Retail News CRM

Author: Mei Ling Tan

  • Singapore retail sector’s weakness continues in 3Q

    Singapore retail sector’s weakness continues in 3Q

    Prime retail rents fell faster in Q3

    Orchard rents fell 0.9% to $39.86 per sq ft.

    Leasing activity slowed and the rental decline quickened in Q3 2016 due to continued headwinds from poor overall retail sales and online competition.

    Based on rental records captured by the Urban Redevelopment Authority’s Real Estate Information System (URA REALIS) as at 18 October 2016, there were a total of 2,460 leasing deals in Q3 2016, down 12.5% quarter on quarter (QOQ) and 14.7% year on year (YOY). This was a sharp contrast to the 41.4% QOQ jump in leasing volume in Q2 2016.

    According to Colliers International, the fall in leasing transactions in Q3 2016 reflected the weak sentiment in the retail sector which continued to face numerous challenges including Singapore’s weak economy, cost concerns, manpower shortages and intensifying competition from online retailers.

    Moreover, although the latest available figures showed tourist arrivals stayed on the uptrend and rose 6.7% YOY in July, the retail sales index (excluding motor vehicles) contracted by 3.1% YOY and 6.5% YOY in July and August, respectively.

    In light of the above, the decline in prime retail rents accelerated in Q3 2016, after slowing down in the second quarter.

    In the Orchard Road sub-market, the average monthly gross rent for prime ground floor shopping mall space contracted by 0.9% QOQ from SGD40.21 per sq ft in Q2 2016 to SGD39.86 per sq ft in Q3 2016. This is faster than the 0.5% QOQ slide in Q2 2016.

    Likewise, the rate of rental decline picked up pace in the Regional Centres.

    The average monthly gross rent for prime ground floor shopping mall space reached SGD33.38 per sq ft, after falling by 0.8% QOQ in Q3 2016. In comparison, rents fell by 0.3% QOQ in Q2 2016.

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  • Huawei applies machine learning to network control

    Huawei applies machine learning to network control

    Huawei has developed a prototype technology involving using machine learning to achieve intelligent, automated network traffic control.

    The vendor’s Noah’s Ark Laboratory has announced results of tests into Network Mind, a prototype technology designed to enable automatic detection and accurate prediction of traffic changes on a network, applying optimizations based on service changes.

    Huawei said Network Mind can facilitate the management of millions of network elements with millisecond response time.

    It uses cutting edge machine learning technologies such as online deep reinforcement learning and real-time big data mining

    The technology is being designed for operators and enterprises maintaining ultra-large networks. The prototype was first developed in December last year, and is being tested in collaboration with operators.

    Tests indicate that Network Mind is is up to 500% more efficient in realizing KPIs such as task completion or policy generation compared to existing template or heuristic algorithm-based optimization methods.

    Network Mind is also over 50 times more efficient when analyzing paths of large optical networks, which has the potential to reduce the time it takes to analyze use cases such as optical network failure prevention from 5 hours to as little as 6 minutes.

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  • Brussels Airport has launched its cool dolly

    Brussels Airport has launched its cool dolly

    Brussels Airport has launched its cool dolly on the opening day of the The International Air Cargo Association’s Air Cargo Forum in Paris.

    Following two years of work with its partners, the new airside pharma transport dolly is designed to be the missing link in the cool chain link. The pharmaceutical sector is of major economic importance to Belgium, explained Nathan de Valck, cargo and product development manager at Brussels Airport [second from right in photo], and this dolly had to meet 17 requirements identified by the industry.

    “We wanted to make a cost-effective temperature-controlled airside transport solution available to the market,” said de Valck.

    The pharmaceutical sector has been actively involved in this project, de Valck went on to say, along with airlines, forwarders, handlers and an engineering company.

    One of the requirements of the new dolly was to avoid extremes of temperatures. Temperatures below 5 degrees Celsius or above 25 were unacceptable, but temperatures in between, as long as they were stable, were acceptable.

    Solar panels on the roof allow the dolly to operate autonomously for several days without needing to be plugged in, and the unit is designed to reach the required temperature quickly, meaning the dolly can be used several times a day.

