Parkson, one of the first foreign retail brands to establish a foothold in mainland China, was once a kingpin of the retail scene, peddling cosmetics and jewelry from some of the country’s best locations. As of June 2011, it operated 49 department stores in 30 Chinese cities.
Parkson has begun losing market share to newer retail models. Many Chinese shoppers now swear by e-commerce sites like Taobao and Moonbasa. Meanwhile, “fast-fashion” retailers like Zara, H&M and Uniqlo have gained ground. These stores refresh their product mix every few weeks and have an almost scientific approach to product display. Parkson, in contrast, seems to feature a jumble of apparel brands.
Within the department store segment, Parkson faces tougher competition from two rising regional brands, Golden Eagle and Intime (Lifestyle) . These companies have concentrated their stores in their respective home bases of Jiangsu and Zhejiang provinces, thereby magnifying their brand strength and making the most of supplier relationships.
These middling results have pushed Parkson’s majority shareholders, the Kuala Lumpur-based Parkson Holdings, to look to other markets. The parent company also owns 67.6% in Singapore listed , Parkson Asia Retail, which manages 53 stores in Malaysia, Vietnam and Indonesia.
The shift should benefit the parent company. Southeast Asia is just beginning to replicate China’s consumer story. Parkson executives expect sales to grow by around 15-20% annually in Vietnam and 8-10% in Malaysia and Indonesia.
But any bump for the Singapore-listed unit is likely to translate into greater stagnation for the China business. This cause Parkson lack focus in a market as large and fast-moving as China retail, which, demands a brand’s full attention.
Parkson's regional sales grow (Another Myanmar play)
The star
Parkson Saigon Tourist Plaza in central Ho Chi Minh, Vietnam, was the first international shopping mall in the city.PARKSON Holdings Bhd (PHB)
has been moving fast in the last decade.The Lion Group retail arm has been reaching deeper into Asia following China as its first overseas expansion, then Indonesia, and then Indochina.
Seeing as Thailand was already a matured market, PHB went for Vietnam in 2005.
“It was the readiest of its neighbours in the region. We had been working on Cambodia in the last three to four years, and found that it wasn’t ready either. Myanmar, at that time, was maturing but it wasn’t quite there either,” Parkson Vietnam, Myanmar and Cambodia CEO Tham Tuck Choy tells StarBizWeek.
In the last two years alone, Parkson went from 46 to 54 outlets in China, seven to eight in Vietnam, one in Myanmar and Cambodia, and six to eight in Indonesia via PT Tozy Sentosa’s Centro department stores and Kem Chicks gourmet supermarkets, a deal that gave PHB eight outlets in the country.
PHB opened two more outlets to 38 in Malaysia last year, raising RM841mil in revenues for the financial year ended June 30, 2012, 10% up from the preceding year’s RM766mil.
It took PHB’s pre-tax profit from RM92mil for the year ending June 2011 to RM121mil the subsequent year.
Breaking through
In gauging the readiness of the budding Indochina countries, Tham noticed the streets there were rife with local brands as well as foreign labels breaking into the retail market via standalone stores.
Lacking malls to house the brands, low-end stores stood next to high-end ones in shoplots.
“You could tell that it wasn’t easy for brands to own a good location. We saw our opportunity in providing a comfortable departmental store with supporting facilities for them so that they could sell their brands more professionally,” says Tham.
He illustrates Myanmar as a vibrant, very interesting market, whose opening in 2011 attracted a plethora of foreign investments.
“Investment laws have been developed in their favour and they have the first mover’s advantage. And the government is doing a lot to develop local industries,” Tham says.
Entering Myanmar as its first foreign retailer, Parkson’s competitors are of the local mid-and low-end markets.
Communication is not an issue as the baby boomer generation there speaks clear English, Tham says.
“So far, Parkson Myanmar’s first year results have been encouraging. We are expecting to be able to maintain our performance and break even for the financial year-end,” Tham says.
“The only risks we can foresee would be those of governmental policies. There are complicated land laws, which they are starting to amend,” he says.
