value in 2013/2014 as it gained popularity among consumers for its convenience. By going online, consumers can shop at their own leisure time and do not have to worry about the stores’ operating hours. Besides that, their demand for individualism also saw them favouring internet retailing as they can easily search for their preferred brands and products. Meanwhile, some of them also considered using e-commerce because of significant price savings.”

The Locals are Becoming More Tech-Savvy

As Malaysia progresses, so does its internet connectivity. Euromonitor states that during 2013/2014, the local broadband penetration rate was more than 67%, making it one of the highest in the ASEAN region. According to the research house, the government is keen in increasing the local internet usage because it will spur the country’s economic growth and competitiveness. At the same time, smartphone and tablet usage in Malaysia has vastly improved with penetration rates of more than 63% and 39% respectively. In this regard, Euromonitor believes that the local e-tailing industry will gain further prominence as it is becoming easier for consumers to browse and buy items on-the-go with their computers or handheld peripherals.

Time to Offer Online Shopping Services

Realising consumers’ developing interest in online retailing, the

research house says that the number of local brick-and-mortar retailers providing e-tailing services is increasing. Tesco Stores (Malaysia) Sdn Bhd is one of them as it offers an electronic trading platform that allows people to buy various groceries and fresh items through the internet. Other retailers such as Parkson and Presto are also continuously updating their websites to deliver better shopping experiences to their online users.

The Future of E-commerce

Euromonitor believes that the e-commerce industry will continue to expand for the foreseeable future. Many consumers, according to them, will continue to favour internet retailing for its convenience and the ability to purchase products that are not present in Malaysia. As the competition in e-commerce becomes more intense due to more players entering the environment, they state that it would be essential for the e-commerce players to differentiate themselves and to ease their consumers’ shopping process by offering valueadded services such as click-and-collect for product returns.

Two Channels are Better than One

The evolution of technology has created an entirely new business model called “clicks for bricks”. The battle for market supremacy will not only be fought in a single arena, but across multiple platforms. In the future, businesses that just rely on a single type of sales channel and fail to progress together with technology will become obsolete as consumers are becoming increasingly sophisticated and demanding. Therefore, e-tailing will definitely play a major role in the dawn of this new business era, together with traditional brick-and-mortar retailing. Together, they will form a new hybrid business strategy called “multi-channel retailing” that will ensure the growth and survivability of a business empire. Vo l 3 N o 2 M A L AY S I A R E TA I L E R

On The Shelf

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Lean & Mean

Eat Your Way to Good Health

As the saying goes “We are what we eat.” So, the key to being healthy is to be selective on what we consume. Malaysia Retailer takes a closer look at what healthy food intake is all about and also the types of healthy diets. By Tan Sher Lynn

aintaining good health requires a three-pronged approach eating well, exercising regularly and leading a healthy lifestyle. When it comes to eating healthily, there are basically two simple rules to remember: #1 – Eat foods that are good for you, and #2 – Avoid foods that are bad for you.

Rule #1 Eat Foods that are Good for You

Foods that are beneficial to you can be categorised into a few classes as follows: Protein Sources Meat such as lamb, beef or chicken provides you protein, the building blocks of your body. If you’re a meat eater, opt for beef, lamb or chicken that have been naturally fed (grass feed and free range), as they are a healthier option. If you’re a vegetarian, you can opt for plant-based protein sources such as tofu or lentils. Fruits and Vegetables Fruits and vegetables are rich in fibre, vitamins and antioxidants that are essential for keeping your body healthy and reducing your risk of certain diseases such as cardiovascular diseases and obesity. Fibre also ensures smooth bowel movement and a healthy gut. 52

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Dairy When eaten in moderation, natural and full-fat dairy is a good source of healthy fats. Healthy fats are a major fuel source for your body and can aid in nutrient absorption — especially antioxidants and vitamins A, D, E and K. Milk, cheese and yoghurt are also rich in calcium, which is crucial for strong bones and teeth. Grains Grains such as rice, bread and cereals give you energy. However, it is important for you to be mindful of the amount of grains you consume in a day, as they are generally high in carbohydrates. Also, it is best to avoid refined grains and consume healthier ones, such as whole wheat bread, oatmeal and barley.

Rule #2 Avoid Foods that are Bad for You

A word of caution, the foods that fall under this category can also be found in some of your favourite snacks. It’s best to avoid them or take them only as occasional treats. Sugar Many types of foods that you’ll find on

supermarket shelves contain added sugar. It is best to avoid sugar-laden food as they can cause diabetes, cardiovascular diseases and obesity. Sugar can also come ‘disguised’ under other names such as corn syrup, glucose, fructose and sucrose. Artificial Sweeteners Artificial sweeteners are no better than sugar! Despite being calorie-free, some studies have shown that there is a link between artificial sweeteners and certain types of diseases, such as obesity, heart diseases and possibly cancer. If you must have a sweetener in your beverage, opt for natural ones such as stevia or honey. Processed Foods Sure, processed foods such as nuggets, sausages and biscuits are convenient and taste great. But they also contain lower amounts of protein or fibre, higher amounts of preservatives and very high levels of sodium. If you read the labels of processed foods, you’ll realise that almost all of them contain synthetic and artificial ingredients, which have been linked to a series of serious health issues including obesity, cancer and diabetes.

3 Recommended Diets

Looking for a healthy eating plan? Here are some of the diets known to promote good health and vitality.

Mediterranean Diet A typical Mediterranean platter contains lots of legumes such as beans and peas, dried and fresh fruits, fish or seafood. Olive oil is used liberally in salads, and wine is commonly the beverage of choice with meals. The main source of energy-giving carbohydrates is from bread such as pita, pasta and potatoes, while nuts and seeds are the most common snacks. Dairy products such as cheese and yoghurts are also favoured, with a bewildering array served each time. The cheeses are flavourful and delectable, providing a moist and savoury touch to an otherwise dry meal. Benefits • High levels of antioxidants believed to prevent depression, cancer, heart disease, hypertension • Protects against skin cancer • Keeps the brain healthy, preventing Parkinson’s and Alzheimer’s Disease • Reduces risk of diabetes • Easier to control weight and less likely to develop obesity • Convenient and easy to prepare

Japanese Diet The Japanese are renowned for their longevity and good health well into old age. The secret to this is probably attributed to ‘shun’, a concept of eating foods that are in season and hence in their prime. For instance, springtime is symbolised by strawberries and bamboo shoots, while summer means you get to enjoy watermelon, peaches, tomatoes, Japanese cucumbers and sweet corn. Meanwhile, kinoko mushrooms, grapes, pears, persimmons, chestnuts, sanma (a kind of fish dish) and shimmai (new rice) are elements of autumn, whereas winter dishes are spinach, daikon (radish), cod and yellowtail fish. A typical meal consists of rice, miso soup and three side dishes. The main side dish is usually fish, whether raw, grilled or simmered, whereas the two side dishes are usually vegetables such as taro potatoes, radish, seaweed or pickled vegetables. All year round favourites are tofu, shitake mushrooms, prawns, soba noodles and wakame, and the most common beverage is green tea. Benefits • Low in cholesterol, fat and calories • High in fibre • Fresh and uses whole foods as ingredients • A balanced meal each time • Believed to keep internal organs, hair and reproductive system healthy • Simple ingredients good for the skin and digestive system

