Retail News CRM

Author: Mei Ling Tan

  • World-first diamond exchange set for Singapore

    World-first diamond exchange set for Singapore

    The world’s first exchange for physical diamonds, is set to launch in Singapore in the fourth quarter, with a longer-term plan of creating a diamond futures market.

    Alain Vandenborre, the man behind the Singapore Diamond Investment Exchange (SDiX), thinks they can be bought and sold in a different way.

    He said he is surprised no one has tried to bring the trading of diamonds as a commodity into the 21st century on a global scale.

    To achieve that vision, some of the biggest diamond companies in the world have been secured as suppliers, including New York-based Leo Schachter, a leading manufacturer.

    “Up until now, the industry has been old-school. There’s wholesalers, there’s retailers, people in the middle, and there’s just no room for those people anymore. This way, we as manufacturers can go directly marketplace to sell our goods at the right price,” said CEO Alex Yarrow.

    According to SDiX, it expects to see turnover of at least US$250 million in its first full-year of trading, with operational bases set-up in Singapore, Hong Kong and India. And there are bolder plans for the future.

    “We’re going to start as the spot-market, but that’s not my strategy. The strategy is to move towards a futures licence,” said Mr Vandenborre.

    “The Exchange will be as soon as we’re regulated under the Futures Trading Act and will be launching a number of derivative products, which are highly needed. The diamond industry needs to hedge its position.”

    The new exchange might be what the marketplace needs.

    According to the widely-followed Rapaport Diamond index, the August price of a one-carat stone was 13 per cent lower than a year ago. Still, at the Hong Kong and Jewellery and Gem Fair, some traders remain upbeat despite economic wobbles in China.

    “When they slowdown, it’s going to cause a lot of pressure, so the volatility has increased considerably, I think it’s stabilising now as we speak so I believe players will come back in because the market has dropped quite a bit,” said Mayank Mehta, CEO of Rosy Blue.

    The trading of polished diamonds is quiet and expectations from dealers at the Hong Kong and Jewellery and Gem Fair was muted. Retail inventory levels remain high, particularly among 0.30-carat to 0.40-carat goods, as jewellers are not stocking up on inventory because of a retail slowdown in China.

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  • Apple to launch online payment in China

    Apple to launch online payment in China

    Apple will launch an online payment service in China, as the tech giant seeks to expand in its largest market outside of the US despite fierce competition from local rivals.

    An Apple Company offering online payment has launched in the Shanghai Free Trade Zone (FTZ), an area set up as a testbed for financial reforms, China News Service reported late Thursday.

    Apple didn’t give a date for the launch, but the company told AFP that CEO Tim Cook hopes to set-up Apple Pay in China “as quickly as possible”.

    Cook previously said that he expects China one day to surpass the United States to become Apple’s largest market.

    But China’s e-commerce giant Alibaba dominates the country’s online payment sector, with the Paypal-like Alipay taking around 80 percent of the market.

    Internet firm Tencent is also catching up with a similar service provided via its popular messaging application WeChat.

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  • Singapore Retail Sales Growth Eases Less Than Expected In July

    Singapore Retail Sales Growth Eases Less Than Expected In July

    Retail sales rose 0.2 percent in August, slightly below analysts’ consensus estimate.

    “Along with a 0.3% m/m rise in core sales and an expected increase in restaurant sales, these components imply a 0.2% gain in total retail sales for August”.

    In August, spending at gasoline stations slid 1.8 percent in August. Excluding volatile autos and gasoline, sales advanced 0.3%.

    People “have chosen to spend some of their gas price windfall on services – leisure, recreation, travel, etc. – which aren’t included in the retail sales numbers”, he said in a client note.

    On a seasonally-adjusted basis, retail sales decreased 2.2 per cent in July over the previous month. Sales at clothing stores rose 0.4 percent.

    Consumer spending has picked up in recent months after a choppy showing early in the year – gains that some economists attribute to milder weather after a harsh winter and Americans’ growing belief that low pump prices will be around for a while. The hiring – 2.9 million additional jobs over the past 12 months – has translated into a surge of spending at auto dealers and restaurants. The USA economy has become increasingly reliant on consumer spending to maintain growth as Europe and China have struggled to expand at a faster pace.

    “Retail sales showed solid gains in August, despite financial market volatility and a deflationary pricing environment in retail”, said NRF Chief Economist Jack Kleinhenz in a blog posting.

    Consumers came back to life in the first two months of the third quarter after lying low in June, wrote IHS Global Insight Director of U.S. Consumer Economics Chris Christopher in a research note. Overall, however, the numbers suggest consumers have been upping their spending in the spring and summer as they begin to feel more confident about their circumstances. The strong labor market has also helped.

    The index for mining fell 0.6% in August, while the index for utilities rose 0.6%.

    “With the Fed eagerly awaiting a sign or signs the economy is strong enough to withstand a rising rate environment, the data suggests the Fed will continue to wait for some time”, Piegza said.

    Americans spent less on gas in August as prices fell and used some of the savings to buy new cars or go out to eat.