With a population of about 15 million and 90 million, the Cambodian and Vietnamese markets are quite similar, Tham says. PHB noticed the similar shift from traditional to modern retail and the only difference was the timing the businesses evolved.
Tham considers the Vietnamese as having the strongest purchasing power among the Indochinese nations.
“The Vietnamese have the higher spending power, but Cambodia will catch up. Both Cambodia and Myanmar have attracted a lot of investors. The countries are vibrant and bursting with new businesses waiting to open shop,” says Tham.
Since its debut in July, Parkson Cambodia has experienced about 20% growth in month-on-month sales.
“There are two peak seasons in the year – wet and dry. We are identifying the sales pattern, but for now we’re just monitoring the growing monthly sales,” Tham says. “Eventually, we will operate like Subang Parade, where there is a cinema, bowling alley and fast food chains.”
Similarly, Vietnam has had very good results until last year’s economic deceleration, Tham explains.
Parkson Vietnam then experienced a drop in sales, bringing its pre-tax profit from RM23mil to RM12mil for the year ended June 30, 2012.
“The slump in economy weakened the people’s buying power, and we began to see a shift in the sales pattern,” Tham explains.
As luxury goods sales declined, however, the cosmetics, beauty and toiletries segment surged on.
“It’s perfectly understandable. Once you start on a good beauty regimen, you don’t cut back because you still want the positive results. But people trim down on other expenses like apparel and luxury items,” Tham says, adding that the cosmetics division in that region continues to grow 10%-15% that year.
To manage the dip in apparel and home-care sales, Parkson Vietnam fine-tuned its strategy by bringing in more affordable brands.
Mid-range brands like Giordano, he says, keep the focus on the middle or upper middle class rather than the high end.
Aggressive promotional activities are carried out on target markets such as customer loyalty programmes and target marketing campaigns.
“The results have been very good. From our database, we understand what they want and market our products directly to them. Last year we built a database of about 300,000 Parkson Privilege Card members in Vietnam. The membership will soon go international,” Tham says.
Similarly, Parkson Myanmar has already enlisted several thousand members in its recently-launched privilege card programme. With a national population of about 60 million, the number of registrants is expected to rise quickly.
At any rate, the economic slowdown shouldn’t persist beyond the second half of 2014, Tham says, adding that the “worst was over”.
Some analysts share this view, seeing as PHB’s earnings have been dampened by the Parkson Retail Group, its 51.5% subsidiary in China, which is listed on the Hong Kong Stock Exchange.
In its first quarter ended March 31, 2013, the China arm dipped 21% from the preceding corresponding period to RMB227mil (RM113.6mil).
It dragged PHB’s third quarter for the financial year 2013 earnings for the year ended March 31 down 25% to RM76.9mil from RM102.4mil the previous corresponding period.
While Hwang-DBS opines that Parkson Retail Group could continue to experience weaker same store sales growth, the China arm, in a report in the South China Morning Post, told UOB that it would reposition as a more niche player and revamp its existing shopping malls there to accommodate eateries and automated teller machines.
Hopefully, it would bring in more sales to counter the higher marketing and promotional costs, the group said.
Then last month, the group told Bursa Malaysia that its retailing division completed the 2013 financial year ended June 30 with a revenue of RM3.47bil.
This was up 2% from last year’s RM3.4bil, thanks to contribution from seven new stores – four in China and one each in Malaysia, Indonesia and Myanmar – that were opened during the period.
While its China operations contributes about 75% to group earnings, the opportunities in Indochina continue to uplift financial results and encourage further expansion.
“We will continue to strengthen our hold in Asia,” Tham says.
PHB has leveraged on the increasing popularity of Internet shopping by setting up online shopping portals in Malaysia and China.
Tham says PHB is to remain competitive as alternative retail channels such as one-stop shopping malls, concept stores and stand-alone brand stores gain popularity, adding that the retail group is reviewing its market positioning, in-store services and latest brand offerings.
“Although our main strategy has always been in departmental stores, we are actively developing malls in major cities,” Tham says.