Vegetarian Diet People who adopt a vegetarian diet don’t consume meat, poultry, fish or seafood products. There are also strict vegetarians who don’t consume any meat by-products like milk, cheese and eggs. Vegetarian food is generally lower in fat, especially saturated fats, and much higher in fibre than animalbased foods. Hence, a vegetarian diet is generally more friendly to the heart, as shown by research findings. However, the elimination of meat and meat byproducts puts vegetarians at risk of protein and calcium deficiencies. As such, those who are on a vegetarian diet are advised to consume proteinrich vegetables like legumes, nuts, seeds and soybean, and to go for dark green vegetables such as kale, collard greens, mustard greens and broccoli. Benefits • Low in cholesterol and saturated fats which are bad for your heart • High in fibre and complex carbohydrates • High in cancer-protective phytochemicals such as flavonoids and carotenoids • Less toxins and preservatives than meat, especially organic fruits and vegetables • Gentler to the gut as it promotes better digestion • Rich in vitamins and minerals • Promotes a lower body weight • Avoids animal-to-human diseases like salmonella infection

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Lean & Mean

Superfoods for Good Health

1. Eggs Eggs are one of the best sources of protein on earth and are also inexpensive. In addition to containing all nine essential amino acids, eggs are loaded with nutrients, especially egg yolks that contain choline, which help protect heart and brain functions and prevent cholesterol and fat from accumulating in the liver.

2. Dark Chocolate Good news for chocolate lovers! Dark chocolate is rich in flavonoids, antioxidants that have been shown to lower blood pressure and improve blood flow. Choose chocolate that is at least 70% cacao or cocoa to optimise its antioxidant power and health benefits.

3. Nuts Walnuts, hazelnuts, pecans, and pistachios are found to have the highest amounts of unsaturated fats and lowest amounts of saturated fats. They’re also rich in fibre and antioxidants. Just make sure the nuts you eat aren’t salted or coated with sugar.

4. Apples Studies suggest that those who eat an apple daily over four weeks can lower their blood cholesterol level by 40%, thanks to its flavonoids content. Apples also contain pectin, which helps fight inflammation, a known trigger of premature aging and disease.

5. Blueberries Blueberries are loaded with antioxidants which have been shown to improve vision and brain function, slow impairments in motor coordination and memory that accompany ageing, and reduce inflammation. They also have much greater anti-cancer activity than other fruits.

6. Dark Green Leafy Vegetables Dark green leafy vegetables such as spinach, kale, romaine lettuce, choy sum and kai lan are excellent sources of fibre, folate and a wide range of carotenoids such as lutein and zeaxanthin which scavenge dangerous free radicals from the body.

7. Whole Grains Whole grains are rich in fibre, vitamins, minerals, antioxidants and hundreds of natural plant compounds that protect cells from damage. Examples of whole-grain foods include wheat breads, oatmeal, corn, wild rice, rye, quinoa and buckwheat.

8. Broccoli Researchers have found that, among many cruciferous vegetables, broccoli and broccoli sprouts have the highest amount of suforaphane – a potent compound that boosts the body’s protective enzymes and flushes out cancer-causing chemicals.

9. Mushrooms Mushrooms have long been used in Asia for food as well as medicine, dating back to 100AD in China. Studies in animals have found antitumour, cholesterol-lowering, and virus-inhibiting effects in compounds of shiitake mushrooms.

10. Cold Water Fish Examples include mackerel, salmon, trout, dory and tuna. They contain beneficial omega-3 fatty acids including docosahexaenoic acid (DHA) which helps promote optimal cognitive and memory function.

Here are 10 nutrient-packed foods that will help keep you healthy and feeling great from the inside out!

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Now that you know what to eat, remember to also exercise regularly and maintain a healthy lifestyle. This includes getting enough sleep and keeping a good work-life balance. Here’s to your good health!

Industry Intelligence

Consumer Behaviour: To Buy or Not To Buy? Understanding how consumers make their purchase decisions is crucial to a retail business. Malaysia Retailer takes a deeper look into the shoppers’ psyche and interviews Barry Ooi, President of the Malaysia Research Society Malaysia for his take on the topic. By Lim Su Yee

veryone loves retail therapy. Who doesn’t? But have you ever wondered, what drives a person who earns an average salary to purchase that exclusive handmade leather Hermes Birkin bag even though the coveted item costs thousands of ringgit – way beyond his or her means? 56

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To answer this question, Malaysia Retailer managed to catch up with Barry Ooi, President of the Marketing Research Society Malaysia (MRSM) for his insights into this topic. As the leader of MRSM, Ooi certainly walks the talk. Moreover, he is also currently the Managing Director for

Potentiate Pty Limited, a data intelligence and technology company in Malaysia that has a strong foundation in market research, analytical software and sample provision.

Giving In to Peer Pressure

We speak to Ooi at his office in PJ just to get his detailed viewpoint on the subject of consumer behaviour, a topic which is pretty much relevant to everyone in society today. “There are many factors that influence a consumer’s decision. Their choices vary very much on situations such as the categories of products that they buy and the kind of channels that they buy from. This is not a simple process. It is influenced by both rational and influence factors. For example, when buying a car which is a big ticket item, consumers will be inclined to use rational factors such as price, fuel

consumption, resale value, underpinning factor and emotional fact. Many may think that a person chooses to buy a car purely based on rational factors as it is a big ticket item. But sometimes, a person may choose to purchase a particular brand of car just because their peers are buying the similar thing. For example, successful businessmen may get a C-Class Mercedes just because their business associates are driving the same expensive car,” he says with a chuckle.

Cognitive Behaviour

Consumers can be categorised into many classes according to their purchasing habits but Ooi highlights one particular behaviour. “In neuroscience, this particular behaviour is called cognitive behaviour. To simplify this concept, you just have to understand that consumers make decisions based on habitual choice. They make decisions that they are comfortable with. For example, A chooses a brand of shampoo just because her sister B uses it. This outcome has implications on marketing. Retailers will make use of this method and find a way to create a buying habit with consumers,” he explains. The key point is that cognitive behaviour is not based purely on rational decisions, but purely on emotions and habitual choices. Advertisements are more effective if they apply both rational and emotional aspects. For example, a brand “X” breakfast cereal that is promoted by advertisements as being fortified with vitamins is called rational while the imagery with a nice family setting is the emotional aspect. However, the brand will be stronger if it uses both emotional and rational elements.”

Wants and Needs

The President of MRSM goes on and explains the aspect of consumers’ wants and needs. “It should be known that a want becomes a need when this aspect is successfully played upon and created by the marketer. Many wrongly assume that certain wants are needs. A certain product could be a need. But if a there are brand choices for that product, than the alternative brand could be a want. The activities that the brand carries out also plays a leading role in creating a need or a want,” he says. Ooi

points out that there is such a thing called value. “For example, consumers want to improve their social standing. As humans, we strive to improve ourselves daily; in relationships, work and status. We want to be seen as a successful person in the eyes of others,” he explains.

