Reaction Paper on Strategic Management Rhoda Mae Zapico Realda Philippine Christian University
1
Robinson Department Store’s Move to Lifestyle Format.
The collection of articles that I am going to present on this paper discuss about formal planning which includes specific goals covering a specific time period. This will also discuss type of goals such as financial goals and strategic goals. In order to achieve these goals, I will also discuss
the type of plan being adapted by this company which includes strategic plans,
operational plans, and long term plans.
This paper is about Robinson Department Store’s Move to Lifestyle Format. We knew Robinson as a Department Store. This should not be confused with the Robinsons Malls we have in the Philippines by entrepreneur John Gokongwei,Jr. This Robinson Department Store (Thai: หห้ าง ส ร ร พ สสิ น คห้ า โ ร บสิ น สสั น ) is a Thai department store chain. It was established in 1979 and was merged with Central Group in 1995. The first reason I chose this topic is because I live in a small province in Thailand, used to be very quiet and away from modernization, and I was surprised when a few months ago, a new Robinson Lifestyle Mall was being opened and I was wondering what are the goals of the company why they have to open a branch in remote area like Kamphaeng Phet. The second reason I chose this is very personal to me because I used to have my own small RTW Store in our small town, and I admit that because I had lack of business knowledge, I failed to plan and strategize, my dreams were long term but the operation only lasted for 3 years. As I studied the factors recently, I realized that there were many factors affected the fall of my small business. At first I thought that having a capital is enough to run a business, it’s definitely a BIG NO. I was an OFW for 4 years in Singapore and thought that I had enough to put up a business; like most people who dreamed to be free from being employed. When I started to work as an employee in one of the Multinational Logistic Company based in Singapore, I only had the aim to save up and go home to start a business. I was able to reach my desired goal, I used my small savings to start a business and stop working. After 3 years of operation, I find myself bankrupt, in debt, and looking for job again, and my family and I ended here in Thailand.
2
This topic of Robinson Department Store’s Move to Lifestyle Format is something that we can learn from. We cannot disagree to the fact that the old traditional shopping model no longer reigns.
According to some surveys, there is no denying that smart phones and tablets are making it easy for shoppers today to research business, survey products, read customers reviews, and even purchase goods. Factors also like distance from home or ease of click and buy options determine the real cause behind influencing a buyer's decision to prefer online shopping. Though there are still people who like to see an item in person and touch it before making a decision to buy. That said, while physical stores are unlikely to go extinct soon, mobile devices will play a crucial role in people’s overall shopping experience. And Robinson’s admitted that they were affected by this trend.
Some retailers have reinvented to create a 360-degree shopping experience to prevent from becoming a complete no sale zone. Many stores now try to give their physical stores a more personalized look by merging digitalized and physical commerce. One of these stores is Robinson’s Department store. That is why in the recent years we saw “Robinson Lifestyle” Malls. Robinson is transforming its business model from department store to a multi format retail outlet to cope up with fiercer competition and raise profits.
President Alan Thomson in one of the article from Bangkok post said that “with the transformation, Robinson will no longer be an old-fashioned department store as in the past years. We will be a retail company with more competitive offerings for our customers.” Robinson’s brand logo and uniforms are being updated, along with the recruitment strategy that focus on younger people joining the management team. The store transformation started on 2016 and be completed by 2020. The shift to a lifestyle centre concept is based on an expectation of higher profits, new income opportunities and faster planned events than a department store.
3
GOAL: Their vision is Robinson Department Store is the most preferred department store with the widest market coverage in Thailand, offering merchandises to best fit our customer lifestyle with excellent services. Their goal is to profitably grow their market share.
