Asia “continued to boom” for travel retailer Dufry in the first half of this year.
Bali, Cambodia, Indonesia, Macau and South Korea all achieved double-digit sales growth during the half year, with Chinese tourists credited for much of that growth. Australia also achieved “strong double-digit performance” after the full renovation of Dufry’s stores there.
“Eastern Europe, Middle East, Asia and Australia continued to outperform, driven by a growing number of Chinese passengers,” the company said in an earnings statement. Organic growth across Eastern Europe, Middle East, Asia and Australia rose 22.1 per cent.
Globally, the Swiss company’s turnover grew by 7.2 per cent to CHF 4.097 billion (US$4.112 billion). Earnings before interest and tax grew 38.4 per cent to CHF 124.6 million.
Dufry says its organic sales growth rose by 5.5 per cent thanks to an expansion and refurbishment program across the group.
In the first half of this year, it expanded and opened 13,200sqm of gross retail space, which included new operations aboard 12 cruise ships, totalling 3500sqm across 38 stores. A further 22,400sqm of refurbishments are planned during the second half year, including the implementation of its new generation store concept at Heathrow Airport’s T3.
Japanese retailer and mall operator Aeon has opened Cambodia’s largest shopping mall in Phnom Penh.
It is the second Aeon Mall to open in the Cambodian capital.
MD Seiichi Chiba said at the opening that Aeon Cambodia’s first Phnom Penh mall has been well-received by Cambodian shoppers, attracting more than 18 million people since opening in 2014, prompting the development of the second mall.
While the new property has been constructed in a relatively low-priced location, its larger scale has involved similar building costs to the city’s first Aeon, which reportedly cost around US$205 million. Sources close to Chiba have disclosed that Aeon Cambodia may have been scouting for further potential sites for a third mall that could be built in the city’s southern districts.
In July last year, market research firm Euromonitor named Aeon Group the best-performing APEC retailer in terms of total sales, number of outlets, sales area and sales per square metres.
Singaporean pizza chain Pezzo Pizza will officially open its first-ever by-the-slice kiosk in the upcoming Aeon Mall 2 in Phnom Penh on May 30.
Run by Star Food Enterprise, Pezzo Pizza Cambodia will be offering pizza made with dough prepared using blended flour from Europe. Pezzo Pizza uses American mozzarella cheese from Leprino Food.
Star Food Enterprise MD Tech Sombo says the store will showcase an open kitchen, and local chefs will devise Khmer toppings. The company also runs Big Apple Donuts & Coffee Cambodia.
Pezzo Pizza has more than 120 kiosk outlets, mainly in China, Indonesia, Malaysia, Myanmar, Philippines, Singapore and Thailand.
Paris-based French and Cambodian startup ShopRunBack was launched in 2014 and has been revolutionising returns management for e-merchants and retailers, it is established by a group of experts in e-commerce, supply chain and the latest web technologies. ShopRunBack is looking to expand into Asia, especially Southeast Asia, and Cambodia is the starting point for a new branch to be opened this year.
The company is finalising its cooperation model with 4PX, which is partially owned by Alibaba Group and by SingPost and is part of Alibaba Cainiao Logistics, to seek ways to use Cambodia as a regional hub for e-commerce in Southeast Asia. Eddy Richauvet, CEO of ShopRunBack, spoke to us about e-commerce, business expansion and the introduction of the 4PX Group to Cambodia.
RN: ShopRunBack was established a few years ago in France. You and your wife both graduated in both logistics for e-commerce and web technologies. Why France? How are you progressing?
Eddy: I have spent the last 20 years in Paris in logistics and supply chain management and we started our company ShopRunBack five years ago, specialising in reverse logistics solutions for e-commerce and retail.
Why France? Because, it is strategically located within Europe where one can easily span out one’s services throughout the other European countries. That is why our first company was established in Paris.
So far, we have been doing very well because we focused over the last five years on a nice segment which is reverse logistics for e-commerce.
The objective is to improve customers’ experience during and post-shopping, that is after-sales services.
E-commerce is not only a process to deliver goods ordered online but it also involves shipping goods to customers who may also seek to return goods due to manufacturing faults or wrong orders.
Hence, ShopRunBack built its platform and expertise in after-sales service to meet customers’ satisfaction and merchants’ obligations.