  • ‘First’ high-end luxury concession for Kunming

    ‘First’ high-end luxury concession for Kunming

    Lagardère Travel Retail has opened the first high-end luxury concession in Kunming’s Changshui International Airport in South-Western China, which the retailer says is the result of a ‘close and successful partnership’ with Yunnan Airport Group and Asiaray Media Group.

    Inaugurated in 2012, Changshui airport is said to be one of the largest and most modern in Asia and serves as a gateway to China’s Yunnan region with growing links to neighbouring countries of South-East Asia.

    Evidence of this can be found in the airport’s traffic reports, which show that the number of passengers at Kunming airport has risen rapidly in recent years. In 2015, the airport is expected to serve over 36m passengers and will be the fastest-growing of China’s large airports.

    The master-concession, encompassing an area of over 1,000sq m in the main departure concourse, brings together ‘ten of the biggest names in luxury fashion and cosmetics’, says LTR.

    Emporio Armani, Salvatore Ferragamo, Dior, Hugo Boss, Bally, Montblanc, Coach, MCM, Tommy Hilfiger and Calvin Klein Jean comprise a strong brand line-up offering a range of ready-to-wear, accessories and beauty products.

    Dublin-based Aer Rianta International originally opened 11 domestic shops at what was Kunming’s newly-built Changshui International Airport in south-west China in June 2012.

    The contract, secured in 2011, was seen as an important one at the time for ARI, marking its first Mainland China airport store openings where it held exclusive rights to sell duty paid fashion goods and accessories, perfume and cosmetics, confectionery, jewellery and souvenirs at the capital city airport in Yunnan Province.

    However, in September 2014, Aer Rianta International confirmed that it had has ceased duty paid operations at Kunming International Airport and in a brief statement issued at the time, ARI CEO Jack MacGowan said: “We are pleased that ARI Yunnan has reached this constructive and amicable agreement with Yunnan Airports Group in the best interests of both parties and look forward to potential opportunities for working together again.”

    ‘WORLD-CLASS SERVICE FROM SALES CONSULTANTS’

    According to LTR, customers will be able to enjoy “world-class service delivered by Lagardère Travel Retail’s sales consultants who benefit from the company’s ISO-9001 certified OSCAR training programme,” says the Paris headquartered group.

    “The industry leading training program covers customer service, brand philosophy and product knowledge, is unique in the travel retail industry and gives the font-line team the expertise and confidence to provide the exceptional service and personalised experience.

    “The addition of high-end brands to the retail offer at Changshui airport was made possible by the complete transformation of the main commercial surfaces in the airport’s departure concourse.”

    LTR and Asiaray Media have worked closely with Yunnan Airport Group to plan and implement the terminal’s commercial upgrade, which intends to elevate the passenger experience by aligning the quality of the commercial offer with that of the terminal’s ‘outstanding’ architectural design.

    “We are also very pleased to have the opportunity to further deepen our working relationship with our global brand partners that have taken part in this project. We look forward to further development in Kunming Changshui airport across the spectrum of categories. Our partnership with Asiaray creates novel and unique opportunities to drive passenger engagement and increase the visibility of the commercial offer.Eudes Fabre, General Manager – China for Lagardère Travel Retail, said: “This new opening is an exciting development for Lagardère Travel Retail in China. We are grateful to Yunnan Airport Group for their trust in our capabilities and for their effective support throughout the planning and building process.

    “We are now working together with the airport to offer exclusive and personalised services that improve the airport experience for our customers, create delightful moments and build loyalty.”

    Vincent Lam, CEO of Asiaray Media Group added: “We very pleased with the collaboration with Lagardère Travel Retail. They are a global leader in the airport retail and F&B sector and have demonstrated their professionalism, innovative spirit and understanding of local market trends throughout the different stages of this project. This partnership is an important development for our company.

    “We aim to create an innovative business model that benefits all parties by delivering an engaging experience between customers, shops and airport. This is our first pilot site where we have exclusive advertising concession at Kunming Changshui airport.

    “By closely integrating advertising and commercial assets within the terminal, we will be able to create a more interactive and ultimately more compelling experience for travellers. Our media assets will support the growth of the retail operation which shall certainly benefit us as advertising service provider riding on the business performance of such operation.”“We look forward to cover the other 25 airports where we have similar exclusive rights in the whole of China. This new development creates many new possibilities for our mutual brand partners.

    Wang Xinrui, Director of Commercial Management of Kunming Changshui International airport, added: “Kunming Airport is very satisfied with the outcome of our collaboration with Lagardère Travel Retail and Asiaray Media Group.

    “The newly-opened luxury brands significantly enhance the image and service provided by our airport and help bring our commercial offer in line with the best airports in the region. We look forwards to growing the collaboration with our partners.”

  • Uber Says Special Interests Challenge Push Onto Indonesia Roads

    Uber Says Special Interests Challenge Push Onto Indonesia Roads

    Uber Technologies Inc. plans to set up an Indonesian entity to deal with challenges from authorities to its push into one of Asia’s largest markets.

    The ride-hailing company has had cars seized in Jakarta this month and drivers questioned by police, Michael Brown, Uber’s regional manager for Southeast Asia, said in an interview. The company needs to register to pay tax, Jakarta Governor Basuki Purnama said in a televised briefing on Friday, after saying it doesn’t have the right permits.