FORMAL PLANNING:
Thailand’s Robinson Department Store aims to invest about 16.8 billion baht (US$479 million) on opening stores over the next five years with the aim of boosting average sales growth by 5 to 7 per cent a year. Robinson plans to boost store numbers to 56 by 2020 from 42 now, pinning its hopes on government economic-stimulus measures, says President Alan Thomson. Robinson Department Store has implemented two formats of store expansion plan - expanding stores in conjunction with grand-scale shopping malls and developing its own Lifestyle Centre.. Featuring over 400,000-sq.m.-area department store and over 220,000-sq.m.-area plaza zone, the recently-operated outlets embrace a full spectrum of well-known stores, namely Super sport, B2S, Power Buy, Tops Supermarket, along with numerous banks and upscale restaurants. Having the store’s floor plan clearly divided into various zones such as service zone, entertainment zone and technology zone, it is believed that these new stylish outlets will be able to best meet diverse demands of discerning customers.
SPECIFIC GOALS CARRYING SPECIFIC PERIOD OF TIME
The company plans to open 16 new Robinson branches from 2016-20. Of the total, 12 will be Robinson Lifestyle Centers, with 10 in Thailand and two in Vietnam, and four will be Robinson Department Stores. By 2020, the number of Robinson stores across the country is projected to reach 56, up from 42 last year, with four in Vietnam. This plan requires total investment of 16 billion baht from now till 2020.
4
STRATEGIC PLANS,OPERATIONAL PLANS AND LONG TERM PLANS
It also wants to refresh the look of 20 major branches into “lifestyle” department stores within three years, including those at Rama IX, Rangsit and Fashion Island in Bangkok and ones in Chiang Mai, Udon Thani, Khon Kaen, Ratchaburi, Saraburi and Phuket, with a budget of 25–150 million baht
Robinson’s corporate brand logo and uniforms are being updated, along with its recruitment strategy that focuses on younger people joining the management team. The store transformation will start this year and be completed by 2020. Nattakit Tangpoonsinthana, executive vice-president of marketing, said the change would meet the demands of its target customers, those aged 15-30, what it considers a “game-changing” group for the retail industry within five years. This target group comprises many people who consume a large amount of social media and have strong purchasing power, expected to transform the retail industry, he said. The company will allocate a higher marketing budget for digital activities this year to cash in on this trend.
5
The information that follows is taken from Robinson Department Store Public Company Limited/Annual Report of 2013 and 2016. The combined annual reports are more than 250 pages. I only copied the information the valuable to the topic presented.
RISK FACTOR and RISK MANAGEMENT In the year 2013, the key risks having an effect upon the Company’s business operation are as follows: Strategic- Ability to respond to economic fluctuation and competition In 2013, uncertainty on global economic recovery and Thai political conflict affected confidence on economy and customers’ spending behavior. Competition in department store business is more tension as well. In addition, as fashion brand stores such as Uniqlo and H&M is in the trend, the Company adjusted its business strategy to match with customers’ need. It focused on marketing promotion and campaigns to stimulate customers’ spending.
The year 2013 saw a number of unpromising challenges, ranging from persisting economic recession to a plummet in domestic consumption. Robinson Department Store strongly believes in its highly-efficient business operation which follows 5 key strategies - new store experience, fashion and differentiation, localized marketing and CRM, service excellence and sustainable corporate social responsibility.
Continuously expanding new stores to cover strategic areas, Robinson Department Store has implemented two formats of store expansion plan - expanding stores in conjunction with grand-scale shopping malls and developing its own Lifestyle Centre. Despite an economic fluctuation throughout 2013, Robinson Department Store has managed to launch new stores as per its scheduled plans and, thereby, has achieved a total of 34 stores - 10 in Bangkok and 24 in provincial areas. Featuring over 400,000-sq.m.-area department store and over 220,000-sq.m.-area plaza zone, the recently-operated outlets embrace a full spectrum of well-known stores, namely Supersport, B2S, Power Buy, Tops Supermarket, along with numerous banks and upscale 6
restaurants. Having the store’s floor plan clearly divided into various zones such as service zone, entertainment zone and technology zone, it is believed that these new stylish outlets will be able to best meet diverse demands of discerning customers.
Operation - The Obsolete Stocks The Company operates the department store business with emphasis on continually providing fashionable products as well as modern products. Hence, when consumers’ trend has changed, the Company’s products have become obsolete and cannot be sold. With regard to stock management the Company paid high attention to supply chain management system, while conducting ongoing stock monitoring for up-to date inventory management. In addition, the Company has set an accounting policy that included provision for impairment of inventories in the credit stock category in the credit stock. While the rest products, the parties have agreed to be responsible for the case of obsolete stocks. Therefore, risk associated with the obsolete products has created no material effect on the Company’s operation.