Rational & Emotional Appeal

Hence, it is not surprising that people sometimes purchase things that they do not need. Ooi firmly stresses that people shouldn’t call this irrational as it is more of an emotional appeal. “Strong brands have the ability to appeal to consumers on both the rational as well as the emotional level. A brand that is purely rational is not as strong as a brand that has both rational and emotional appeal. If the brand is appealing, consumers will buy the brand. Brands that have values that are in line with consumer behaviour or attitude will also go down better,” he stresses. Ooi says that a brand will have value if people know what it stands for. For example, there are brands that focus on good health, helping you to save, being ecofriendly or sharing beautiful moments of togetherness. However, a brand’s emotional appeal needs to be consistent. Research shows that city, suburban and rural consumers make decisions based on income level, environment and lifestyle.” These three factors are the major influences on consumer behaviour. City dwellers lead a different lifestyle as they are active, hectic and emphasise on convenient methods that save time. City dwellers make their buying decisions based on innovations and trends. The pace of life in less urban areas are different. The most important factor is income, followed by affordability and choice,” says Ooi.

Online vs Offline

The differences in behaviour between online and brick-and-mortar shoppers are not clear cut and hence Ooi speaks cautiously on this topic. “Firstly, there are multiple channels of purchase and secondly but more importantly, multiple channels of information seeking. For many categories, e.g. the purchase of homes and cars, the first line of information is the internet. The consumer will tend to

check out some comparative differences first before buying. For example, if a consumer wants to buy a car. He or she will still physically go to the showroom, feel and touch the car. It is still important to have the choice to feel, touch and test drive the car of their choice. Thus, the physical channel is still an important aspect in this situation,” he says. Ooi, who has spent 14 years at market research giant Nielsen Malaysia, points out that e-commerce normally focuses a lot on apparel such as made-to-wear clothes. “E-commerce aside, consumers will still go to the offline store to check out the goods before buying them online. However, if there are only online stores, the consumers will buy items that are less risky. Pricing will be a major factor,” he elaborates in a serious tone.

The Thought Process

How a consumer’s thought process works, from the point of making the decision to buy and then making the actual purchase is something that most businesses would like to know. Without hesitation, Ooi explains that people must remember that the straight line method starts with a need. “This need could be habitual or an occasional need such as shampoo that we use to wash our hair with. Some are less frequent such as buying a house. The need of a home arises when one gets married or starts a family. These are different stages in life.” The need is to seek information and the sources are the internet, friends and relatives, etc. You can also call it word of mouth advertising. The next step is the actual purchase. People are affected by the store’s environment and availability of a product. Sometimes, some people may only want to buy a particular brand. However, if there is no stock, they will choose an alternative brand to replace the original one.

Differences between the Races

In a multiracial country such as Malaysia, it is not unusual that consumer behaviour differs among the different races. “Doing research in Malaysia is unique due to culture differences. Why is it different? The underpinning factors are the values. Different backgrounds mean different Vo l 3 N o 2 M A L AY S I A R E TA I L E R

Industry Intelligence

will need to digital way.”

promote their brands the

Additionally, a brand must ensure that its offer is relevant. For example, when talking about shampoo, what triggers the need? Is it a dandruff problem that triggers the need? The next step is to look for an effective anti-dandruff shampoo that has medical benefits. Finally, the point of purchase is the environment, such as availability and also what’s on offer at the particular moment. Barry Ooi

values. It is clear cut in Malaysia. If the item is not halal, people will not purchase, especially Muslims. Even everyday items such as shampoo and toothpaste are made halal for Muslim consumers,” he says. For retailers to capture a bigger market share among the various races, Ooi suggests that they apply a method called segmentation. “This way, retailers can understand the different groups of consumers that they are catering for, such as their preferences and values, and then offer them services based on each segmented group. Retailers cannot take a one-blanket approach. It is impossible. Multiple solutions are effective because there are purchasing differences between the races. Another effective method is to look for commonality. It helps consumers to save money and time,” he says.

The Foreign Influence

Consumers in Malaysia do differ from those overseas, although there is not much difference in certain aspects. “There are differences, but consumers are generally influenced by global changes. I say different at a certain level as consumers here have local requirements. On the other hand, there are global brands that appeal to them. One big example is handphones. In Malaysia, basically everyone is influenced by mobile phones and applications such as social media and facebook. You see, Malaysian consumers are quite open to trying new things. Our country is a place that adopts new products quite easily. There is a big influence from foreign brands and products. Malaysians are big fans of overseas entertainment such as k-pop, bollywood, and Indonesian movies. The people here are willing to be embraced and entertained. 58

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K-pop is enjoyed not only by the Chinese, but also the Malays. This presents the opportunity for Malaysian businesses to leverage on this factor,” says Ooi.

Good Times & Bad Times

Economic booms and recessions play a significant part on consumers and Ooi explains that this has to do with consumer sentiments. “If there is recession, people will be more price-conscious. In times of economic boom, consumers will spend more on luxury goods. In bad times, people will buy things more on needs and not on wants. For example, the recent GST implementation. Consumers expected that with the GST being put into effect, prices will be higher. In terms of behaviour, consumers resorted to lots of stocking up. I know of cases where some people even made their own suits to stretch the ringgit. It was hilarious,” he says with a laugh.

5 Stages of the Consumer Buying Process

There are five stages in the consumer buying process: recognition, search for information, possibility of alternative options (brand consideration), choice to purchase the product and finally, the actual purchase of the product. One will be curious to know which stage actually has the most impact. Lim laughs and continues by saying that each stage is equally important. “In each stage there are triggers. It is a challenge to understand what the triggers are. Information seeking is important and the brands must know which channels consumers use. With this, they will know where to advertise. If consumers look for information more from websites, retailers

Consumer behaviour is a strange thing that sometimes customers will purchase a product even though the price is way beyond their means and budget. Ooi says that this phenomena is based on one’s aspirations. “Peer influence is an important factor. There is no right or wrong. It is about face value and how consumers see themselves,” he opines.

Countering GST Effects

The recent implementation of the GST in Malaysia has triggered all kinds of reaction from the public, especially those from the lower income group. Ooi says that retailers can boost their sales in the current scenario by practising a method called selective promotion. “Through this method, we let the consumers know that we are trying to help them to cope in these difficult times by telling them that some of our prices are reasonable. You can understand this by thinking what the current mindset is postGST. Firstly, consumers will wait before making a purchase. Secondly, as they have just bought a lot of goods before the GST implementation, they will delay further purchases. Third and lastly, there is the saving mindset. To sum it up, based on these three aspects, how does a retailer come up with selective promotion? Eventually, people will get used to paying GST. Right now, consumers are still uncomfortable as this concept is new. The sentiments will change with time. While waiting for consumers to get used to a new habit, retailers have to act fast and do something,” he stresses. Based on consumer behaviour, Ooi offers a few useful tips on how retailers can attract visitors to their shops and increase their sales conversion rates. “The most important

aspect is the fundamental concept of business which is about knowing and understanding your shoppers. For example, identifying their current concerns and needs. From a research point of view, we recommend that businesses have a continuous programme to listen to and obtain feedback from consumers. In the end, by listening to and

understanding their customers, retailers will then be able to effectively modify their products, services and pricing to boost sales and ultimately, profits. Finally, to help boost sales conversion rates and attract human traffic, retailers have to look at their parking facilities. There are

some shopping complexes which opens and offers free parking as an incentive for the first three months. In Malaysia, most people have to drive to the store. In good times, people don’t mind paying the parking fee but in bad times, people will of course feel the pinch,” he observes.