    Brussels Airport has currently ordered four dollies, and will look to increase the number if needed.

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  • Singapore commercial property faces a gloomy outlook. Here’s why

    Singapore commercial property faces a gloomy outlook. Here’s why

    The outlook for Singapore’s commercial property, including retail, office and industrial space, may have turned grim, according to forecasts from real-estate services provider Colliers.

    Singapore’s retail landlords and tenants face “challenging times,” Colliers said in a note dated Monday, forecasting demand for retail space to lag behind supply this year, with a rise in new space pushing up island-wide vacancy rates.

    Colliers said leasing activity slowed and rental declines accelerated in the third quarter amid poor retail sales and online competition.

    Singapore’s retail sales fell 1 percent in August on year overall and excluding the 30 percent jump in car sales, fell 6.5 percent, with drops in categories including jewellery, restaurants and recreational goods, according to official data.

    “In the near term, the uncertain economic outlook and heightened unemployment risk will probably be dampening factors on consumer spending,” Colliers said, although it expected the year-end holiday shopping season would mitigate the hit to retail sales.

    It forecast ground-level shopping-mall rents in 2016 would fall by 2.0-2.5 percent in regional centers and by 2.5-3.0 percent in the prime Orchard Road shopping belt.

    Singapore’s office segment may not fare much better.

    “Overall office rentals across Singapore continue to slide under pressure of oversupply and lacklustre demand as the market saw the fifth consecutive quarter-on-quarter rental decline in the third quarter,” Colliers said.

    “Underpinned by gloomier economic outlook from potential U.S. rate hikes, an uncertain Chinese economy and concerns on the repercussions of Brexit, business sentiments and overall office space expansion remain restrained,” it added.

    Colliers noted that Singapore’s preliminary gross domestic product estimate for the third quarter showed a 4.1 percent on-quarter contraction, with some economists saying a technical recession was a possibility.

    When it comes to office rents, grade-B office buildings were taking a bigger hit as tenants fled to better quality space, it said.

    “We expect competition among landlords to fill the backfill spaces, especially in older office buildings, to intensify over the next few quarters,” it said.

    Colliers forecast the office vacancy rate would surge, with premium and grade-A supply in the central business district (CBD) set to rise 5.6 percent this year and another 12.1 percent next year as more buildings were completed.

    It expected rents in that segment would decline by up to 3.0 percent in the fourth quarter, for a full-year decline of 7.0-12 percent.

    When it came to industrial property, Colliers advised it was an “opportune time” for tenants to evaluate their needs.

    “Given the tentative economic outlook, we expect industrial rents to remain soft over the next three to six months,” it said. “Coupled with the ample space options available, there will be opportunities for industrialists to secure choice business premises at competitive rents. ”

    It expected 20 million square feet of new industrial space to be added this year, pushing up vacancy rates island-wide.

    Colliers forecast that rents for prime multi-user conventional industrial space would fall 7.0-14.0 percent this year.

    Amid tough competition for tenants, it expected rents at independent high-specification industrial buildings located outside the science and business parks would fall further in the fourth quarter, for a full-year decline of 9.0 percent.

    But in business parks, it expected rents would rise a modest 1.0-2.0 percent for the year as higher rents were attainable at newer developments.

    Colliers noted, however, in the third quarter, landlords didn’t cut rents by much across industrial properties.

    Most landlords weren’t willing to cut rents by large margins in the period after sharp cuts in the first half of the year and were instead giving tenants more incentives, such as longer rent-free and fitting-out periods, covering alteration works and subsidizing repairs, it said.

    –Leslie Shaffer

  • Singapore’s Mall Vacancies Jump to Highest Level in a Decade

    Singapore’s Mall Vacancies Jump to Highest Level in a Decade

    Singapore mall vacancies rose to the highest level in a decade in the third quarter as an oversupply of shop spaces added to muted spending by shoppers.

    A gauge of mall vacancies rose 0.6 percent to 8.4 percent in the three months ended Sept. 30, even as rents declined 1.5 percent in the quarter, data from the Urban Redevelopment Authority showed Friday. That’s the highest vacancy rate since Sept. 2006.