STRATEGIC AND OPERATIONAL PLANS Store Expansion and Refurbishment of the Already-existing Stores. The Company has foreseen an opportunity to expand department store business in various areas in Thailand; therefore, it has continuously planned to expand its store. At present, there are 2 models for store expansion. The first model is to expand its branch in any big mall and the second model is called “Lifestyle Center”, considering the format that best fits each potential area so as to serve customers in all areas. Moreover, quick expansion not only provides the Company with a store in a good location but also becomes the first store in such provincial area. This enables Robinson to become a recognized brand and build a good relationship with its customers. Thus, the Company receives advantage in competition in the long-run. Regarding the “Lifestyle Center” concept, it is a shopping complex with about 30,000-35,000 sq.m. area which is tastefully designed with a strong emphasis on the perfect balance of floor-plan continuity between department store and plaza zones for customers’ utmost convenience and shopping pleasure. One-stop shopping mall with both 7
variety and completeness of products and services is also considered in order to satisfy customers. This includes supermarket, specialty stores (for books, sport equipment, electrical apparatus, etc), restaurants, cinema, IT, banking zones and beauty services - all under one roof. This type of expansion is considered as another successful strategy because the Company receives good response from customers. This also helps boost the confidence in this format of the Company, suppliers, and partners constantly. Besides, such solid growth also facilitates the operation for the Company’s future store expansion plan. In addition to store expansion plan, the Company also has a plan to renovate its existing stores annually. The refurbishment includes an improvement of the product display position, the furniture and counters at various department so as to maintain the store’s fashionable image, as well as an incorporation of state-of-the-art interior lighting system to other design renovation. All of these aforementioned efforts have been achieved so as to stimulate and attract a continuous customers’ attention and, hence, eventually make them become the store’s regular patrons. In doing so, moreover, it is believed to bring about the most efficient space management for the Company. Following the Company’s rapid store expansion which includes 5 new stores in 2012, the year 2013 also saw a continued implementation of such plan and, therefore, 5 new stores were also inaugurated in
Target Customers The Company’s major target groups include modern families and young professionals between the ages of 25-45 who have medium to high purchase power, have modern lifestyles, love to spend on popular fashion products and focus on quality of products at reasonable prices. In addition, customers who fall into groups such as teenagers, students, and young professionals are those who demand fashion products with affordable price. Moreover, there are also customers, who are tourists such as Middle East customers, Asia customers, which are Chinese, Taiwanese, Korean and Vietnamese, etc, European tourists and foreigners who work in Thailand. The Company provides products matching to each group of customer at branches that are located in such group’s areas or that are in close proximity with overseas residents including Sukhumvit, Bangrak, Phuket, Chiang Mai, Had Yai Sriracha and Chonburi. Besides, the Company launched the Tourist Card and 8
VAT refund activities to allow convenience for overseas customers. In addition, special discounts and sales promotion activities have been organized especially for tourists. The Company provides special services for loyal customers’, who are members of The 1 Card including special privileges such as discounts, point accumulation and reward redemption, and also Lifestyle monthly magazine delivered to members. Through this magazine, members are able to obtain news and information on sales promotion activities, new products and special activities. In addition, the Company also has customers using Robinson Credit Card. The card holders receive special services such as discounts, promotion activities
Operating Results and Financial Status in 2013 As of 31 December 2013, the Company operated 34 stores, comprising of 10 stores in greater Bangkok and 24 stores in upcountry. The Company highly achieved the target to open 5 new stores in this year. Ratchadapisek branch was closed at the end of the first quarter 2013 due to leasehold right expired whereby Rama9 branch has been operated since 2011 to replace Ratchadapisek branch. In year 2013, the Company was able to continue to generate revenue growth and constantly manage costs at an appropriate level.
NEW NATURE OF BUSINESS ADAPTED The retail business structure divided into 4 segments: 1. Department store: Currently the Company has 26 department stores. Its offers products from leading local and international brands.