    Uber is in discussions to submit an application to become a registered onshore entity as asked by Jakarta authorities, Brown said on Monday. The company is obeying Indonesian law, is tax compliant and is working with the government to “get aligned” with everything it is asking for, he said.

    “We see some things here that are new and challenging,” Brown said, referring to “special interests” working against the San Francisco-based company that he declined to identify. “We don’t like that.”

    Indonesia’s President Joko Widodo is trying to attract investment and tackle corruption to spur an economy growing at its weakest pace since 2009, yet U-turns on policies from taxes to foreign worker permits have left investors confused. Foreign direct investment has stagnated and the rupiah is Asia’s second-worst performing currency this year.

    Cars Confiscated

    Some of Uber’s junior employees have been taken to police stations for hours of questioning, Brown said. Police confiscated 30 Uber cars but didn’t detain drivers, said Jakarta police spokesman Muhammad Iqbal.

    The smartphone application allows users to order rides from private drivers. It is offering fares at discounts of as much as 50 percent compared to taxi operators in greater Jakarta, home to an estimated 30 million people and some of the world’s worst traffic. Its competition includes taxi companies such as PT Blue Bird and PT Express Transindo Utama.

    Uber has run into strident opposition from taxi drivers in the U.S. and abroad as it has expanded to build its business, valued at $50 billion.

    Uber has sent a message to customers in Jakarta, asking them to take to Twitter to tell the authorities why they need it.

    “Uber can say what it wants,” said Adrianto Djokosoetono, the head of the country’s land transport association and a director at Blue Bird, Indonesia’s largest provider of taxis, car rentals and chartered buses. “They are in a tricky situation having to follow the laws so they have to ask for public support.”

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  • Luxury Brands Leave Hong Kong as Rental Prices Skyrocket

    Luxury Brands Leave Hong Kong as Rental Prices Skyrocket

    The closure of the watch brand TAG Heuer’s outlet in Causeway Bay in August this year is a sign of luxury brands’ withdrawal from Hong Kong and the end of the city’s status as a center for Asian luxury goods.

    Following TAG Heuer’s exit, luxury fashion brand Coach pulled out its flagship store in the Central District of Hong Kong on Aug. 31, two years before its lease expires.

    Women’s shoe retailer Belle International in Tseung Kwan O also closed on the same day, while Hong Kong jeweler Emperor Watch & Jewellery Limited also announced plans to terminate its store’s lease early.

    The Guangzhou-based paper said that the exodus of luxury brands from Hong Kong has raised concerns about whether the trend may spread into mainland China.

    High rental fees were one of the reasons for the closures, the report said. Store rentals in Causeway Bay in the first quarter of 2014 stood at HK$43,310 ($5,580) per square meter, making it the most expensive in the world next to New York’s Fifth Avenue shopping district.

    With its store’s closure in Central, Coach will save HK$180 million ($23 million). It had been paying rental fees of $7.2 million ($930,000) per month.

    TAG Heuer ultimately decided to close shop after negotiations for a rent reduction with its landlord fell apart.

    Hong Kong is gradually losing its appeal to mainland Chinese shoppers, who are becoming more inclined to go to Europe, the U.S., Japan and South Korea to shop.

    Total retail sales in the city in 2014 have decreased 0.2 percent from the previous year to HK$493.3 billion ($63.65 billion), its first negative growth in the retail sector since the Hong Kong government launched the individual visa scheme for mainland visitors 11 years ago.

    Between March and July, the region’s retail sales fell even further, posting a 0.4-percent decline year-on-year in June and 2.8 percent in July.

    But despite increasingly poor sales of luxury goods such as jewelry and watches in Hong Kong, medium- and low-priced goods, including food stuffs, liquor, and tobacco, have been growing steadily. According to Southern Metropolis Daily, foodstuff sales rose 7 percent year-on-year in July, an indication that shoppers visiting Hong Kong are shifting from luxury items to daily necessities.

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  • Richemont Revenue Beats Estimates on Japan, Europe Demand

    Richemont Revenue Beats Estimates on Japan, Europe Demand

    Richemont, the world’s biggest jewelry maker, said sales growth accelerated as weaker currencies attracted big-spending tourists to Japan and Europe, spurring the stock’s steepest intraday gain in more than two years.

    Sales increased 4 percent excluding currency shifts in the five months through August, the Geneva-based company said in a statement Wednesday. Analysts expected a 1 percent gain, according to the median estimate in a Bloomberg survey. The shares climbed as much as 7.5 percent.

    Sales rose 48 percent in Japan and 26 percent in Europe, offsetting an 18 percent decline in Asia-Pacific. The results mirror comments by peers in the luxury business, such as Hermes International SCA, which reported higher first-half sales, fueled by an acceleration in Japan. LVMH Moet Hennessy Louis Vuitton SE in July posted strong revenue growth in Europe and the U.S., which helped offset a decline in China, Macau and Hong Kong.