We were the first one to embrace that niche service five years ago, which was an innovating model since most service providers mainly focus on delivery, including the last-mile option.
Thus our business growth is satisfactory and we are developing and improving the platform as well the markets. To date, our services stretch to 70 countries worldwide.
RN: What sort of products have you been dealing with primarily?
Eddy: Well, on a global scale, cross-border e-commerce transactions mainly involve clothing, electronics and furniture. But throughout the years, we can see that e-commerce transacted items have varied from small to big items. Today, all types of products are offered and transacted online.
RN: Does your company have any operations in Cambodia? And if not, why?
Eddy: We built our logistics network first in Europe and America and have been looking into Asia since 2017, especially Southeast Asia.
We are starting with Cambodia first. We have operations in China and Hong Kong through our partners and Southeast Asia is our natural expansion in the region.
We intend to use Cambodia as a springboard and offer to train Cambodian SMEs to sell their products online to global customers as well as introduce global merchants’ products into the Cambodian market.
We are in the process of customising our platform for Southeast Asia with our tech team.
RN: The government announced its intention to have Cambodia become a digital economy by 2023. How do you view the trend of tech business now? How may this be relevant to your business?
Eddy: I think the government’s intention to embrace the digital economy within the next five years is a very good strategic move.
In Europe for instance, we have seen transformations in the traditional business to business (B2B) and business to customer (B2C) models.
Digital technology is the enabling medium to improve people’s standard of living by facilitating trade and extending connectivity and collaboration with each other.
Therefore, we are happy to contribute our expertise to the government vision and strategy to integrate further with the region, that is Asean.
RN: Since Cambodia doesn’t have e-commerce legislation in place yet, do you view it as a constraint to start your business here?
Eddy: We understand that the law is being finalised and should be passed soon, probably right after the elections at the end of July.
We would need such legislation to facilitate and regulate e-commerce transactions. Just like back in Europe, over a decade ago they initiated similar legislation.
No one was familiar at that time with e-commerce, consumer protection and online business, but they improved the legislation as time went on and regulators gained more experience.
RN: Logistics cost is one of the major constraints in Cambodia that hamper the flow of foreign direct investment. Since you are involved in that domain, how do you think Cambodia can improve its logistics costs?
Eddy: This is indeed a crucial matter. We started our business in traditional logistics and B2B, which is not solely about networks but also about collaboration.
Of course, logistics providers will compete with each other but they also need to cooperate with each other to improve connectivity and smoother functioning of the supply chain network.
As far as Cambodia is concerned right now, we are at the gestation phase of an e-commerce logistics base and platform.
We need to enhance the regional and domestic network by establishing more hub-and-spoke networks because in logistics, consolidation through better distribution and last-mile services enable cost reduction.
Eddy Richauvet says Cambodian special economic zones are being established successfully. KT/Mai Vireak
In this market, I see many service providers competing with each other instead of collaborating with each other. In Europe and elsewhere, businesses embrace the “competition collaboration” modus operandi.
Sure, you have businesses competing but cost-effective and efficient logistics is about collaborating.
Cambodian infrastructure has been gradually improving over the last decade as we see better roads and bridges, and lower electricity costs thanks to the many hydropower schemes built with Chinese funding and to the many special economic zones being established successfully.
Our ports and airports are continuously being upgraded to augment their capacity and this has improved the hard aspects.
However, the soft part such as cross-border goods clearance. Trade-facilitation wise, still need more work to facilitate faster transit times.
RN: Last December, the government approved the establishment of the National Logistics Council to deal with logistics in a holistic and cohesive manner. Do you think this can work out well?
Eddy: From my understanding, the NLC aims to improve efficiency and inter-ministerial collaboration.
As said earlier, logistics is about connection, collaboration, communication, and anything related to supply chains across multiple businesses from different sectors and across countries.
Therefore, establishing the NLC does make sense as the government seeks to better comprehend this complex topic and enhance logistics efficiency.
The government should conduct more stakeholder consultation or dialogue with the private sector, the real business practitioners, to better assess businesses’ needs and how they may contribute better inputs.
RN: Earlier last month, you met the Minister of Public Works and Transport with 4PX, part of the Alibaba Cainiao Logistics arm. Are you going to cooperate with them to set up operations in Cambodia? If so, when will that happen?