A Tale of Two Shoppers Malaysia Retailer also interviews two consumers to understand more about their purchasing behaviour. Both of these ladies may be of different race and from different backgrounds, but the two share the same common ground that is “shopping”!

can’t afford an item now, I will save my money. When I was younger, I bought things that I didn’t need based on whims. This unhealthy shopping habit was cultivated due to my environment working for a large prestigious corporate company in the United Kingdom,” she reveals. For the Scottish who has been staying in Malaysia for the last ten years, the recent GST implementation has no effect on her at all.” I am not bothered much as I understand the concept. Furthermore, GST is normal in my native country, Scotland,” says Dale beaming.

Confessions of a Shopaholic

As for 33-year-old sales representative Nelly, she normally makes her purchase decisions based on the latest trends. “My buys must be hip and happening. Price is not a factor. I like highstreet brands from Topshop, Zara and Miss Selfridge. I am not drawn by needs, but usually wants such as a sudden shopping impulse,” she professes. Nikola Dale

The Rational Shopper

Nikola Dale, a zumba instructor who owns the popular zumba fitness outlet Studio Bodyrock in Melaka Raya, says that she enjoys shopping and is quite the avid shopper. “However, I do not buy on whims but make my purchase on classic staple items based on quality and price. My buying decisions are affected by a little bit of both needs and wants. But most importantly, I must look good and feel fabulous in these apparel,” the 41-year-old says. Dale adds that the brand of an item is not necessarily important to her. “For example, I will never buy a Louis Vuitton bag. I think the price is vulgar. I avoid certain brands. To me, quality is my main priority. I rank quality first, design secondly, price thirdly and followed by the brand lastly. I also do search for products on the internet and compare prices. I do not go for generic items. I look for gym equipment, travel and services online,” she says. According to Dale, regardless of economic booms or recessions, her shopping habits stay the same. “Everyday is the same. Like I say, I spend on quality. I will set my own budget. If I

To Nelly, the brand of an item is important to her. Other than highstreet, she also likes high-end luxuries such as Prada, LV and Chanel bags. “I rate design first, price secondly, quality thirdly, followed lastly by features. As long I like the design, I will buy it. I normally shop for my purchases at brick-and-mortar shops. I do not believe in online shopping,” the Malaccan says. The sales representative reveals that she will tend to be more excessive in her shopping habits during good economic times. If I have a bonus, I will go even further. I will look at the price range of an item to see whether I can afford to buy it,” she adds. The 33-year-old shopaholic continues by saying that she had on numerous occasions, bought products that she did not need. “I already have several Louis Vuitton bags, but I kept on buying other brands such as Prada to add to my growing collection. Tell me, how many bags does one need?” she asks. However, Nelly says that for now, her voracious shopping habits have been set back by the recent GST. “Compared to last time, I have cut down on my obsession for luxury goods. One has to adapt to the current situation by making some sacrifices,” she says with a frown on her face.

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RETAIL Property

Simon Kwan

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Sunsuria: Creating Commercial Icons As competition among commercial developments heat up, Malaysia Retailer talks to Sunsuria Berhad for updates on the retail property scene and also the developer’s latest commercial projects. By Tan Sher Lynn

The Forum Facade View

ver the past few years, the retail or commercial property scene in Malaysia has seen steady growth. According to Simon Kwan, Sales & Marketing Director of property developer Sunsuria Berhad, the property development industry in Malaysia is very in sync with the country’s development.

Malaysia’s Retail Property Scene

“As Malaysia has enjoyed uninterrupted growth in the past 10 years, being able to weather global economic headwinds, our retail and commercial property market has also grown in tandem,” Kwan comments. He thinks that this trend will continue, mirroring the country’s steady economic development that will entail a need for more retail and commercial outlets. “Malaysia is a growing nation with a young demographic and resilient economy – this alone indicates that the retail and commercial sector will be buoyant for years to come. As the younger generation today continues to move up their earning capacity, they will possess spending capabilities which will positively impact retail. More of the population will enter the white collar work force in the next ten years and this will translate into constant, if not greater demand for commercial property,” he explains.

Moreover, Kwan also notes that shopping has always been one of the favourite pastimes of Malaysians, and research shows that at least 20% of the urban population in Malaysia spend their weekends in shopping malls. Based on recent reports, seven new malls and five refurbished malls have come on stream recently or will do so this year in the Klang Valley - The Strand, DPulze, Nu Sentral (formerly known as Lot G, KL Sentral), Main Place (formerly known as Taipan Square/Newgate 21), Jaya Shopping Centre, Quill City Mall (formerly Vision City), Sunway Pyramid Phase 3, M Square, The Atria, Sunway Velocity Lifestyle Mall, Sunway Putra Mall (formerly known as The Mall), a refurbished CapSquare Mall and also IOI City Mall in Putrajaya.

Spotting the Hotspots

According to Kwan, the Klang Valley remains a hotspot for any type of property development, because it is the pulse of the country. “In my point of view, Kota Damansara, Damansara Perdana, Empire Damansara, The Curve and IPC will continue to be popular commercial areas. We will see more retail spots opening in Kota Damansara as the population increases. For investors, highly soughtafter areas will still be Mont Kiara, Sri Hartamas and Bangsar,” he opines. Vo l 3 N o 2 M A L AY S I A R E TA I L E R

RETAIL Property

Suria Jelutong

The Forum Street View

Kwan also sees Setia Alam, which is growing steadily, as an upcoming hotspot. “This is also where Sunsuria’s ‘The Forum’, an integrated development poised to give businesses and residents a complete lifestyle experience, is located,” he adds. Meanwhile, hotspots in the southern side of Klang Valley are Kajang, Cyberjaya and Bangi. Other potential areas are in Johor, Penang and Kota Kinabalu.

Even though it has not been officially launched yet, over 50% of the retail shop units have already been taken up through a collaboration with members of the MRCA (Malaysia Retail Chain Association). As for the second phase, there will be high-rise developments consisting of offices, residential units and possibly hotels, ensuring sustainability of the development. The uniqueness about ‘The Forum’ is that we are working together with the end users – people who will be having businesses there – to develop the project. This is something that hasn’t been done before. By doing so, we ensure that once the development is completed and handed over to the end users, there will be commercial activities and we’ll not need to wait for things to happen,” Kwan explains.

“The property development in these places has been growing well not only because of the local catchment, which is increasingly moving up the income scale, but also because of the presence of an international community. For example, the first three phases of our The IONS project (located at Iskandar Malaysia), comprising of 2and 3-storey shop offices, have been sold out and now a new phase, ION21 is open for sale” he says.