    Demand for shopping space is being dented as consumers rein in spending amid slowing growth and buyers increasingly turn to shopping online. That’s converging with a rising supply of mall space, which threatens to further squeeze rents. Singapore will add almost 4 million square feet of retail space over the next three years, according to data from Cushman & Wakefield.

    Singaporeans are among the most tech-savvy spenders in Asia, with a greater percentage shopping online than customers in Hong Kong and Malaysia, according to data from MasterCard. Singapore’s retail market is also reeling from the impact of China’s slowing economy, and a pullback in spending by tourists, especially those from the mainland. Tourism spending fell for the first time in six years in 2015, even as tourist arrivals rose.

    It’s not just the retailers feeling the heat. Office landlords too are struggling to maintain rents amid rising supply. Office vacancies rose to the highest in more than four years despite rents sliding 1.1 percent in the quarter. Prices of office space decreased 0.4 percent in the quarter compared with a 1.5 percent decline in the previous three months.

    Residential rents dropped 1.2 percent in the three months to Sept. 30 to the lowest since June 2010, the data showed. Singapore home prices dropped by the most in more than seven years as developers offered discounts amid signals from the government that it won’t roll back property curbs initiated in 2009. The price index fell 1.5 percent in the third quarter, the data show.

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  • How Did China’s Retail Sales Look in September?

    How Did China’s Retail Sales Look in September?

    China’s retail sales

    On a year-over-year basis, China’s retail sales showed a strong recovery in September 2016, according to the National Bureau of Statistics of China. The country’s retail sales rose 10.7% in September 2016 compared to a 10.6% rise in August. This reading was above the market expectations of a 10.6% rise, and it was the highest since January 2016.

    How Did China’s Retail Sales Look in September?

    Sector-by-sector performance

    Building material sales rose 14.2%, furniture sales rose 8.7%, home appliance sales rose 8.6%, telecommunications sales rose 5.1%, personal care sales rose 12.5%, automobiles sales rose 13.1%, and cosmetics sales rose 7.7%.

    Economic impact

    The sales improvements in different sectors signify that consumer sentiment is improving. After the slowdown in economic activity in China, the economy is going through a transitional phase. From a manufacturing hub, it’s transitioning to a consumer-based economy. Consumerism will play a large role in the country’s future economic growth.

    Consumption patterns are changing in China’s economy. Chinese consumers are becoming more selective toward the products and services that they use. As China is one of the world’s most important economies, improvement in its growth drivers could aid the global economy.

    In the next part of this series, we’ll analyze China’s monthly new loans in September 2016.

  • Ericsson appoints new CEO

    Ericsson appoints new CEO

    Ericsson has appointed long-time board member Börje Ekholm president and CEO, effective from mid-January.

    Ekholm will replace interim CEO Jan Frykhammar on January 16, who is standing in following the resignation of Hans Vestberg in July.

    Ekholm joins Ericsson from Patricia Industries, a division of Sweden’s Investor – Ericsson’s largest shareholder -where he is CEO. Prior to this he was CEO of Investor AB between 2005 and 2015, and has held positions at companies including Novare Kapital and McKinsey and Co.

    “I am very excited about this opportunity. As the networks and applications become even more important in a 5G connected world, our customers, and the industry, look for continuous innovation,” he commented.

    “I look forward to joining the great team at Ericsson and work closely with existing and new customers around the world in shaping the future of our industry.”

    Ekholm is also a board member of Alibaba and several other companies. He is based in the US, and will stay there when he takes the role. He will retain his position on the Ericsson board.

    Ericsson recently announced plans to cut 3,000 jobs in Sweden as part of the vendor’s ongoing cost cutting program.

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  • SK Telecom Q3 profit falls 15.6%

    SK Telecom Q3 profit falls 15.6%

    SK Telecom has reported a 15.6% year-on-year decline in net profit for the third quarter to 322.1 billion won ($281 million), due to factors including the impact of Samsung’s Galaxy Note 7 recall.