Parkson Vietnam has five malls in Ho Chi Minh city to date. It will add one more in December and another next May.
PHB’s retailing division chalked up revenues of RM3.47bil for the financial year ended June 2013, up 2% from last year’s RM3.4bil.
Moody downgrade
On 14 Nov 2013, Moody's rates four department stores in China: Golden Eagle Retail Group Ltd (Baa3 stable); Maoye International Holdings Ltd (Ba1 stable); Lifestyle International Holdings Limited's (Baa3 stable); and Parkson Retail Group Limited (Ba1 negative).
"Golden Eagle and Maoye are best positioned to withstand the industry's challenges, given their large self-owned store portfolios, commercial-property expertise, young store age, and track record of new store ramp-up," said Alan Gao, a Moody's vice-president and senior analyst.
"The credit quality of Lifestyle will remain stable, but Parkson faces increasing challenges, namely exposure to rent increases and weakening credit metrics," adds Gao, who authored the report.
Gao adds that fast-growing Internet retailers and the shopping mall construction boom are drawing traffic away from department stores, particularly in large cities.
And to stay competitive, department stores are shifting their focus to the mid- and high-end market segments and increasing their service offerings and store sizes.
Moody's views store ownership as a strength. For example, it insulates Golden Eagle and Maoye from rising rental costs, which helps them maintain stable profitability.
Moreover, department stores with high store ownership typically have commercial-development expertise. This hybrid model helps department stores compete against shopping malls and is instrumental in securing prime commercial properties in China's low-tier cities, which have become growth drivers for department stores.
Moody's also views fast ramp-up and regional expansion as credit positive, as department stores are also seeking growth through expansion and their credit metrics will depend on how quickly their new stores become profitable.
Finally, the strong liquidity inherent in department stores will likely weaken with acquisitions.
Parkson, for example, in acquiring more physical stores, is likely to use its operating cash flow and debt to fund acquisitions, which will reduce its liquidity buffer. stated Moody.
Moody report have send shares price of Parkson Retail Group Limited down. However, it rebound after news of Eagle Retail increased its staske in Parkson to 4.64%
香港百盛集团 大涨22.3%，金鹰商贸 把百盛集团的持股比例提高至4.64%
香港百盛集团 大涨22.3%，此前据一份交易所文件，金鹰商贸集团有限公司 把百盛集团的持股比例提高至4.64%。
11月14日，穆迪投资者服务公司发布报告称，随着租金上涨及来自网络零售商和大型购物中心的竞争加剧，未来2-3年中国百货商店的信用质量将继续发生分化。
该报告指出，与租赁店面的零售商相比，自营店比重较大的零售商更有可能维持其盈利能力、市场份额和融资渠道。此外，公司扩张战略及新店盈利能力也会影响其信用质量。
同时，穆迪对以下4家中国百货商店运营商进行了评级：金鹰商贸集团有限公司(Baa3/稳定)、茂业国际控股有限公司(Ba1/稳定)、利福国际集团有限公司(Baa3/稳定)和百盛商业集团有限公司(Ba1/负面)。
穆迪副总裁高翔称：“金鹰和茂业抵御行业挑战的能力最强，原因是其自营店比重较大，具备商业房地产的经验，店铺历史较短，并有增开新店的记录。”
同时其指：“利福的信用质量将保持稳定，但百盛面临不断上升的挑战，主要是租金上涨和信用指标趋弱。”
高翔称，快速发展的网络零售商和兴建大型购物中心的热潮分流了百货商店的客流量，尤其是大城市。为了保持竞争力，百货商店将重心转向中高端市场，并扩大了服务种类和商铺规模。
穆迪将快速增开新店及地区扩张视为正面信用因素，原因是百货商店也在通过扩张实现增长，其信用指标将取决于新店盈利的速度。
11月消息指茂业国际旗下茂业百货未来5年还会增开14个门店，每年以2到4家的速度新增。
此外，11月10日，金鹰商贸发布公告称，公司共以4482万元向控股股东王恒收购徐州店7楼，目的在于扩大徐州店的经营面积。
百盛控股 先行缅甸占优势