Eddy: 4PX is a Shenzhen-based Chinese firm and is one of the largest logistic players for cross-border e-commerce in China and they also have worldwide branches.
They are already our strategic partner in Europe and in the US. As you mentioned, they are part of the Alibaba Cainiao Group.
Together with Singpost, they are a 45 percent equity holder in 4PX. 4PX is presently handling a million packages daily for Ali-Express in Southern China with a capacity of two million packages daily.
Cainiao Network is a 100 percent owned subsidiary of Alibaba Group and basically their logistics arm.
Its business is operating a logistics network for all Alibaba’s market places. 4PX is the only one doing cross-border logistics among companies invested by Alibaba Cainiao.
The reason they invested into 4PX was because 4PX has been in cross-border e-commerce logistics for more than 14 years and was considered a market leader in this field.
When we discussed with them about how to carry out the 4PX’s objectives, we shared with them the strategy and vision on how to train local SMEs to use the platform to sell from Cambodia to customers around the world and for make it easier for international merchants to sell to Cambodia.
We also told them Cambodia was a very strategic location as a possible regional hub for Southeast Asia. So the 4PX chairman and his team came for the first time on a fact-finding visit to Cambodia and appreciated the opportunities.
So yes, we will cooperate with 4PX in Cambodia. We will bring together our experience, the technological platform and our existing trained human capital to provide professional e-commerce services.
Most importantly, together with 4PX, we will transfer knowledge to Cambodians to beef up domestic expertise.
The online shopping experience will be improved much more than before. So the primary goal is to bring new high-tech, professional technology to Cambodia, create job opportunities and provide better services.
Though the market size is small, Cambodia possesses a high percentage of tech-savvy young people which makes it an ideal place for more innovation.
Our partner 4PX is a company skilled in innovation. They have to be, since e-commerce is a very fast-growing and fast-moving sector.
Three years ago, 4PX’s revenue was about $450 million but this increased to about $900 million last year.
As a very young market, we could bring many innovations without confronting much historical luggage or impediments.
Think about how the Americans used new technology to nurture the development boom during the second industrial revolution.
Now, it is time for us to leverage e-commerce and the digital economy to help Cambodian people leapfrog and improve their living standards.
Logistics is always a business of support and collaboration. As a pioneer of this industry, our friend and partner, Kevin Li, the founder and group CEO of 4PX, is always scouting for investments in new markets. We should become operational in Cambodia soon enough within the second half of 2018.
Mobile payments platform Alipay is expanding its cross-border footprint with new outposts Cambodia, Myanmar, Laos and the Philippines.
The deployment is aimed at connecting merchants with an estimated 520 million active users in China through its Alipay’s in-app marketing platform while they are traveling overseas.
The company says Alipay is now accepted in Phnom Penh, Siem Reap and Sihanoukville across shopping, F&B, entertainment and hospitality sectors. Notable merchants include Sajibumi, which operates the food and beverage concessions at Siem Reap International Airport and Phnom Penh International Airport, Sokimex petrol kiosks, and Legend cinemas.
Alipay will also be rolled out in duty free stores managed by DUFRY at Phnom Penh International Airport, Siem Reap International Airport, and NagaWorld, the largest entertainment complex in Cambodia.
Mobile payment is gaining momentum among Chinese travelers overseas. According to the recent Nielsen report, 65% of Chinese tourists used mobile payment platforms during their overseas travels, more than six times in comparison to non-Chinese tourists (11%).
Over 90% of Chinese tourists would consider using mobile payments when traveling overseas if more overseas merchants accepted it.
Thailand’s Inthanin coffee brand will roll out in Cambodia following the signing of a memorandum of understanding between RCG Retail (Cambodia) and Bangchak Retail.
RCG plans to open more than 100 Inthanin cafes in Cambodia from next month until 2022.
It will start with a flagship branch in Phnom Penh, followed by a second flagship in Siem Reap in April, says president Jiranun Wongmongkol.
She says the company will then seek franchisees, with the average cost of applying for a licence and opening a branch being around US$200,000 (THB6.2 million). Each location will have about 20 staff members.
Bangchak Retail MD Viboon Wongsakul says the Inthanin deal for Cambodia is part of its business plan to expand its business in CLMV countries (Cambodia, Laos, Myanmar and Vietnam).