    “Japan and Europe more than compensate for the weak development in Hong Kong,” said Rene Weber, an analyst at Bank Vontobel AG in Zurich. “The strong performance of those markets mean the Swiss watch industry can weather the Asian weakness, at least this year.”

    Shares in the Swiss owner of the Cartier jewelry brand, whose full name is Cie. Financiere Richemont SA, rose 6.4 percent to 76.65 francs as of 11:40 a.m. in Zurich. The report bolstered shares in the luxury-goods industry, with Hermes up 4.8 percent and LVMH gaining 3.5 percent.

    Richemont said sales in Hong Kong and Macau were “significantly lower,” while mainland China returned to growth with retail sales growing at a “strong double-digit rate.” The company reports five-month sales figures each year on the day of its annual meeting with shareholders.

    “Part of the crisis in confidence in the watch industry in Asia-Pacific is fragile confidence by independent retailers amid the problems in Hong Kong and Macau,” said Jon Cox, an analyst at Kepler Cheuvreux in Zurich, adding that Richemont’s comments about China were reassuring.

    Still, Richemont said its wholesale business continues to be weighed down by weakness in the Asia-Pacific region, which is still “extremely challenging.”

    Luxury spending in Hong Kong has been suffered since late 2012 when the Chinese government has been discouraging exuberant spending among officials. Political protests in Hong Kong last year forced some stores to shut and weighed on tourism.

    Among other luxury stocks, Swatch Group AG, the maker of Omega watches, rose 3 percent, and Kering SA, which owns Gucci, rose 4.4 percent.

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  • Omni-channel to be the next big play in retail

    Omni-channel to be the next big play in retail

    “I haven’t seen such a behaviour in other South East Asian markets. While businesses in countries like Taiwan, Thailand and Philippineshave adopted e-commerce in a big way, there is a clear focus on bottomline. Money is being made on every transaction and majority of the companies there are gross margin positive,” said Iyer at the inaugural session of the two-day IRF summit in Mumbai on Tuesday.The fast emerging e-commerce sector in India has been talked about in the business world as the next big thing to be in. However, according to Krish Iyer, president and CEO, Walmart India and chairman of India Retail Forum (IRF) 2015, one thing that has hit him in the last year and half isthe whole craze about building valuations while not really looking at the bottomline.

    “I haven’t seen such a behaviour in other South East Asian markets. While businesses in countries like Taiwan, Thailand and Philippines have adopted e-commerce in a big way, there is a clear focus on bottomline. Money is being made on every transaction and majority of the companies there are gross margin positive,” said Iyer at the inaugural session of the two-day IRF summit in Mumbai on Tuesday.

    Defending the valuations game being played in the e-commerce sector in India, Alok Goel, managing director, SAIF Partners, said that India is the only country that offers an opportunity for growth investment in the global scheme of things. “Lot of money is flowing into India looking for opportunities and return on investment. And when lot of money is chasing fewer products out therein the market, the price of that product increases. This roughly explains the rapid price-valuation situation that’s come up in the market,” said Goel, adding that from a valuations point of view, businesses need to be looked at in terms of growth they will register over the next five to 10-year horizon.

    Stressing on the need for Indian retail (online / offline) players to seek profitable growth, Anurag Mathur, retail and consumer goods practice leader, PricewaterhouseCoopers India, said, currently mom-n-pop stores are enjoying operating margins of between 6% and 8%over gross margins of 16% and 18%, while the organised retailers had high gross margins of 20% and 22% though operating margins were as low as 2% and 4%. “The online / e-commerce players are still ages away from getting into the positive space with gross margins anywhere between -3% and -8% and operating margins between -15% and -22%,” he said.

    While the recent past has seen the Indian retail fraternity debate aggressively about retail and omni-channel, Iyer pointed out that a few years ago, it was about retail and e-commerce. “And from what I see on the ground, I can tell you that omni-channel will be the key focus of discussion next year. The brick-n-mortar players will continue to learn from the pure-play e-commerce players and then will be able to drive profitable growth while providing omni-channel experience to the customers. And that to my mind, is the only way to go,” he said adding that retail players, particularly those in the brick-n-mortar space, are clearly focused on profitable growth.

    Iyer stressed that ongoing economic adjustments around the world offered businesses in India a brilliant opportunity to lead global growth. And the fact that India has been a domestic consumption-driven economy has come handy. “We are not an export-driven economy and that’s one of the primary reasons why the economic turmoil and global events haven’t had as much impact on India as we have seen in other BRIC countries viz. Brazil, Russia and China,” he said.

    The next phase of retail revolution, retailers and experts said, will be driven by India and China unlike the past phases that were driven by the West. However, Indian retailers lagged in retaining a black bottomline when compared with their foreign counterparts.

    “Operating margins (ebitda) of Indian retailers have dropped to 2% in 2014 from8% in 2011. During the same period, ebitda of select international retail chains like Walmart, Target, Tesco and Home Depot have maintained 7-11% during the same period,” said Mathur.

    In fact, according to a survey conducted by PricewaterhouseCoopers India, over 65% of Indian retailers are focusing on improving profitability through improvement in revenue throughput as fast-changing consumer behaviour is driving many retailers to rethink their business model. As per the survey, 53% retailers are considering a change in their operating model driven by changing consumer behaviour.