Sunsuria – The Past, Present & Future

The “Sunsuria” brand name has been unveiling itself as a Malaysian showpiece in real estate development since 1989, having delivered more than 2,500 innovative, high value and quality properties in various segments, from light industrial factories to commercial units and residences. Current development projects of the group include Trivo (a commercial development project) and Suria Residence (a luxurious freehold serviced apartment), both located in Bukit Jelutong, Shah Alam. Several notable past projects under the Sunsuria brand name include Suria Jelutong (a 665-unit high-rise serviced apartments in Bukit Jelutong), Sunsuria Avenue (a mixed commercial development in Kota Damansara), Sunsuria Ampang Sports Complex (a mixeduse sports complex in Ampang), Sunsuria Seventh Avenue (semidetached office lots in Setia Alam), as well as signature pieces like the prime gated-and-guarded exclusive bungalow residences in Setia Alam. Upcoming projects include the 500-acre Xiamen University Malaysia campus township in Salak Tinggi enveloping the Xiamen University Malaysia Campus, 13 acres of mixed integrated development known as The Forum @ Sunsuria Seventh Avenue in Setia Alam and Medini Iskandar in Iskandar Malaysia, Johor Bahru. “The Forum is a family-oriented neighbourhood mall, with 80% of it designated for F&B and 20% for services. It’s about serving the community there and giving them conveniences. The first phase of ‘The Forum’ consists of about 233 units of retail shops and office lots. 62

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Another notable Sunsuria development in the Klang Valley is the Xiamen University Malaysia Campus Township, a smart, liveable, sustainable, transit-oriented and integrated development located at Salak Tinggi, Putrajaya South. This 500-acre freehold township presents a host of fresh design concepts in residences, serviced residences, retail lots, business parks and commercial precincts. It has a good location due to its existing adjacency to the Express Rail Link (ERL) Salak Tinggi Station, and local connections to KLIA and Putrajaya/Cyberjaya via the Elite Highway and the PutrajayaCyberjaya Expressway. “Xiamen University Malaysia Campus Township will house numerous residential and commercial developments, including a mall, and the 150-acre Xiamen University campus – China’s first overseas university campus. It is very strategically located due to its proximity to KLIA. This is a hotspot that no one has tapped into yet, with a good catchment – we are targeting people from KLIA, KLIA2 and Dengkil. We also plan to make this place a tourist spot with monuments for people to take pictures. We are putting a lot of thought into the content and features of this township,” he elaborates. Meanwhile, Medini Iskandar in Johor is a mixed integrated development spread across 82 acres of land featuring commercial units, retail parks and serviced suites. Bearing a gross development value of RM4.5 billion, it is making a grand entry with three distinct developments comprising 2- and 3-storey shop offices. Located at the heart of Nusajaya, Medini Iskandar presents an excellent location for business activities with its seamless connectivity to surrounding conveniences and amenities. It is set to be a thriving business hub that caters to Johor’s diverse business community,” Kwan reveals. Owing to the company’s commitment to sustainable development and constructing buildings to the highest standards, Sunsuria was

recently awarded The EDGE-PEPS Value Creation Excellence Award 2014 for The CORE Kota Damansara. On top of that, Sunsuria is also honoured to receive two regional awards at the International Property Awards; Asia Pacific 2015-2016 for ‘Suria Residence’ winner of 5 Stars Best Residential Landscape Architect Malaysia Award and ‘Seventh Avenue’, winner of Highly Commended Office Architecture Malaysia Award.

Trends in Retail Property – Mall or Shop Office?

If you are a retailer looking to set up an outlet, would you choose to set up your outlet in a shop office or a mall? According to Kwan, malls are the current trend. He adds that shop offices were in trend 10 to 20 years ago but it has since died down as developers realise that the top floor shops/offices are often empty or do not do well. Nowadays, when a developer designs a shop office development, it will have to be concept-driven, with innovative features that cater to the needs of current retailers.

According to him, the success of commercial developments relies heavily on the success of their owners – either their businesses or their tenants’ businesses. The ecosystem involving the developer, owners, tenants and visitors that encourages people to meet each other will add tremendous value to the development. “In order for a mall to be successful, we need accessibility and a good mixture of property types and tenants. Therefore, residences and hotels are important besides retail outlets. In Sunsuria, we aim to provide reasons for people to meet whenever we consider a commercial development plan. Also, we believe that customer care is critical. As such, we have a leasing team and building management team to assist the owners in getting the right tenant mix. This definitely helps to set the benchmark for the development,” he stresses.

“On the other hand, successful mall designs are the ones that create an interior where flow of movement is not hampered, from the entrance to the carpark to the highest or lowest floors. Visitors do not like a mall where they have to figure out how to get from one floor to another. The ideal is to maximise the potential of all outlets by giving them exposure to the crowd in the mall. There will be outlets that are more strategically located but a well-designed mall should allow all outlets to be visible to the visitors,” he comments. Obviously, when malls offer visitors an enjoyable shopping experience, it translates into repeat visits and bigger crowds – a key factor for retail success. Apart from design and location, a good management is the key to a well-run mall. New malls are offering car jockey services and phone charging at the concierge as the latest add-on services. According to Kwan, developers usually target to sell or rent out over 90% of a retail or commercial project before the development is ready, so when the building is completed, consumers can immediately get a feel of the atmosphere within the development. “This is the key to attracting the target crowd, and ensuring that consumers know what they can expect in their following visits. It is also a trend that developers are moving towards leasing out the lots and managing the development, rather than selling them, to retain control over the tenant mix and image of the retail/commercial property as it is intrinsically tied to the developer’s name. A well-run and well-kept retail space reflects well on the developer’s brand,” he explains.

Right Property for Retail Success

While the demand of retail property in Malaysia is high, how can retailers choose the right one when setting up an outlet for their businesses? Kwan believes that in-depth research and observation is pivotal in any venture. Retailers should always find out about the people and demographics of a location, such as what kind of residents live there – what they do, where they go to, what they eat and so forth. This will give you a clear picture about the location, and how your business can fit into its ecosystem.

The Sunsuria Way

Kwan reveals the Sunsuria philosophy: “Whenever we come up with a project, we need to think of customer success. We need to consider the things that are important to our customers. We must make sure there’s sufficient catchment. We also need to have a mixture of residential components to bring in the population for the mall area. Therefore, communication with retailers is very important to me. From day one, we work with retailers to build a mall that is feasible. For example, in the case of The Forum, we sat down and had a few rounds of discussions with the people from MRCA before we decided on the features, like the number of parking lots in the building. In my perspective, it is important to look into the end user’s point of view. Hence, we would not compromise on this kind of things.” Kwan advises retailers to establish and maintain good partnerships with developers, and stresses on the importance of working with people (developers) who would listen to them and to cater to their needs. “Our customers’ success is our success, so we develop our projects to ensure a conducive environment for businesses, such as ensuring sufficient parking, good access and value for money which leads to sustaining the right brands and right visitors over the long term,” he concludes.

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Retail Aesthetics

A Touch of Industrial Inspiration Industrial designs are the “in” thing at the moment, according to Mike Lim, CEO and founder of M Innovative Builders Sdn Bhd. Malaysia Retailer finds out what it’s all about. By Lim Su Yee

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have mentioned above will not go outdated. As for 2015, I think that customers will go more for trends such as lighting and decorations. They will also tend to spend more of their money on furniture such as sofas,” he opines.