He says targeted average sales for Cambodia will be 300 cups of coffee a day for the first year. The company will supply coffee from Thailand directly to franchisees in Cambodia. As master franchisee, RCG Retail will source baked goods and other food to distribute through the coffee outlets.
Jiranun says RCG Retail has already contracted with 20 Cambodian producers to distribute their products at Inthanin branches.
Thai coffee firm Amazon Coffee, owned by PTT, has already expanded its franchise business into Cambodia.
Bilateral trade between Việt Nam and Cambodia last year surged 29.7 per cent against the previous year to nearly US$3.8 billion, the General Department of Customs reported.
Of the total, Việt Nam’s export turnover to this market was $2.77 billion, rising 26.1 per cent against the previous year. Vietnamese key export goods to Cambodia last year included steel and iron products ($521 million, up 69.7 per cent year-on-year) and oil and petrol ($375 million, up 30 per cent year-on-year).
Meanwhile, Việt Nam’s imports from Cambodia reached $1 billion, a year-on-year increase of 40.6 per cent, mainly with timber and wood products ($214 million, up 16.9 per cent), cashews ($168 million, up 46 per cent) and rubber ($138 million, up 64 per cent).
The leaders of Việt Nam and Cambodia have agreed to enhance the comprehensive co-operation between the two nations and raise the bilateral trade value to $5 billion. Việt Nam is currently the third largest trade partner and the fifth largest foreign investor in Cambodia.
According to the Asia-Pacific Market Department, under the Ministry of Industry and Trade, trade across the border of the two nations has become easier, contributing to making Cambodia the 16th largest export market of Việt Nam.
In recent years, the economic co-operation between the two nations has seen strong development. Statistics showed that the two-way trade between Việt Nam and Cambodia jumped from only $184 million in 2001 to $3 billion in 2016.
Major export products of Việt Nam to Cambodia included steel, fertilisers, garments, machinery and plastic products.
The two countries also expect to soon sign agreements on avoidance of double taxation, border trade and labour co-operation along with a memorandum of understanding on transport cooperation strategy for 2017-25 with a vision to 2030, which will help advance the trade relationship between the two sides to higher levels.
It has been another record year for luxury products group LVMH Moet Hennessy Louis Vuitton.
Revenue increased by 13 per cent year on year to reach €42.6 billion (US$52.9 billion), while organic revenue growth was 12 per cent.
All business groups recorded double-digit organic growth with the exception of wines and spirits, where second-half growth was hit by supply constraints.
Profit from recurring operations reached €8.2 billion, up 18 per cent. Operating margin reached 19.5 per cent, while the group share of net profit was €5.1 billion, growth of 29 per cent.
Describing the performance as “excellent”, LVMH chairman/CEO Bernard Arnault says the record year was partly because of a buoyant environment but above all a result of the creative strength of the group’s brands “and their ability to constantly reinvent themselves”.
Key highlights of last year listed by the group include:
● Record revenue and profit from recurring operations.
● Growth in Asia, Europe and the US.
● The success of both iconic and new products at Louis Vuitton, “whose profitability remains at an exceptional level”.
● The acquisition of Christian Dior Couture.
● Growth at Fendi and Loro Piana.
● The first year of integration of Rimowa luggage.
● Strong momentum at Parfums Christian Dior, driven by product innovation.
● An excellent year for Bulgari and good progress at Hublot and Tag Heuer.
● Growth at Sephora.
● Free cashflow of €4.7 billion, up 20 per cent.
“Significant” growth in China helped Hennessy cognac volumes grow by 8 per cent, with 7.5 million cases shipped despite the second-half supply constraints.
In fashion and leather goods, key events of the year were products arising from collaborations with artist Jeff Koons as well as the Supreme brand, the launch of the brand’s first smartwatch and the inauguration of the Maison Louis Vuitton Vendome in Paris.
There was rapid growth in Asia for the perfumes and cosmetics segment, and growth was particularly strong in Asia for Bulgari. Asia again shone in the selective retailing group with Sephora continuing to gain market share.
LVMH says the year was a positive turning point for DFS, with new stores in Cambodia and Italy continuing to grow sales.
Despite unfavourable currencies and geopolitical uncertainties, LVMH says it is well equipped to continue its growth momentum across all business groups this year.