    With the emergence of new formats, distinct paths to sustainable profitability will need to be crafted as retailers in India face a herculean task of reaching out to the customer through a combination of mobile, social and human connect, experts said.

    According to Abheek Singhi, senior partner and director, Asia Pacific leader –consumer and retail practice, The Boston Consulting Group, online and e-commerce with varying digital density along with omni-channel are straining traditional business models in retailing. “Moreover, with consumer companies selling directly via offline and online tools, value chains are also getting disrupted,” he said.

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  • China August Retail Sales: E-Commerce Remains Robust

    China August Retail Sales: E-Commerce Remains Robust

    China reported August retail sales that grew 10.8%, which beat the consensus 10.6%. Most encouraging was that online retail sales remain robust, underscoring my bullish view on Alibaba. As for offline retail, jewelry grew off a lower base so we view this of a lower quality while it appears that offline electronic retailers are taking share from online retailers, which is a negative to JD.com. We see China retail numbers to be a good read-through to companies such as BABA and JD as well as North American companies with exposure to China such as Tiffany. We reiterate my bullish view on BABA and Nike and our cautious view on JD and TIF.

    Online retail numbers remain robust for the first eight months of the year, and this is a positive indicator to Alibaba. For the first eight months, online retail sales grew 36% and accounted for 9.8% of total retail sales vs. 8% a year ago. Worth reminding investors is that China leads the world in e-commerce penetration and we expect penetration to continue to grow, driven by mobile device penetration in second and third-tier cities as well as the lack of proper retail infrastructure in those cities. We can easily envision China’s online retail penetration to reach 20% in the next 10 years driven by those two factors as well as higher mobile consumption driven by online-to-offline services that are heavily invested in by BABA, Baidu and Tencent. Looking at the individual segments, online sales of services was up a whopping 41%, as were discretionary items such as food. Apparel grew 27% and other discretionary items grew 39%. All these figures imply that August online sales alone grew 27% y/y, still solid given the near-term weakness of the Chinese economy.

    As for offline retail, jewelry grew 17% y/y vs 14% in July but it was largely due to a lower base from last year. As such, we would not be quick to jump into TIF stock until we see material improvement from the demand side. Interestingly, home appliances and electronics accelerated in the month, up 14% vs. 8% in the prior month. This could potentially be a negative to JD.com given this could imply that BABA and Suning JV may be taking share from JD in the online segment.

    In conclusion, we remain bullish on BABA while cautious on JD and TIF.

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  • Korea more active than Japan in Southeast Asian tech

    Korea more active than Japan in Southeast Asian tech

    In a region where masses of users are newly armed with smartphones and more spending power, Southeast Asia is a new gold mine for tech enterprises.

    China’s quickly saturating market for all things tech has pushed Asia-bound start-ups to seek new territory, and global companies like Rakuten, eBay and Rocket Internet are vying over Southeast Asia with no clear winner ― meaning plenty of opportunities still abound for new players.

    Those conditions drew Korean-Japanese entrepreneur Tesong Kim, who led e-commerce at Japanese investor Rakuten’s offices in Tokyo and Jakarta, to launch his own discount retail start-up VIP Plaza for fashion goods in Indonesia, Southeast Asia’s biggest market, in 2014, and recently expand to Malaysia.

    And Korea’s start-ups are joining the rush, he says.

    They seem to be making bigger waves there than in Japan. He cannot list any Korean start-ups with a big presence in the country, a closed, conservative market that is a nut nearly impossible for foreign companies to crack. But in expanding to Southeast Asian markets like Singapore, Indonesia and Malaysia, he says they are far more active than their Japanese rivals.

    “Korea is quite aggressive in Southeast Asia, I think more aggressive than Japan in terms of e-commerce start-ups,” he told The Korea Herald in an interview on the sidelines of tech start-up conference Tech in Asia Tokyo 2015 last week.

    “Korea is very crowded. The population is very small, geographically the landscape is very small, and there’s a lot of start-ups. So it’s quite packed, but I think Japanese investors think Korean start-ups can go global more than Japanese start-ups.”

    Indeed, SK Planet’s e-commerce retailer 11st is seen harnessing the region’s demand for Korean fashion and beauty products, while couples messenger Between and crowdsourcing translation app Flitto are also gaining traction in markets like Indonesia, Taiwan and Thailand.

    Meanwhile, Kim says Japanese start-ups are trapped at home, falling hard when they try to copy and paste their successful domestic strategies into new markets.

    But competition in Southeast Asia is heating up fast. Kim believes Korea’s KakaoTalk lost the messenger app war in the region to rivals like BlackBerry, WhatsApp, LINE ― one successful Japanese exception in the region ― and WeChat because it entered too late.

    That’s why it has pivoted to commercial services such as e-commerce when targeting markets like Indonesia, he said.

    Not that e-commerce is any easier, as Kim knows from his experience with Rakuten’s Indonesian e-commerce venture and starting his own online discount retailer. Handling logistics, acquiring products and dealing with fragmented, cash-based payment systems takes immense effort.