Leaning Towards Industrial

According to Lim, ID trends have changed throughout the years. He explains, “Back in the past, the designs used to be more modern. But now, the trend is leaning more towards industrial or architecture designs. Previously, many people opted for built-in furniture such as wall panels, but now, they (the clients) will spend money on loose furniture such as designer lights and sofas.” Lim points out that one of the ID trends that have changed is furniture, for example. “Furniture do not have a long ID lifespan, and in three to five years, they will go out of trend. Modern designs will also become outdated very fast in comparison to classic designs that will remain timeless,” he says.

Firm-Client Conflicts

Mike Lim

ocated in the bustling commercial area of Bandar Puteri Puchong, M Innovative Builders Sdn Bhd is a well-established interior design company which is known for creating residential property, commercial office and retail outlet concepts in Malaysia. Helmed by its CEO and founder Mike Lim, M Innovative Builders’ designs and ideas are actually a blend of foreign elements that are specially altered to suit the Malaysian market. Here, Malaysia Retailer speaks to its CEO, Lim on the issue of interior design (ID) trends, a topic that is very familiar to this Puchongbased interior design company.

Ever-changing Trends

Decked casually in a checked tee while

sitting by the table in his office’s lounge room, Lim says, to our surprise, that he is presently unable to identify the current interior design trends for retail outlets. But obviously, the CEO has his own reasons and he explains, “Honestly, I cannot predict, as this subject is difficult to comment on. Interior design is an ever changing thing. Furthermore, the subject is very wide and I do not want to provide you the wrong information,” he says half jokingly. However, Lim pauses for a moment and continues, saying that as an interior designer himself, he is looking at industrial designs as his inspiration and is currently using materials such as wood, cement, natural fabrics, stones and steel for his projects. “I feel that trends such as those I

As an established interior design firm in Malaysia, M Innovative Builders has worked on numerous retail ID projects in the past. However, Lim reveals that there are many challenges and the business is not a walk in the park. “In Malaysia, it is difficult for both the designer and client to collaborate as conflicts often arise between both parties. For example, in an ID project, the designer’s ideas and preferences may differ from the client’s. Lim offers an example, “My style may be different from what my customer wants. Let’s say I want the shape of my design to be round, while the customer wants it to be rectangle. I mean, how does one handle that? Furthermore, there are customers who still fall prey to superstitions and in such a case, the designer has no choice but to reluctantly conform to the client’s wishes in the end. Therefore to avoid conflict, the best solution is for the designer to work on things solo such as having his or her own showroom, investments and designs,” Lim laments with a long exasperated sigh.

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Retail Aesthetics

For new customers, we go for quality depending on the client’s budget. The cost can be high if our team needs to spend a lot of time and effort on the design. Otherwise, the opposite also holds true,” he remarks.

Playing Catch-up with Neighbours

Based on his experience, Lim feels that Malaysia still lags behind other ASEAN countries when it comes to the subject of ID trends. “Malaysians have this mentality that if a client invests a lot, there must be bound to be lots of profit for the firm,” he says. But Lim is also quick to interject and says that Malaysia may be struggling to catch up at the moment, but he believes that our country has the potential to go far as time passes by. “Even countries such as HK are very outdated compared to its overseas counterparts. The reason is because in other places such as Taiwan, China and Singapore, the clients over there are more willing to invest their money when it comes to interior design,” he opines.

Beating the Competition

A Firm is Only as Good as its Track Record

No reputable interior design company’s portfolio is complete without some note worthy pictures of their past works. Malaysia Retailer requests to see past pictures of Lim’s retail ID designs and the affable CEO quickly obliges. He opens a book and flips through pages to reveal beautiful designs that are his pride and joy. He points at a particular picture of an industrial-looking kitchen, living room and study room and says, “I can tell you that all the designs are industrial-based. Such as makeover does not come cheap

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as it can cost you around RM500,000 for everything.” Lim adds that there is a motive behind his works and creations. “Instead of being just like any other cookie-cutter designer out there who are armed with a laptop, I want to prove to my customers that my company, M Innovative Builders is on a different level as we have our own concept. Unlike our rivals, we also have the commitment and strength where I believe, our work and designs can speak for themselves,” he says proudly. According to Lim, his company mainly targets potential customers who lean towards the upmarket level. “At M Innovative Builders, we emphasise on quality and not quantity.

Lim believes that as competition among one another in the industry escalates, retailers have no choice but to find ways to attract more customers. With this, they have to improve on their outlets’ ID. “It is a matter of survival of the fittest. In the past, a restaurant can still survive if they depend solely on the quality of the food. But now, it is all about packaging. Other than food-wise, the current generation will choose an outlet to eat based on ambience, environment and comfort. For example, is there proper air conditioning and does the interior of the restaurant appeal to them? Or, is the signboard of the particular eatery attractive and big enough that people can notice easily? These are all the ID factors that a retailer has to consider in order to attract more customers. Also, the location of the food outlet plays an important role too as it has to be strategically placed so that finding your way there will be a breeze,” he elaborates. Lim adds that this is the time

when the need for an interior designer comes in. “We can do all the packaging for you, but if your food is not tasty and all else fails, than you cannot blame us for that,” the CEO chuckles.

Outstanding Designs

When it comes to retail outlets with excellent ID concepts, Lim thinks hard for a moment for notable examples. At last, the CEO smiles and says that he likes concepts that are a blend of east meets west. “Personally speaking, I like a mixture of old and modern,” he reveals. Lim also names Thailand as one of the countries that he looks up to. “Thailand has excellent retail concepts as the land is rich in handicraft. I like the handcrafted wood out there as it is special and unlike those mass-produced designs that you can get in Malaysia. I am always amazed at how impeccably well the handicraft in Thailand are crafted as they put in so much effort and detail to them. You seldom get to see this type of workmanship in other countries,” he says. Lim comments further that there are retail ID concepts that he is not too keen on. “Say, for example, China. The country may be a growing economic powerhouse, but I personally think that the ID concepts in China emphasise too much on the mainlander’s style. Let’s say if the clients there have the budget and they want to make it big, the designers will go all the way to make it the biggest project, outshining everyone else. To me, it’s sheer exaggeration. Meanwhile, here in Malaysia, it is the direct opposite from China as everything here is done on a stringent budget,” says Lim with a chuckle.

A Play on Colours

The subject of colours play an important

role in ID, especially for retail outlets, as the colour tone that one chooses will affect one’s mood in the long run. According to Lim, back in the past, people tend to go for colourful combinations and vibrant colours such as dark blue and light blue. But now, if there are too many colours used, it will get confusing and mind boggling. Lim personally prefers light colours such as white. “This colour, which is a symbol of purity, is a universal colour and goes with just about anything. I especially like applying it to walls as the colours for backgrounds cannot be too contrasting. Just think about it, if the colours are too contrasting, it can get distracting as one does not know whether to concentrate on the furniture or the walls. Don’t you agree?” Lim asks.