Korean coffee chain Caffe Bene has collapsed, filing for a court-led restructuring scheme on Friday.
Yonhap news service reports the court will soon decide whether to put the ailing coffee chain under its receivership or commence liquidation.
The legal move follows a protracted slump and mounting losses, the company said. In 2016, the company lost about US$32 million on sales of $73 million, down 32 per cent on the previous year. At that time it operated 800 stores in Korea, a figure it said would shrink as it restructured, and about 50 in the US.
Launched in 2008, Caffe Bene expanded to become one of South Korea’s largest coffee franchises, opening more than 1000 stores in five years, but lost ground in the saturated coffee market. While its US website claims it has opened 1600 stores worldwide, the exact number still trading is difficult to ascertain. It has opened in Vietnam, the US, China, Canada, Brunei, Singapore, Japan, Indonesia, the Philippines, Saudi Arabia, Malaysia, Cambodia and Mongolia.
But the international foray has met with mixed success. The Cambodian store has already closed and the last Facebook post by the Singapore cafe is dated February last year. In Vietnam several stores have opened and closed, including its downtown flagship which drew huge queues when it opened in 2014. Three outlets remain trading there, but it is not clear if they are franchised or company-owned.
The company also appears to have exited the Canadian market.
While rapid growth in the consumption of brewed coffee drove up the Korean coffee industry’s overall expansion, Caffe Bene was unable to match the growth rate at home.
Luk Fook Holdings (International) Limited has announced its foray into the Cambodian market with the grand opening of a flagship store in its capital city, Phnom Penh, marking the expansion of the Group’s retail network to 10 countries and regions globally.
Mr. Wong Wai Sheung, Chairman and Chief Executive of the Group said: “Adhering to the corporate vision of ‘Brand of Hong Kong, Sparkling the World’, the Group has been seeking new business opportunities in the international market to expand our footprint.”
He continued: “With the launch of the Belt and Road Initiative, the Group is optimistic about the prospects of the Southeast Asian market. Following our entry into Malaysia with opening of two shops last year, the Group now establishes a flagship store in Cambodia, with a view to introducing our quality jewellery and professional, caring services to the market. With over 1,610 shops globally, the Group will continue our efforts in providing unparalleled shopping experience for customers worldwide, so as to ensure that Lukfook Jewellery remains a premier jewellery brand for consumers everywhere.”
The flagship store in Phnom Penh covers an area of over 5,600 square feet and is adjacent to a tourist hotspot with high tourist traffic and great potential.
Phnom Penh, the capital of Cambodia, is a developing city as well as the country’s political, economic, industrial, cultural and tourist centre with considerable room for development. With the opening of this new shop, the Group expects to further expand its retail network in Southeast Asia.
In partnership with the US National Basketball Association (NBA), sports merchandise e-commerce company Fanatics has launched official NBA online stores across Asia Pacific.
Fanatics already runs the flagship NBA Store in New York City, the league’s global e-commerce site and its official online store for Europe.
It has now opened official online stores in Cambodia, Japan, Laos, Malaysia, Singapore, Thailand and Vietnam, as well as Australia and New Zealand. These offer a range of men’s, women’s and youth products from all 30 NBA teams, including oncourt apparel from official outfitter Nike and products from a range of NBA merchandise partners including Mitchell & Ness and New Era.
There are also exclusive products, including personalised team jerseys.
As well as paying in local currency, online shoppers will benefit from quicker deliveries and cheaper shipping thanks to Fanatics’ centralised distribution point in Asia.
“The NBA is becoming an increasingly global league, and we’ve seen a significant uptick in fandom across several regions throughout Asia,” says Fanatics International president Steve Davis.
With the launch of the new online stores, the league now has 20 international e-commerce sites.
Safilo continues to expand internationally, boosting its presence in Asia.
The Italian eyewear manufacturer has signed an exclusive distribution agreement for Thailandand Cambodia, adding to its international distribution network, now extending to 42 countries.
Safilo, which is controlled by Dutch investment fund Hal, issued a press release announcing the signing of the deal with Supreme Eyewear, a major local distributor with a 40-year presence in the business. The term of the agreement was not indicated.