    But due to the region’s overall cheaper costs, he believes Korean and Japanese start-ups underestimate the investments they need to gain ground ― a mistake that will get them steamrolled in the market. “They think that with $1 million-$2 million, they can go to Indonesia, try to develop ― with that kind of mindset, they will never succeed,” he says. “All the very aggressive companies are investing into Southeast Asia with a very big amount of money.”

    Even for Korea’s prized e-retailer Coupang, which received a $1 billion boost from Japan’s SoftBank Ventures this year, it might already be too late to test the region’s waters, he said.

    “What they have is a know-how of how to sell things, of impulse buying. They have a system and good talents, but they are not localizing the region,” he said. “If they tackle some new country now, they need to invest in everything ― the products, warehouse, marketing and user acquisition.”

    But the market is already crowded by Lazada, Elivenia and Rakuten, not to mention 11st and Kim’s own start-up VIP Plaza. “I think it’s already too late in terms of social commerce,” he said. “The better strategy is buying out some local players. It’s not only easier, but much cheaper.”

    Still, Japan’s massive opportunities can’t be ignored, he says. Its app market is the biggest in the world, and gaming companies are seizing opportunities. “So in that sense, I think the market is still very big.”

     

  • ‘Weak’ Hong Kong and Macau hits Prada

    ‘Weak’ Hong Kong and Macau hits Prada

    Continuing volatility in the market and the exchange rate landscape in Hong Kong, Macau and the Asia Pacific region (excluding Japan) has been blamed for Prada’s overall net profit fall of -23% to €188.6m ($212.7m) in the first half of 2015.

    Despite the big challenges in the Asia Pacific region which is Prada’s biggest market, the Milan-based fashion company first half-year revenue growth of +4.2%, thanks to more positive market performances in Europe, The Americas, The Middle East and Japan.

    Consolidated net current exchange rates on the corresponding period in 2014.

    The luxurygoods company says the increase is entirely attributable to the retail channel, as a result of its selective strategy aimed at further enhancing the of its Directly Operated Stores.

    All other regions reported good growth, although the company adds that the Asia Pacific market (excluding Japan) showed the same negative trend as it did in the first quarter of the year, offset by a positive effect.

    Patrizio Bertelli, COO said: “The luxury goods market is undergoing a period of significant change which must be met with a far-reaching, long-term strategy.

    “Our commitment remains centered on creative dynamics and the spirit of innovation, so that we can constantly increase the levels of excellence of our products.

    “In operational terms, we will continue with our thorough review of business processes in order to make them more efficient.”

    While its wholesale business declined by 13%, sales of the group’s retail network grew by 7.6% at current to €1,552.4m ($1,750.7m). The company reported that its 605 Directly Operated Stores (DOS) also benefited from a general improvement in sales performance.

    The European market grew by +12.4% thanks to a steady flow of tourists, together with a recovery in consumption by domestic customers, while the Japanese market outshone the rest of Asia with a +11.7% constant result. Sales in the Americas and the Middle East also improved considerably (both plus +15%).

    In terms of retail channel by brand, Prada recorded a 5.4% rise in sales thanks entirely to the effect, but was badly impacted by the negative economic situation in the Asian market.

    Miu Miu grew with revenues up at both current (+18.7%) and constant (+6%), enjoying a sales boost in the second quarter. The Church’s shoe business also grew by +18.6% and Car Shoe’s result was in line with the same period last year.

    EBITDA for the first half of the year was €440.1m ($496.3m) or 24.1% of net revenues, while EBIT came in at €293.2m ($330.7m) or 16.1% of consolidated net revenues.

    As mentioned, was reported down -23% at €188.6m ($212.7m) or 10.3% of consolidated net revenues.

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  • Lulu Group to enter Indonesia

    Lulu Group to enter Indonesia

    Plans $500mn investment in the country over the next five years

    The first LuLu Hypermarket in Indonesia will be opened in Jakarta by the year-end as the group has announced plans to invest $500mn in the country over the next five years.  The announcement came during the visit of Indonesian President, Joko Widodo to Abu Dhabi. He visited LuLu Hypermarket along with a high-level delegation at Khalidiyah Mall in Abu Dhabi. “With an initial investment of $300mn in the first phase, we plan to open some 15 hypermarkets by the end of 2017 and a central logistics and warehousing facility in Jakarta.

    These projects are likely to generate more than 5,000 job opportunities for Indonesians and help train them at all levels” said MA Yusuffali, LuLu Group managing director. The fact that we are going to Indonesia with our Halal Hypermarket concept, is giving us the encouragement to look for a wider market segment there” Yusuffali said. Apart from Jakarta, LuLu intends to open hypermarkets in Bandung, Solo, Semarang, Surabaya and Yogyakarta. “We also plan to set up contract farming to ensure continuous supply of high-quality products and support the Indonesian agriculture sector,” Yusuffali added.

    The Indonesian president is on a five-day state visit to Saudi Arabia, the United Arab Emirates and Qatar, to boost the country’s ties with the three countries, particularly on investment, trade and Indonesian migrant worker protection.