    Operating revenue fell 0.4% to 4.24 trillion won due to a decrease in revenues at retail unit PS&M following the recall. ARPU also declined 2.1% year-on-year and 0.8% sequentially to 35,471 won.

    But revenue from SK Telecom and subsidiaries SK Broadband and SK Planet all increased quarter-on-quarter, and net income grew 10.7% over the same period due to equity-method income from semiconductor division SK Hynix.

    The operator added around 301,000 new subscribers during the quarter, taking its total to nearly 29.5 million. Of these, over 20.5 million are LTE subscribers, a penetration rate of 69.8% Monthly churn decreased by 0.1 percentage point to 1.4%.

    SK Telecom revealed that its mobile navigation T Map grew to reach 9.18 million monthly users by the end of September, around three months after its launch

    Looking ahead, the operator said it is focused on strengthening its core competitiveness as a mobile network operator, while using its nationwide LoRa and LTE-M IoT networks to deploy services that enhance customer convenience.

    “We expect that our strategy to fully open up major platforms including T Map and T Phone will lead to a successful outcome in the mid-to long-term,” SK Telecom CFO and head of strategy and planning Hwang Keun-joo said.

    “SK Telecom will accelerate its transformation into a next-generation platform company and keep developing customer-oriented products and services.”

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  • Lotte to launch Lotte.vn in Vietnam

    Lotte to launch Lotte.vn in Vietnam

    Korean retailer Lotte is entering the Vietnam eCommerce market with Lotte.vn after six months’ preparation.

    By launching its first online shopping website on October 28, the Korean retailer is expecting to acquire 20 per cent of the online market. And it sees Lotte.vn as completing the full spectrum of retail services: physical stores, TV shopping, mobile shopping and now online.

    Despite joining the market a little later than other eCommerce sites such as adayroi.com and tiki.vn, Lotte.vn has some advantages such as its products being available – and sourceable – from its local Lotte Department Stores.

    According to Lotte.vn GM Seo Tae Ho, all products from the department store will be sold online, with cosmetics and apparel expected to be the two most popular categories.

    Furthermore, Lotte is planning to encourage more purchasing by developing a shopping app for Android and iOS.

    Vietnam is still seen to be a leader in the Southeast Asian eCommerce market in the next five years along with Indonesia.

  • Sa Sa profit drop looms

    Sa Sa profit drop looms

    Sa Sa profit is expected to fall 35 to 45 per cent for the six months ended September 30.

    The Hong Kong-based cosmetics retailer has issued a profit warning, citing a drop in both sales and gross profit margin of its Hong Kong and Macau business, weaknesses in some overseas stores and decline in online profits.

    Meanwhile, the group has recorded a 2.3 per cent decrease in retail and wholesale turnover to HK$1910.9 million (US$246.3 million) for its second quarter.

    In other markets, including China, Malaysia, Singapore, Taiwan and Sasa.com), the group’s turnover fell 2.9 per cent. For Hong Kong and Macau, turnover was down 2.2 per cent to HK$1552 million, total sales easing by 2 per cent while same-store sales were 2.5 per cent down on a year-on-year basis.

    However, there was a 3.9 per cent rise in the number of transactions because of increased traffic growth. The number of transactions of Hong Kong and mainland customers rose by increased by 1.8 and 5.9 per cent respectively, while the average sales per transaction fell by 5.5 and 6.9 per cent respectively.

    Improved sales performances, says the group, were a result of its efforts to adjust product offerings to meet market demand. The resulting change in product mix intensified downward pressure on gross profit margin for the quarter.

    For the National Day Golden Week holiday from October 1 to 7, the group’s retail sales in Hong Kong and Macau had positive growth of 13.8 per cent, with same-store sales growing by 12.4 per cent.

    As at September 30, the group had a total 283 stores/counters, down from 288 at June 30. Hong Kong and Macau has 113 outlets (up one), China 53 (down two), Malaysia 68 (down one), Taiwan 26 (down five). Singapore was steady at 23 outlets.

  • Tokyu Hands opening third Singapore store

    Tokyu Hands opening third Singapore store

    Japanese department store Tokyu Hands plans to boost its overseas sales, which now contribute 1 per cent of overall sales.