2. Lifestyle center: Currently the Company has 18 lifestyle centers nationwide. Our lifestyle centers are fully occupied with department stores, food parks, leading restaurants, movie theaters, commercial banks, supermarkets, Water Park, fitness centers as well as all full service facilities inside our shopping malls with exclusive activities and promotion.
9
3. Brand management: Well-known international brands which are selected to sell only at Robinson such as Just buy, Payless shoesource, Baby shop and etc.
4. International business: The Company has operated department store in Hanoi city and Ho Chi Minh city, Vietnam.
Competitive Strategy In order to achieve its business goal, the Company manages its business under main 5 strategies as follows. 1. To continue to drive sale In order to drive sale, the Company focus on signature products that aims to be number one in each destination that we operate such as Health and Beauty, shoes and luggage, kids, lingerie, Jean and Denim, home as well as playing to trend categories such as sport fashion and one price product (60Bt) and introducing new concept of retail such as 1below. In each festive season, each store arranges marketing and promotional activities to attract customers and increase their spending. Apart from that, the Company targets to add branding value of “Robinson� by using effective marketing strategies for customer relationship management (the 1 Card member customers) and public relation via media and online channels. These strategies stress the image of Robinson as lifestyle department store and lifestyle malls.
2. To improve our gross margin increasing the proportion of house brands and international brands such as Great value, Payless, Babyshop, Justbuy supports the improvement of our gross margin, coupled with implementing a string of suitable promotional campaign encourages of margin improvement. To create differentiate and memorable marketing campaign to attract customers. Nowadays, retailers, particularly mall operators, have continuously hosted numerous event, marketing campaigns to expand their market share, in consistent with stimulating consumers’ purchasing demands against the slowdown of economy. In order to differentiate itself from competitors while simultaneously avoiding a deep discount which may lead to trouble implemented a set of marketing campaign as follows: 10
2.1 Primary Campaign: The monthly main promotion campaign focuses on a highlight theme which is also related to seasonal festivals and celebrations. The primary campaigns are, for example, RobinsOn Loving Mom, RobinsOn Loving Dad, as well as other campaigns which aims to highlight specific products such as RobinsOn Home, RobinsOn Shoes and RobinsOn Athleisure. Lucky draw is also made available in each primary campaign. In addition, a continuous buying allowance on attractive products have enjoyed an immense popularity and become memorable among customers.
2.2 Pay Day Campaign: A campaign organized with an aim to stimulate customers’ purchasing demand at the end of the month – the period of time when customers have a higher purchasing power. Taking on slogan “Pay Day: End the Month with Shopping Spree”. Indeed, the Pay Day campaign has so far enjoyed a warm welcome among customers. 2.3 Wednesday X2 Campaign: A campaign organized with an aim to stimulate customers’ mid-week purchasing demands, Wednesday is normally the day with the lowest spending rate in a week. Thanks to this campaign, The 1 Card holders can earn double points in their spending on Wednesday. The Company has splendidly succeeded in attracting an increasing number of shoppers due to creative event marketing campaigns at Robinson. Consequently, it is not only benefits sales revenue, but also its tenants in the plaza zone. The Company has partnered with a number of new trading alliances to jointly create new marketing campaigns throughout the year. Thanks to such partnership, it has not only enabled the Company to offer better privileges for customers, but also provided a platform for exchanging customer database to effectively reach new target audience. 3. To manage our cost The Company has installed a centralized cashier to best facilitate customers. And thanks to such top-notch, one-stop service, it can best respond to fast-paced lifestyle which demands an utmost convenience. In keeping with that, the number of staffs employed has been minimized, while the current staff’s working efficiency is enhanced. Furthermore, a solar panel installation project has been made at Robinson Lifestyle Lopburi with an aim to promote energy efficiency and environmental preservation. 11