A Matter of Spacing

Lim says that apart from colours, other influencing factors for ID are layout and spacing. “The most important element is spacing. It is the core of interior design. An ideal space planning makes a huge difference. If your living room is too small to accommodate all your furniture items, how will you manage them? That is where space planning comes in to help you maximise the utilisation of an available space in the most efficient and effective manner according to the client’s needs and specifications,” he explains. Lim says that levelling is also another important factor. For example, the floor must have the right level of a 90-degree angle. These concepts that I have just explained are the most basic rules in the field of interior design,” he says. Lim adds that ventilation also plays a key role, as without proper ventilation, a room will be very stuffy. The right ventilation will

enable the air to flow in, giving you a very comfortable and relaxed feeling,” says the seasoned interior designer.

Right Location, Decor & Target Audience

The saying “Rome was not built in a single day” applies to the challenges that retailers face from time to time. When Lim first started M Innovative Builders, he also encountered his fair share of obstacles. Thus, the CEO has some useful advice for retailers who are just about to set up their outlets. “First of all, retailers need to have a strategic location/venue. You can build an upmarket shopping mall such as KLCC in the heart of the big city, but you definitely can’t build it in a less desirable place, say, in a lower income area. Simple logic will tell you that the business will not thrive,” he says. Secondly, Lim further reveals that the renovation of the shop also plays an important role. “For example, how big and attractive is the signboard? Can it be seen clearly from afar? Are the correct colours used for the signboard and is it pleasing to the eyes? Far from what people think, the materials used for renovation do not necessarily need to be expensive. Our main purpose is to give every customer who walks into the outlet a cosy and comfortable feeling. Thirdly, the target audience is another matter to look into. Aspects such as age and level of income are all taken into careful consideration. But, there is only so much that I can say,” Lim pauses for a moment. He continues by stating that eventually, the ultimate choice lies in the hands of the retailer. So, make your decision wisely,” he advises.

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expert Contributor opinion

Your Your Business vs Personal $ Money $ Money

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As an entrepreneur, the fine line between your own money and your business’s money may be blurred. Financial trainer and author KC Lau offers a few useful tips on differentiating between the two and how to effectively segregate them.

ot keeping personal and business funds separate is one of the most common mistakes made by new entrepreneurs. If you’re a business owner, blurring the lines between business and personal expenses can be very tempting. This mistake is often the prime target for taxation scrutiny in audits. Your personal finances can easily get tangled up with that of business finances. The worst case is when you spend your business revenue as if it is your own income. I’ve seen new entrepreneurs who immediately switch to a luxury branded car when they see the lump sum payment cashed into their bank account. The temptation is hard to resist if you don’t know how to manage cash flow.

between your personal and professional finances, your assets might face the risk of being seized to meet the demands of the creditors. So a little effort here can save you from a blatant disaster in the future. Consult a legal advisor if you need more clarification as I don’t have a legal background to provide you advice.

Maintaining a Professional Reputation

First and foremost, your business should be considered as a completely separate identity. No matter what type of business you’re running, keep in mind that this separation needs to be addressed starting from Day 1.

Neither customers nor clients would feel secure and confident when they’re dealing with a business that seems more like a hobby! When there is no proper separation between the owner and the business, that’s exactly how any business will look like. You would want your business to have the most professional image possible. Mixing business and personal finances will never help. For instance, when a client is required to write a personal cheque to you instead of writing one to your business, it’s absolutely natural for the client to feel uncomfortable, although it might work well enough for you.

Why is it not wise to mix your Business Money and Personal Money?

Refraining from Self-Destruction

Avoid Piercing the Corporate Veil Let’s say you’re operating a corporation (Sdn Bhd) or a LLP (Limited Liability Partnership). When a clear distinction cannot be found between your personal and business expenses, you might be held responsible for company debts. This is called Piercing the Corporate Veil. To put it simply, if your business falls into a crisis with any amount of money and the courts cannot determine the plane of intersection 68

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You should view your business like an individual, separate and living entity, or you will end up treating it as your personal cash register. This mindset can ruin your business, draining it to a point of insolvency. Even the most profitable company can plummet to the ground when the owner takes out too much money with no concern for the solvency of the set-up. There are many people who would lavishly overspend the business money. Just because you have a lot of money doesn’t mean you can commit to a luxury car. That’s a recipe for disaster.

Dealing with the Tax Season It’s highly beneficial to have separate personal and business accounts when it comes to tax preparation. All your business expenses throughout the year will stay separate from personal purchases when you have a business account. It’s recommended to set aside some additional funds before the tax season arrives. You’ll never have to worry about draining your personal account for covering taxes when there is sufficient money in your business account.

Strategy #1 - Track Your Business Expenses Separately Tracking your business and personal expenses separately is an important component of financial segregation. If you’re raising the start-up capital for your business and even if you’re using your own money, a separate budget should be prepared to make sure that you can still cover your individual expenses. This is true for a one-man shop as well. If you have a tight personal budget, seek external funding. Instead of paying for company expenses directly from your personal account, use business credit accounts. For example, if you need to buy a cash register, do it using a business cheque or a company credit line. Similarly, when you want to pay for your own bills using the business funds, write a check to yourself instead of doing it right from the company fund. This helps to avoid the auditing complexities which can arise if the taxation authority finds that you’re using company money for personal expenses. Besides, separate accounts will also lead to separate taxation. If you can focus on drawing on the right account for the right transaction, all you have to do is review the bank statements when you need a clear picture during tax time. You can even do the taxes and financial reporting directly from the bank statements if you avoid cash and manage to use only your business debit/credit card.

Strategy #2 – Use a Business Credit Card It’s difficult to meet the lending requirements when you have a small business or a start-up. However, it’s still worth trying to get a business credit card. Just like having separate checking accounts, a credit card helps to keep record of all transactions and gives you something to show to the taxation authority when you’re being audited. On top of that, a business card can also give you additional tax deduction. The balance on a business credit card is the only credit card interest that can be deducted as a business expense. Since you won’t have a financial track record when you first start a business, you won’t be able to obtain a business card. A possible solution is to use a separate personal credit card only for business purposes. It would then be justifiable that the interest charges on the credit card can be filed as a business expense. Please consult your accountant for more details.

Strategy #3 - Make It Official It’s a good idea to establish a separate entity with a private limited company (Sdn Bhd) or limited liability partnership (LLP) for your business. Sit down and consult with a team of professional advisors including an accountant, tax advisor, company secretary, insurance agents, financial planners, etc. to weigh your options. Explore which

entity sounds the most reasonable and how this business is likely to affect your financial plan, taxes and what sort of insurance coverage you should look at. Apart from the obvious tax advantage of lower tax rates for corporate earnings, the business entities will also provide a redefined liability protection to your personal finances, which can be really helpful in case your business is ever sued.