    Overseas income for its latest year totalled about 800 million yen (US$7.69 million).

    A third store is opening next month in Singapore, where Tokyo Hands has had managed stores for two years, and next year the group plans to start trading in Malaysia.

    tokyu-hands-artist

    Tokyu Hands opened its first overseas branch in Taiwan in 2000 and now has 15 franchised stores on the island.

    Takenori Tsuji, who heads Tokyu Hands’ international business, says the Taiwan stores are mainly in Taipei with management entrusted to the franchisees, “but we consult on the selection of merchandise and store layout”.

    He says trends in Japan, such as aging consumers, have made it hard for the store to grow domestically.

    Tokyu Hands’ first directly managed store overseas opened in China in 2012, but closed it in January this year. Tsuji says this was a result of management difficulties.

    “It took more time and effort than expected to clear customs when we brought in products from Japan, making it hard for us to sell new products quickly.

    “Some sales people quit soon after being hired, and it was hard to train Japanese employees in the local area.”
    Six months after launching, the store had a temporary sharp drop in sales when relations between China and Japan worsened over the disputed Senkaku Islands. However, full-year sales were “reasonably good”.

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  • Penang outlet mall Design Village about to launch

    Penang outlet mall Design Village about to launch

    Penang will gain its first premium outlet mall, Design Village, next month.

    In Batu Kawan in mainland Penang, it will be the biggest outlet mall in Malaysia. It was developed by PE Land, which owns and runs The Spring shopping mall in Kuching.

    The outlet mall is on a mixed-use site that will include a hotel and high-end condominiums. The single-storey mall has a net leasable space of 400,000 sqft (37,161 sqm) for 150 stores.

    There are more than 80 brands already committed to the mall, which is aiming for up to 100, says Savills Malaysia MD Allan Soo. The company is the international leasing and retail development adviser for Design Village.

    Design Village Malaysia 1

    The mall’s retail mix will be 20 per cent large-format stores, 15 per cent F&B, 7 per cent sports outlets and 5 per cent children’s stores, with 25 per cent new tenants and 28 per cent others.

    It will include the biggest Adidas outlet in Malaysia, plus the first outlet stores for Aldo and Bata. Other retailers include Banana Republic, Guess, Padini Concept Store, Sacoor Brothers, Samsonite and Starbucks.

    The mall will provide daily shuttle services to and from hotels and the airport.

    Design Village GM Aileen Tay says the mall is also working with tour companies to bring in tourists who will be offered rebates through tax-free shopping network Global Blue.

    PE Land is the retail and property development arm of Borneo-based conglomerate Pan Sarawak Holdings.

  • Why Apple China is struggling

    Why Apple China is struggling

    Apple’s sales decline is slowing – but there are several reasons why it is doing so badly in China…

    While the iPhone 7 has not been out long enough to have had a full impact on this quarter’s numbers, it has helped Apple to moderate the pace of revenue decline.

    Even so, global revenues are still down by 9 per cent over last year indicating that Apple is a long way off the steep growth trajectory it once enjoyed. With more investment going into stores, and with those store selling fewer products than they once did, it is not surprising that net income is on the slide. Indeed, Apple will be particularly disappointed with its rare full-year profit decline.

    China is an interesting, and worrying, example of some of these points. Across this quarter Apple saw revenues fall by 30 per cent in Greater China. In part this is down to the fact the market is more mature and ownership of iPhones is higher than it once was. But it is not the whole story: domestic brands like Huawei and Vivo have gained share thanks to the fact that they have, in design and technical terms, caught up with Apple and are now seen more favorably by consumers. In essence, in China and elsewhere, while Apple’s products are still seen favorably, the distance between Apple and its competitors is nowhere near as great as it once was.

    “No longer firing on all cylinders”

    Globally, the change in Apple’s fortunes is partly down to the fact that it is no longer firing on all cylinders. Previously, Apple was able to rely on strong sales of phones, tablets and computers to drive up revenue and profit across all geographies. This is no longer the case. Tablet sales are in decline. Growth from computers, which are long overdue a refresh, is weak. And consumers in some markets are saturated with product which makes growth much more difficult to attain. The latter is exacerbated by the fact that new releases, such as the iPhone 7, have been iterative rather than innovative.