    Coordinating Minister of Economy Darmin Nasution, Trade Minister Thomas Lembong, Minister of National Development Plans Sofyan Djalil, State Secretariat Minister Pratikno, head of the Investment Coordinating Board Franky Sibarani and Cabinet Secretary Pramono Anung were also part of Widodo’s delegation.  The Indonesian president was given a rousing welcome at the LuLu Hypermarket by Yusuffali; Saifee Rupawala, CEO; Salim MA, director; Rajmohan Nair, director – LuLu (Far East Operations); and a large number of Indonesian expatriates.

    President Widodo and the accompanying delegation were taken to a guided tour of the hypermarket by Yusuffali who briefed him about specialties of the retail store. The president later said his visit to LuLu Hypermarket was to see Indonesian products mainly agricultural products and asked Yusuffali to import more products from villages and towns in Indonesia.  A LuLu release said Widodo inquired about the prices as well of the various Indonesian products imported to Abu Dhabi.

    The LuLu chain currently operates some 117 stores across the UAE, Oman, Bahrain, Kuwait, Qatar, Saudi Arabia, Yemen, Egypt, and India.

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  • Lotte chief vows to improve corporate governance

    Lotte chief vows to improve corporate governance

    By Kim Eun-jung

    SEOUL, Sept. 17 (Yonhap) — The chief of South Korean retail giant Lotte Group pledged Thursday to untangle a cobweb of cross-shareholding among its affiliates and speed up the listing process of its hotel unit.

    Testifying before a parliamentary committee, Shin Dong-bin also ruled out the possibility that Lotte, the fifth-largest family-run conglomerate in South Korea, may be embroiled in another family fight over leadership.

    Shin appeared before a parliamentary audit of the antitrust watchdog the Fair Trade Commission, tasked with assuaging public discontent after a bitter fraternal feud over winning control of the nation’s fifth-largest conglomerate.

    After winning the backing of Japanese shareholders last month, the 60-year-old has vowed to improve corporate transparency and list Hotel Lotte, a hotel and duty-free operator.

    During the nationally-televised audit session, Shin apologized for the family feud and vowed to clean up 80 percent of the cross-shareholding structure by the end of October.

    “We formed a task force to improve the governance structure and restore the brand image,” Shin said.

    Lotte has listed only eight companies and the core units are linked through unlisted Japanese units. Shareholders of the small Japanese firms remain largely shrouded in darkness because they are not subject to Korea’s financial disclosure rule.

    As part of reform efforts, Shin bought 35.8 billion won in Lotte Confectionery Co. shares from Lotte Construction on Aug. 28, clearing up about 34 percent of the cross-shareholding links.

    Shin said the task force is working on the initial public offering for Hotel Lotte, with plans to complete it by the first half of next year. Last week, Lotte selected three lead managers for the planned initial public offering.

    Hotel Lotte is 99 percent controlled by Japanese shareholders, including Tokyo-based Lotte Holdings and other unlisted Japanese companies.

    Lotte said earlier the hotel unit is expected to have a market capitalization of around 10 trillion won ($8.5 billion) when it lists, but market watchers estimate it could reach as much as 20 trillion won, considering its large stakes in affiliates and strong earnings.

    When repeatedly asked about the company’s identity, Shin said Lotte is a Korean company that generates most of its sales locally.

    “Lotte is a Korean company because it pays tax according to the Korean law and its employees are Koreans,” Shin said, noting he will maintain the Korean nationality.

    Founder Kyuk-ho was born in the South Korean port city of Ulsan, 414 kilometers south of Seoul, while his sons were born and raised in Japan by a Japanese mother.

    Lotte has tried to allay public discontent over its historic links to Japan as it could deal a harsh blow to the group that heavily relies on the retail, food and travel industries.

    Lotte was first established as a confectionery store in postwar Japan in 1948. It later expanded into Korea when diplomatic ties between Japan and Korea were normalized following Japan’s colonial rule from 1910 to 1945.

    Although lawmakers’ summoning businessmen has been a longstanding ritual as a way to flex their muscles in front of cameras, it is the first time the head of one of the nation’s top 10 family-run conglomerates, called chaebol, showed up before parliament to face acrimonious questions.

    Shin was called in for a 2013 parliamentary audit, but he evaded it, citing overseas trips and instead paid fines. But this time, negative public sentiment and growing government pressure left him no choice but to clarify issues related to the governance structure and other related issues.

     

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  • Swisse bought by Hong Kong company Biostime

    Swisse bought by Hong Kong company Biostime

    The first 'Suisse' shop in Airport West in Melbourne in the 1970s.The first ‘Suisse’ shop in Airport West in Melbourne in the 1970s.

    It was the brainchild of organic baker Kevin Ring, who started selling pollen tablets from his St Kilda naturopathics shop back in 1972.

    Ring’s hand-made vitamin tablets, inspired by a trip to Switzerland in the late 1960s, were soon doing better than the bread, and a little shop under the Suisse brand was opened in Melbourne’s suburbs in the early 1970s.

    Later changed to Swisse for legal reasons, that little shop blossomed into the country’s biggest wellness company, and has just been sold to overseas buyers for an astonishing $1.67 billion.