“The distribution agreement for Thailand and Cambodia marks a further step in the development of the Asia Pacific region. It supports the acceleration in the growth of Safilo’s Emerging Markets unit, as per Safilo’s 2020 Strategy,” wrote the group, which hopes as a result to earn “significant market share in highly interesting countries.”
Supreme Eyewear will distribute all of the brands featured in Safilo’s portfolio – more than 30 labels – from the most accessible ones, like Polaroid and Havaianas, to premium names such as Elie Saab, Dior, Fendi, Jimmy Choo, Givenchy and soon also Moschino.
Through this geographic redeployment, Safilo is seeking to compensate for the loss of the Gucci license, which still weighs heavily on its financial performance, as shown by the third quarter 2017 , which recorded a revenue of €245.1 million, equivalent to a 14.9% shortfall (-12.3% at constant exchange rates) compared to the same period a year earlier.
Dairy Farm sales were described as “flat” in the third quarter to September 30.
The Hong Kong-headquartered company said improved performances in health and beauty, Ikea, restaurants and Yonghui were offset by lower sales in the food and grocery division.
“The lower food division sales, together with new store pre-opening costs in home furnishings, (Ikea) led to underlying profits being marginally below the same period in the prior year,” the company said in a statement issued in London, where it has a secondary listing. “Similar trading conditions are expected to continue for the remainder of the year.”
Dairy Farm said the weakness seen in food and grocery sales was principally driven by difficult trading for the hypermarket and supermarket operations in Southeast Asia, where it operates Giant hypermarkets and Cold Storage supermarkets. It says reviews of “a number of the businesses” are being undertaken.
The results from greater China (including its Hong Kong Wellcome supermarkets) showed improvement over the same period last year. Convenience store operations (including 7-Eleven stores in Hong Kong and Singapore) produced improved sales and profitability.
Yonghui reported a strong 20 per cent growth in revenue and 131 per cent increase in profit in the quarter.
Improved sales in the health and beauty division (Manning’s, Guardian and Rose Pharmacy) were driven principally by a strong performance in Hong Kong and Macau. Home Furnishings (Dairy Farm has the Ikea franchises in Hong Kong and Taiwan) traded well, although profitability was reduced due to pre-opening expenses for the new store in Hong Kong.
Maxim’s (which also includes Starbucks operations in Hong Kong, Vietnam and Cambodia) had a seasonally strong quarter in both sales and profit, benefiting from record mooncake sales during the Mid-Autumn Festival period. In September, Maxim’s acquired the existing business and exclusive rights to operate and develop Starbucks franchise stores in Singapore.
In August, the group completed the acquisition of the remaining 34 per cent interest in Rustan’s in the Philippines from its joint venture partner.
The Cambodian government plans to launch its first communications satellite by as early as 2021, and will conduct a feasibility study within a year.
The satellite project is projected to cost around $150 million and the satellite will have a lifespan of seven years, the Bangkok Post reported, citing comments from an official at the Telecom Regulator of Cambodia (TRC).
TRC and the Ministry of Post and Telecom have partnered with Royal Blue Skies and Beijing-based China Great Wall Industry Corporation, and these partnerships are expected to allow Cambodia to launch a satellite within three years, compared to the standard of seven, the official said.
China Great Wall Industry Corporation already has experience launching a satellite in Laos and will be able to take this experience to the Cambodian project.
The feasibility study will be used to gauge the potential demand for satellite services and determine how much the government should invest in the project.
In March, a new subsea cable was launched connecting Cambodia with Malaysia and Thailand. The 1,300km Malaysia-Cambodia-Thailand (MCT) cable system was built by a joint venture between Cambodia’s EZECOM, Telekom Malaysia and Symphony Communication of Thailand.
Levi’s Cambodia has opened its first store in downtown Siem Reap.
The US denim-focused fashion brand now operates six official stores in the country, with four in Phnom Penh and one at Siem Reap international airport.
Levi’s Cambodia has been operated by DKSH, the brand’s sole franchisee and distributor, since 2010.
“We are optimistic about the prospects of Cambodia’s retail environment,” said Peter Hornby, VP for fashion apparel with DKSH Thailand.
“In particular we have seen strong growth and demand for Levi’s branded products among Cambodia customers, and we plan to continue our retail expansion to 10 or more stores by the end of 2018.”
The downtown store is also the first stand-alone outlet for the brand, with the other five in centre developments.