Strategy #4 – Proper Documents Everything should be properly documented. When you’re contributing money into the business - is it a loan or an investment? When you’re taking money out - is it your salary or a loan from company? Each and every business-related expense should be clearly documented on paper. Everything should be on receipt. For example, you embark on a business tour and stay over at a hotel. This hotel expense should be documented along with your purpose of going out of town. If you spend some money for business entertainment purposes, the entertainment bill should be documented, stating the name of the customer you’re entertaining. There should not be any transactions without written documentation. When you have your utility and grocery bills in the same box with invoices and business receipts, a huge mess will be waiting for you to clean up during tax time. Separate business and personal records can solve this issue. Physical business records, for example – mails and receipts, as well as digital data such as emails, word files, spreadsheets and posts from social media, everything should be on paper. Your business is definitely meant for you. All your earnings and profits belong to you. They are all your money, but in order to keep the profits streaming, it’s important that you treat your business as a different entity from yourself. When you track all your finances separately, you will know exactly where your business money and personal money is going and you can make the right decisions in any critical situation. In order to become a successful entrepreneur, it requires considerable expertise in different fields. Undoubtedly, a vital feature of a successful business owner is to have a clear understanding of financial management. After all, if you have no money, you have no business! Striking a balance with your finances is the key to success. Go cheap and you’re not likely to get quality results. Go extravagant and you’re likely to turn up in the red and fall. Be smart, be optimistic and invest in a business with the potential to grow and it will put you in the frontline for success.

About the Expert KC Lau is a prolific financial educator who has published six books and co-created more than a dozen online financial courses. His popular personal finance blog is one of the most visited websites in the financial blogosphere. Lau also hosts regular and free financial training online featuring various financial experts. Visit www. KCLau.com for more information and free financial training. Vo l 3 N o 2 M A L AY S I A R E TA I L E R

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Branding & Marketing Your Business with Government Assistance Brand and marketing consultant Yap Keng Teck identifies some of the types of government assistance available to help lower your branding costs. Cost of advertisement media buy and media relations. Online marketing and others. I hope the above will not scare you off from branding your business or products. In our opinion, your time and commitment are much more important than the funds to advertise. A clear brand direction will sure allow you to market your brand cost effectively. Yet, to bring your brand to the next level, some funds need to be allocated. How can we lower our burden on brand investment? One of the answers is to seek government assistance.

What Kind of Government Assistance is Available?

MEs always associate branding with high costs. I can only agree to a certain extent. Branding without proper planning is cost to the company. However, branding with proper planning is an investment with a high Return on Investment (ROI). Let us have a look at the potential investment needed for branding. Time and commitment to set the strategic direction for the brand. Cost to engage a brand consulting company to steer your brand towards the right direction and plan your brand campaign cost effectively. Basic marketing materials including brochures, leaflets, profiles and other point of sales materials. Trademark your brand in the respective markets you are marketing to. Concept design of your stores and your advertisements. 70

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Malaysia is one of the few countries that provide many assistance programmes to assist businesses to start and grow, especially for the SMEs. SMEs always associate government assistance with grants. Grants may help you in the short term but I would say the non-financial assistance is equally or even more important than grants. The branding know-how, market access, networking, media exposure, award recognition are some of the crucial elements to bring your brand to the next level. Below are some examples of the government assistance which your business can benefit from:

National Mark of Malaysian Brand Certification (National Mark) Launched in 2010, National Markâ&#x20AC;&#x2122;s objective is to nurture and facilitate the growth of Malaysian Brands to be on the regional and global stage. It is a recognition of home-grown Malaysian brands whether they relate to products, services or corporate branding. The programme was initiated by SMECORP in collaboration with SIRIM. Up to Oct 2014, there were approximately 100 companies certified under this programme. The Mark itself carries some weight as it has been heavily promoted locally and abroad. Some of the benefits include privileged media

coverage, invitation to brand trainings, and assistance on local and international trade. Some recipients received up to RM500,000 in financial assistance. The funds can be used for advertising and promotions, e.g. TVC, radio ads, billboards, marketing in hypermarkets and shopping malls, certification, R&D packaging and machineries. The key eligibility criteria include international standard certifications like ISO and a registered trademark. Please visit www. nationalmark.gov.my for further details.

Go-Ex Programme The Go-Ex programme is part of the government’s initiatives to guide and enhance the growth of exports of Malaysian SMEs. The programme is targeted at export-ready companies or high potential exporting companies venturing into new products or new markets. SMEs, whether in retailing or manufacturing, always face uncertainties when exploring the export market. Market potential, trends, legal requirements, competition and the certifications required are just some of the questions to address when considering the export market. Much time will be spent on these and by the time the business is ready, the opportunity may have passed. Go-Ex Programme by MATRADE is able to assign a market advisor and market linker to address your above concerns. We also understand that the programme offers up to RM50,000 funds for relevant certifications needed to enter a new market.

Mid-Tier Companies (MTCs) Development Programme MTCs in Malaysia are defined as companies with annual revenues between RM50 million and RM500 million in the manufacturing sector and between RM20 million and RM500 million in other sectors. If your business is in this category, it is best that you get into this programme. Why? Because MATRADE will assign international consultancy firm McKinsey to consult, and provide practical tools and guidance on marketing your brand globally at no cost to you. The objective of this programme is to accelerate export growth and to strengthen core business functions. This 9-month programme is opened to only 50 companies per year. They will tailor the assistance and support in accordance to your present organisational needs. Branding, expanding to new markets, access to finance, market intelligence, and linkage to technology partners are the type of support that grants can’t help you with but the MTC Development Programme can. There are other government assistance programmes available but there are simply too many to share in detail here, e.g. Industry Promotion and Development Grant by MCMC, Business Accelerator Programme and Innocert by SMECORP, Biotech Commercialisation Fund by BiotechCorp and MSC Malaysia Research & Development Grant Scheme (MGS) by MDEC.

Don’t be Fooled by Self-proclaimed Agents It is important to note that government agencies do not appoint agents or consultants to assist in the application for their assistance

programmes. There are no official or approved agents for any of their programmes. Many “agents” will claim that they can guarantee approval, they know people and they will do everything without spending your time. Not true. Let’s be rational. Most programmes are evaluated and approved by a panel of committees from different departments or agencies. The “agents” can’t guarantee anything. They can’t help you without your involvement. Business direction, present corporate and product development, challenges and opportunities are important information to be submitted. The top management has to be involved. How much does an “agent” know about your business? If you really need help, hire a consultant who can guide you through the process, strengthen your strategies, provide objective feedback, and produce concise and impactful write-ups to convince the government to provide assistance.

Doing it Right! Many businesses claim that it is not easy dealing with government officers but have you played your part in understanding their process? Below are some pointers to do it right: • Check the website for basic information and forms. Most programmes have their forms downloadable from the respective agency’s website. • Seek face-to-face clarification. Don’t interpret based on your own understanding. Spend time to pay a visit to the agency to seek clarification. • Ask fellow recipients. Get insights from others on areas which need special attention. • Submit the right documents or write-ups and NOT MORE. Submitting a lot of information and documents doesn’t necessarily make it better. But the officers will definitely need to spend more time to pick out the relevant information to prepare their reports. • Please follow up. Constantly follow up with the officer in charge to ensure you have all the necessary information and documents in place and are ready for the approval process. • Management must know the content of submission. Do not only leave it to junior staff. Otherwise, interviews might be conducted and the management will have zero knowledge then. In short, branding can be done cost effectively. You do not need millions to brand. All the best in your branding in these challenging times.

About the Expert Yap Keng Teck is the founder and managing consultant of Bizsphere Brand & Marketing Group. He has 18 years of Brand & Marketing experience and was formerly an EXCO member of the Branding Association of Malaysia and Global Advisory Member of World Brand Congress 2013/2014. Vo l 3 N o 2 M A L AY S I A R E TA I L E R