    Hong Kong-listed company Biostime International Holdings on Thursday won the auction to buy Swisse, beating out two Chinese companies, Hony Capital and manufacturer Shanghai Pharma, on the way. Swisse will remain based in Melbourne, with a head office in Collingwood, but 83 per cent of the company is now in the hands of Biostime.

    The deal will lift the fortunes of Kevin Ring’s son, Stephen, and his business partners Radek Sali and Michael Saba. All become some of Melbourne’s richest men, with estimated net worths in excess of $250 million each.

    It’s a long way from the company’s first outlet back in the 1970s, a “naturopathics” shop in working-class Airport West.

    The Swisse deal highlights the demand for Australian brands and products in China, which are regarded as “clean and green” when compared with domestic produce. The share price of rival Australian vitamin maker Blackmores has more than quadrupled in the past year, from $31 a share on the ASX to in excess of $137.50 during trade on Thursday, on the back of massive sales growth in China.

    Australian infant formula brands, such as Bellamy’s Organic and A2 Platinum, have notched windfalls sales thanks to huge demand from China.

    Much of the success has come from internet and grey market sales, with gangs of Chinese students buying up stock from Australian chemists and supermarket shelves to send back home.

    One milk industry CEO recently suggested Australian domestic sales of infant formula were now more than double the actual consumption by Australian babies.

    A2’s Australian chief executive, Peter Nathan, admitted the success of his infant formula was partly based on shoppers sending his product to China.

    “We have had significant growth on online sites such as Alibaba, and also at retail level at grocery and pharmacy where Chinese tourists and nationals are often buying products on trips and taking it back with them,” he said. “We are clearly demonstrating that we are having enormous traction with Chinese nationals. There is no question about that.”

    The deal at Swisse justifies the big-spending strategy of CEO Radek Sali, a former executive at Village Roadshow. His father, Avni Sali, helped to develop the men’s and women’s Ultivite range of multi-vitamins for Swisse, which have been the mainstays of the company for the past decade.

    When Radek became CEO in 2005, he embarked on a massive marketing push. Nicole Kidman and Ellen De Generes were signed as ambassadors, along with a galaxy of sports stars including Cadel Evans, Ricky Ponting and Mark Webber.

    Lavish parties at the Birdcage at Flemington helped push the glamorous image.

    Such was the extent of the marketing push, at one point Swisse’s $50 million annual marketing spend was almost 40 times the cost of the ingredients used in vitamin production. It was all part of Radek’s plan to make vitamins “fashionable and fun”.

    That has paid off.

    “We have grown from small, family-owned business in the suburbs of Melbourne to become Australia’s number one wellness brand,” Sali said after the deal was inked. “We have done it on the back of an unwavering commitment to the highest standards of quality, safety and product efficacy.”

    Founding shareholder Stephen Ring was equally happy after the deal.

    “I am incredibly proud to have been part of Swisse’s journey so far,” he said. “The strength of the business is testament to the hard work, passion and energy of the entire Swisse team and I thank them for their ongoing commitment.”

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  • Diesel targets China in copy clampdown

    Diesel targets China in copy clampdown

    Italian lifestyle brand Diesel says it is initiating legal action against an average of three Chinese companies every week in its war against copycats selling copies of its apparel.

    “Hundreds of legal actions are in place against usurpatory brands, especially in China,” the company said in a statement outlining the enormous scale of the counterfeit goods trade and its astonishing campaign to fight back.

    Last year, Diesel says it started a legal action by the US Federal Court in New York, against 83 sites, which were illegally selling counterfeited products by using the cybersquatting technique – registering domain names with “Diesel” in the address.
    So far Diesel closed 3346 sites, sent 4000 ‘cease and desist’ letters, and de-listed 19,000 sites from Google. Just 131 of those sites were in Asian countries.

    “It has been calculated that in this way the company has avoided about 700,000 visits to illegal marketplaces; 9200 bids [from prospective buyers] have been removed completely,” the company said.

    Fake Diesel jeans seized in a raid.

    In Asia, over the past year Diesel obtained to remove 6786 listings on marketplaces, for a total of 1.7 million items.

    Diesel has worked with Customs agencies to seize more than 60,000 items coming from China in 2013, and another 75,000 last year, and more than 80,000 items in the European Community.

    In China, 1300 items have just been confiscated in a factory producing counterfeited t-shirts, and in another factory the police seized 910 pairs of shoes with Diesel logo, along with a quantity of unfinished products worth US$155,000.

    Last month, Diesel successfully closed the case of the ‘Diesel Cluthing’ line, which was signalled by Diesel business partners who found infringing products circulating in the Colombian market. After thorough investigation, the Chinese authorities confiscated 520 jeans infringing the Diesel trademark: the company, who registered this logo, is now under an opposition process.

    On top of these activities, Diesel says it has established a system to register its iconic products and therefore ensure that any potential copy is identified and sequestrated (in the last six months only, four cases have been closed successfully). The latest triumph took place earlier this year, when Diesel finally won back the property of its brand in Indonesia – a legal battle which has lasted 23 years.

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