Cashing In on the demand for Apple’s latest product, the iPhone7, retail giant Courts Asia recently announced that it would offer a competitive one-year service package that covers accidental damage and data recovery and a guaranteed 50 per cent trade-in value, if customers buy the phone from its shops.
This is one example of efforts being made by the furniture-to-electronics departmental store to differentiate itself and be the “store of choice” for Singaporeans. It also fits into its long-term objective of transforming itself into an omni-channel retailer.
Mainboard-listed Courts has a long relationship with Singapore, particularly in the heartlands. With roots as a furniture retailer in the UK, Courts was established here in 1974. It opened its first store in Malaysia in 1987 and recently started operations in Indonesia in 2014. In the three countries, Courts operates more than 80 stores in multiple store formats spanning over 1.6 million sq ft of retail space.
In the first quarter which ended on June 30, 47.8 per cent of its revenue came from electrical products, which included major white goods, audio and small appliances. IT products, including computers, smartphones and cameras, made up 27.7 per cent of its sales while furniture accounted for 17.9 per cent. Services, such as warranty sales and telecommunication subscription plans, accounted for the remaining 6.6 per cent of its revenue, which was S$196.3 million for the quarter. The company’s last reported full year revenue was S$770.4 million, with two-thirds (S$505 million) of that coming from Singapore.
Speaking to The Business Times, Terry O’Connor, Courts Asia’s executive director and group chief executive officer, says the departmental store looks to provide low prices, large ranges, full service and financial options “in terms of any way to pay from every credit card in the market to cash; to our own payment plans and an extensive loyalty programme which is being boosted with the NTUC link points partnership”.
Giving an example of how Courts is trying to differentiate itself, Mr O’Connor cites the iPhone. He notes that buyers can choose to buy online or go to a exclusive Apple retailer if they are sure that’s the phone they want.
At other times, buyers may not be sure whether the choice is the iPhone or a phone made by some other manufacturer, Mr O’Connor says. Maybe they want to compare the iPhone with Samsung’s offerings but at the same time they want a full customer experience in which an agent will show them how to use both phones and discuss the merits of both, he says.
“An Apple store can do that for only Apple products but they don’t do that for Samsung products or the other brands in the market. We want to be that player in the market which can do that for all major brands,” Mr O’Connor says.
He acknowledges the fact that many technology savvy Singaporean shoppers are shopping online and Courts needs to have a strong online presence as well.
Courts Singapore relaunched its online store in 2012 with 7,000 product offerings, which has grown to more than 14,000 today. Both the online and physical stores are at the centre of Courts’ omni-channel retail offerings, which also include the deployment of tablets and digital kiosks on the shop floor, use of QR codes and “click and collect” counters in-store.
Despite this, Mr O’Connor is sure that physical stores will still remain an important component of the shopping experience. “The overall shopping experience will have to be an omni-channel experience.”
Noting that the mass middle income market is the core customer group for Courts, Mr O’Connor observes that shoppers feel “we are local and, therefore, there is a deeper relationship, maybe because of our history in the heartlands. We have been serving multi-generation of families and we reinvented ourselves just as Singapore has done so over the years.”
This has ensured that Courts is more connected to customers than many of the international players, he adds. “We ourselves have been thought to be an international player but now headquarters is effectively here and we are listed here.”
Mr O’Connor adds that the megastore’s approach is to “outrange” and “outprice” its competition. “I think that’s what kept us ahead of the pack. When I look back, I’ve been here for 23 years and virtually none of the competitors I started with exist anymore.
“Many of them have changed hands, many have been subsumed in other organisations and others have gone out of business.
“The point is retailers always have had to deal with disruption, generally it’s disruption from other retailers. Now pure plays are just another form of retail.” Pure play stores are those which only have an online presence with no physical brick and mortar outlets.
Mr O’Connor adds that Courts will “move with the speed and agility” of a pure play online store. “At the same time, we want to develop our physical stores as experience centres.
Mr O’Connor says that market factors are helping Courts’ push to reinvent itself.
“We didn’t ask for the Funan Centre to close but it did. We didn’t ask the Sim Lim centre to get the reputation it did, but it got it. And so we think there is an opening in the market and we are pushing hard into services and the store experience.
Mr O’Connor notes that many international retailers are seeing increased business online. “John Lewis (departmental store) in UK is doing 25 per cent of their business online but in Singapore it’s only 3-5 per cent. When you talk about shopping online it somehow conjures up an image of somebody sitting at home with a laptop on the coffee table. But fundamentally it’s not that. It’s increasingly people on their mobile devices. This is the first year mobile has overtaken computers as the online shopping platform of choice,” he notes.
He is confident that the share of online sales in Singapore will go up significantly and Courts would be ready to cash in on that.
Mr O’Connor notes that the Singapore online purchasing market is skewed by international purchase of apparel and products that are not sold in Singapore. “If you actually look at the goods that are bought online and shipped within Singapore, we are a market leader among regular stores. Citing a Bain report, he says that the top 10 online stores in Singapore by number of visits were all pure plays but Courts was number 11 on the list. This makes Courts the top omni-channel player in the Republic.
Courts is also looking at upgrading its stores with digital features that help shoppers go online and make it easy to shop. “At the moment we have digital kiosks but I wouldn’t say they are popular; they have become a bigger phenomenon in other markets. I think in the future they will become more popular in the same way that people initially didn’t like to use digital checking counters at airports, but eventually got used to it.”
He adds that one could envisage a situation where 100 per cent of the business is online. “Maybe 50 per cent was physically transacted in the store. I think what’s key is making sure that stores are still relevant. And I think that there are lots of changes coming in terms of disruption in the real estate sector. I think the real estate will be more disrupted than the retail sector.
“So fundamentally in the future do we say I have a 20,000 sq ft store? Or do I go for 10,000 sq ft for my store, where I pay a retail rent and the other 10,000 sq ft is a fulfilment centre where I pay warehouse rent?”
He adds that such shifts are already happening in the UK. “That’s going to happen here and that has implications for Reits; it has implications for how malls set themselves up. Do they have two-thirds of the mall as retail space and the rest as a combination of fulfilment centres? And POP (pick your own parcel) stations for the entire mall?
“We have to be fluid and agile in our thinking and be led by the consumer.”
