Enhancing value in a crowded space

Enhancing value in a crowded space.

Dubai-based owner of Robinsons and John Little sizes up retail landscape.



Mr Kesri Kapur, Al-Futtaim Group’s head of business in Asia.

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RETAILERS catering to bargain hunters are finding it harder to survive here due to the many international firms swooping in over the years, says the spokesman for the Al-Futtaim Group, the Dubai- based owner of Robinsons and John Little.

This is partly why the John Little store at Marina Square will close on April 26 and the Tiong Bahru Plaza outlet will shut in the final quarter of the year.

That will leave the firm to focus on the Plaza Singapura and Jurong Point stores.

Value retailers, as they are called, cater to bargain-conscious shoppers who used to make a beeline for John Little on Orchard Road, especially when it was at the now-gone Specialists' Shopping Centre, noted Mr Kesri Kapur, Al-Futtaim Group's head of business in Asia.

He told The Straits Times in an interview yesterday: "At the end of the day, it's about whether there is a place for so many value retailers or not in Singapore.

"With the cost of business being very high, the top line might be there but will it be sufficient for any business to make money?"

The Marks & Spencer outlet at Centrepoint will also close on March 29.

The wrong choice of store locations also affected business, which is why Al-Futtaim is downsizing or moving out. Suburban businesses like Jurong Point are doing well, Mr Kapur noted, but there are no plans to expand further into the heartland.

Store leases were also expiring and Al-Futtaim decided not to renew them. The conglomerate owns the Robinsons Group of Stores and the distribution and retailing arm RSH, which also runs the Royal Sporting House chain.

On top of John Little's two store closures, Al-Futtaim announced a string of sweeping changes last Thursday, including major upgrades next year for the Raffles City Robinsons and Marks & Spencer, as well as its Paragon Marks & Spencer outlet.

Mr Kapur was unable to disclose the exact financial implications, but he did say that the only savings would be the rental costs of the stores to be closed.

"Maybe we are spending a little less this year in Singapore, compared with the capital expenditure in Thailand and Malaysia.

"However, in 2016, with revamping Robinsons Raffles City and two Marks & Spencer stores, the total spend will be in the tens of millions of dollars."

Mr Kapur also said Al-Futtaim had been discussing these ideas for some time and they were practical moves.

"When doing this exercise, we're not doing it only to save costs, it's about efficiency as well. Some of the stores that we are closing are profitable stores."

He said the main reasons for the changes were limited manpower and funds.

"We didn't have a dollar value or figure in mind, and said let us see how we can ensure that sales stay the same, and people are deployed at other locations, even if we were to reduce the number of stores we had."

It is retaining the staff affected by the store closures - fewer than 100 people - and offering them similar roles or the chance to upgrade their skills and apply for different roles across the group.

Al-Futtaim has more than 7,000 employees in Asia, with about 2,500 of them in Singapore.

Mr Kapur noted: "There are hardly any people who want to come and work in retail, so we better take care of the people that we have. We are short of staff in our existing businesses and locations."

There are still plans to grow in Singapore and the region, he said.

One idea is to introduce online shopping with Robinsons by the end of this year, and Royal Sporting House and Marks & Spencer next year.

He said: "We are working on a model that allows customers to have an option of 'click and collect', where they place an order and collect in store, or an option of home delivery.

"We are still evaluating our business approach on how to introduce our e-commerce business, and the most likely scenario is that Robinsons would be working with a third-party service provider to deliver our e-commerce option."

The Straits Times / Money               Published on Wednesday, 18 March 2015

By Rachael Boon                             rachaelb@sph.com.sg

BACKGROUND STORY

DIMINISHING RETURNS?

At the end of the day, it's about whether there is a place for so many value retailers or not in Singapore. With the cost of business being very high, the top line might be there but will it be sufficient for any business to make money?

- Mr Kesri Kapur, Al-Futtaim Group's head of business in Asia