    Unfortunately, Apple’s attempts to add new strings to its fiddle have not counteracted some of the strings that are now playing out of tune. In particular the Apple Watch, while a triumph of engineering, has simply not become a mass market product in the way that the iPhone, iPad, or iPod did. The one bright spot comes from service revenue, which includes streams of sales from Apple Pay, Apple Music and other services, and is up 24 per cent year-on-year. Over the longer term, this is a very lucrative part of Apple’s business and growth story, but it is not yet at the point where it is offsetting revenue declines in other areas.

    Despite this relatively gloomy view, it is important to note that Apple is being judged by its own incredibly high standards. Even with the dips in growth it remains a phenomenally successful business that is far from running out of steam.

    Complexity over simplicity

    That said, there is a complexity creeping into the firm that runs counter to Apple’s underlying philosophy of simplicity. The recent launch of the iPhone 7 in the US is a case in point: the buying process has been dreadful. The cumbersome system of placing orders via the website, where users have had to enter carrier information, has frustrated many customers. Meanwhile the vast array of different models, color options and payment and upgrade methods has contributed to a shortage of the right stock in the right place and has inevitably slowed sales.

    For a brand like Apple these things matter. As the company has always maintained, the experience of purchasing is almost as important as the product itself. While there is no doubt Apple continues to be committed to this mantra – especially with the store upgrades it is now rolling out – it needs to look more carefully at issues of stock availability and to make the purchase process simpler and easier.

    Looking ahead, Apple’s prospects give cause for optimism. In the next fiscal year the company will come up against softer comparatives which will flatter performance. However, the unveiling, later this week, of new computers will help to ease up Mac sales. And as the iPhone 7 becomes more widely available, Apple will receive a nice growth spurt over the holiday quarter.

    Longer term, the company will be helped by the natural replacement cycle of older iPhones as these break, are damaged, or become less attractive to their users. Furthermore, Apple will, at some point, come up with a new phone – or maybe another device – that represents a significant leap forward and puts it on a better growth footing.

    As such, this current period is a hiatus rather than representing a material change in Apple’s long term prospects.

     

    -Neil Saunders

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  • ‘Astonishing growth’ for Chinese FMCG market

    ‘Astonishing growth’ for Chinese FMCG market

    The Chinese FMCG market online has shown “astonishing growth” according to a report by global consulting firm OC&C Strategy Consultants.

    In 2010, the market was worth just US$1.4 billion – today it has exceeded $25.3 billion according to data from Euromonitor. It has far surpassed any other country in the world and is about twice as big as the US.

    But while large, FMCG still has a relatively lower online penetration than other categories in China, providing ample opportunities going forward especially given favourable tailwinds, believes OC&C.

    The report Bits & Bytes: FMCG’s shift to eCommerce in China aims to help FMCG brands understand eCommerce trends in China and thus to derive the best strategy for their target segments in the market.

    “The post-80s and 90s generation in China, who grew up with the internet, are coming of age and entering the workforce, forming families and increasing their need for FMCG. It is unquestionable that they will become an important customer segment and driving overall growth of FMCG eCommerce,” comments the report.

    “Moreover, growth is not only coming from the younger generations. In fact, more people aged between 30 and 50 intend to devote more of their FMCG spending to online channels next six months (Figure 1), suggesting the universality of growth of FMCG eCommerce.

    Figure 1

    “Price and convenience related factors are consistently placed as the top reasons for buying FMCG online in China. Growing middle class want to save money on everyday consumables so they can use these savings towards a better lifestyle including for dining out or buying international fashion brands,” said Jack Chuang, Hong Kong-based partner, Greater China, OC&C Strategy Consultants.

    He says consumers’ need for convenience is fuelling the demand to buy FMCG online anywhere, anytime.