4. To invest for future growth: Efficient new store expansion and maintain market share The Company aims to expand its stores within a country continuously in order to be located in a potential area and become the first mover. Store expansion is also served the economic expansion and urbanization in each location. Attention is paid to an area closing to neighboring countries due to potential benefit from ASEAN Economic Community (AEC). In 2016, the Company opened 1 lifestyle department store in Nakornsrithamrat and opened1 Robinson lifestyle center. To apply new technology and IT System to enhance proactive sale channel The Company applied the analysis system on the data of visiting times of customers (People Counting System). This can conduct deep analysis to develop and improve its business strategy for better efficiency. Following on a widespread use of the internet, communication devices and information technology across the globe, coupled with an increasing popularity in online shopping, an e-commerce business has so far enjoyed a continuous leap growth. The Company has aggressively entered an e-commerce business since 2015 so as to cater to shifting consumers’ behavior, in consistent with providing an Omni channel retailing. In so doing, it is believed not only to offer a new height of ultimate shopping experience for customers, but also to best facilitate customers who can choose their desirable productsat a relatively quicker manner. Running in parallel with that, the Company has upgraded its social media platform so as to more effectively communicate with its customers and, thereby, can further expand business success to an online market. Comprising of facebook with 700,000 followers, Line with 12 million friends and instragram with 46,000 followers The Company’s social media platform also includes the “Click and Collect” service which enables customers to choose whether they would like to have their purchased products delivered to their home or to pick up by themselves at any of the 44 Robinson or Central branches nationwide or at “Skybox a delivery service on BTS stations. Indeed, the social media platform also maximizes the Store’s selling opportunities as it allows customers to shop online for some products which are unavailable at certain branches. Recruit and retain talented individual to meet our future organizational structure The Company has recruited for professional personnel and seriously
12
improved its employees on their skills and knowledge. They will be well-qualified for the Company’s growth in the future.
5. Making Retail More Than Just Shopping. The Company is committed to make a continuous refurbishment on its existing branches, in line with introducing a new height of shopping experience which inspires fun and excitement for customers. With state-of-the-art service that has been suitably upgraded to meet an ever-changing demands and diverse lifestyles of customers in each location, the Store is currently equipped with a broad array of facilities ranging from stylish cafes, recreation area, free WI-FI hotspots, cell phone charging stations to fitness center. Running in parallel with that, event promotions are periodically held on various occasions under the concept of Center of Community such as Valentine’s Day, Songkran Festival, Mother’s Day, Father’s Day and New Year celebration so as to attracts more customers. Moreover the Company also improves service quality in many aspects such as better standardized service, product knowledge to best facilitate to customers, maintain strong relationship between customers and the Company which leads to re-visit the store.
Expansion and renovation plan Based on the Company’s annual report of 2016, The Company achieved their store expansion target of 5 stores in the year 2013. There are 4 new stores under the format of the Lifestyle Center i.e. Kanjanaburi, Sakonnakorn, Saraburi and Surin, together with one new store is in the big shopping mall in Ubonratchathani. For year 2014, the Company targets to expand another 5 new lifestyle centers in Thailand, and one new store in Hanoi, Vietnam.
13
Now you can just completely forget an image of an old-school shopping mall where you can only see a myriad of products all around you as we are now inviting you to shop and chill in a stylish shopping venue
CONCLUSION: Based on the annual reports gathered, the said move of the company produces good result. The company projected a goal that they want to achieve. The plans are very specific as well as the time-frame. The chart below was taken from the company’s 2016 Annual Report. In 2016, the Company had a total income of Baht 30,187 million, an increase of Baht 1,424 million or 5.0% from 2015.
References:
http://robins.listedcompany.com/misc/AR/201703 27-robins-ar2016-en-04.pdf Audited by: (Thanit Osathalert) Certified Public Accountant Registration No. 5155 KPMG Phoomchai Audit Ltd. Bangkok 14
16 February 2017 http://www.56-1.com/reports/ROBINS/ROBINS_13AR_en.pdf Audited by: (Bongkot Amsageam) Certified Public Accountant Registration No. 3684 KPMG Phoomchai Audit Ltd. Bangkok 17 February 2014 https://www.brightvessel.com/online-shopping-vs-offline-shopping-trends/ http://www.pressreader.com/thailand/bangkok-post/20160316/282037621273465
15