    “All these are favourably fulfilled in China given the rapid development in infrastructure and logistics across the country, with leaps and bounds in both intra-country movement of goods as well as last-mile delivery to consumers. These make online shopping of FMCG easy, inexpensive and fast,” said Chuang.

    When respondents were asked to rate various eCommerce platforms based on their experience, Alibaba’s platforms were neither the most highly rated, nor are they frequently ranked among the top five across selected FMCG categories.

    Figure 2

    However, interestingly, when the survey asked about brand awareness and actual purchases, Tmall and Taobao, under Alibaba, received highest brand awareness and shopper penetration across the major FMCG categories explaining Alibaba’s dominating market share.

    Figure 3

    A third of survey respondents ranked ‘familiarity’ as being the key reason on why they rely so much on a particular online platform. Beyond benefiting from being an early entrant, Alibaba is also able to provide competitive prices, a convenient one-stop shopping destination, as well as a ubiquitous payment system.

    Figure 4

    “Online platforms in China are always fighting for customer traffic and market share, yet consumers often perceive buying on Alibaba a bargain, thanks to its promotions,” added Chuang. “Selling online in China is rewarding yet not easy. Brands can benefit and achieve their online objective through partnering with strategically-aligned platforms and by customising their offerings to cater to various needs of different market segments. In addition, brands need to figure out the level of control and capability which an online store demands, so as to determine whether to establish in-house operations or to rely solely on platforms. Choosing the right model and strategy can definitely make it much more effective.”

    Though Alibaba’s dominance remains undeniable, the online FMCG market is relatively more fragmented than retail in general. Alibaba commands a 52 per cent share in FMCG as compared to 70 per cent of the overall online retail market.

    “Just as you would not depend entirely on one particular store format (e.g. hypermarkets or mom-and-pop stores) as you formulate your offline channel strategy, the same applies to online whereby brands should leverage each platform’s unique strengths, be it its large traffic flow, strong authenticity and quality, more personalised customer service, etc.,” commented, Chuang.

    “At the same time, companies should treat eCommerce not only as a sales channel but also as a platform to build their brand. For example, premium players can build brand awareness to a wide audience by opening a flagship store, while other companies who lacks physical presence in China, can use cross-border platforms to ‘test the water’ prior to their full market entrance. They should also integrate offline and online channels to create a win-win proposition, either through leveraging existing offline infrastructures, such as distributor networks, to facilitate online sales; they may also consider using e-commerce to facilitate offline strategies,” concluded Chuang.

    The study canvassed 4600 respondents from 16 cities across China, looking into 13 selected sub-categories across infant milk formula, packaged food and soft drinks, alcoholic beverages, and beauty and personal care, from August to September 2016.

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  • Hokkaido Baked Cheese Tart heads to Australia

    Hokkaido Baked Cheese Tart heads to Australia

    Food enterprise ST Group has launched Japanese-style Hokkaido Baked Cheese Tart outlets in Australia.

    Using a traditional recipe involving three cheeses from Japan’s dairy heartland of Hokkaido, the tarts have already been introduced in Brunei, Indonesia, Malaysia, Shanghai and Singapore. Six outlets are planned for Australia, three in Melbourne to be followed by three in Sydney next year.

    The first Hokkaido Baked Cheese Tart stores launched in Malaysia this year, selling up to 20,000 units a day.

    Designed by Eat Architects, Hokkaido Baked Cheese Tart kiosks are compact with a luxury aesthetic, featuring marble benchtop displays and low-slung designer lighting. The tarts are displayed like precious gems.

    ST Group MD Tatt Ghee Saw says Australia’s multicultural society is continually evolving, along with its palate and cuisine preferences. “At ST Group we are passionate about sharing the foods we love in Southeast Asia. ”

    Tatt Ghee Saw

    He established the group in 2011, recognising the need for comforting cultural eateries, much like the hawker’s markets and corner laksa stores of his native Kuala Lumpur.

    His first venture was PappaRich in Melbourne, which attracted long queues. It is now a major franchise enterprise with 26 stores throughout Australia and New Zealand. The group’s other brands are NeNe Chicken, Gong Cha (New Zealand only) and iDarts Australia.

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