SME

SenQ’s sensibility

Thursday, 15 August 2013

Spreading out: Senheng says it has plans to set up SenQ outlets in every major town in the country.

Spreading out: Senheng says it has plans to set up SenQ outlets in every major town in the country.

IN THE world of technology, what was hot only a few months ago is considered outdated today.

Many consumers find it a thrill to keep up with the newest and most innovative models of their favourite IT products — be it smartphones, tablets or even household electronics.

That demand is a boon for local electronics retail businesses, which have been buoyed by consumers constantly seeking the latest and trendiest gadgets and gizmos.

While basic necessities like food and drink have always been considered as fast-moving consumer goods, technology products have also joined the same category as they are constantly evolving and developing at lighting speed.


Shopper's galore: senQ practices the economies of scale theory - featuring up to 1000 brands of various items, with pricing and accompanying promotions that are competitive to other players.

Shopper’s galore: SenQ practices the economies of scale theory - featuring up to 1,000 brands of various items, with pricing and accompanying promotions that are competitive to other players.

Local electronic goods chain, SenQ Digital station, seems to have what it takes to keep up with the times when it comes to knowing what their customers want, and how these wants can change within a short span of time in tandem with the advancing world of technology.

Each SenQ outlet displays merchandise worth about RM1.5mil and has an average floor space of 18,000 sq ft, which accommodates value-added services, “special effect corners” for specific categories and brands, customer service providers for enquiries, usage and maintenance information plus product demonstrations.

A SenQ outlet is on average six times larger than a Senheng Electric shop, so it’s not uncommon to see customers become awestruck by the vast variety of items available.

Senheng Electric KL Sdn Bhd, a company that operates two retail channels — SenQ and Senheng — has made a name for itself in Malaysia over the last two and a half decades.

SenQ positions itself as a premium electrical and electronics retail chain store that carries premium products whereas Senheng is your neighbourhood’s electrical and electronic retail chain store within residential shoplots that feature mid-range products.

There are currently 106 Senheng and 29 SenQ outlets in the country with the latter contributing some 41% to the company’s revenue.

Fast growth: There are currently 106 Senheng and 29 SenQ outlets in the country with the latter contributing some 41% in revenue per year.
Fast growth: There are currently 106 Senheng and 29 SenQ outlets in the country.

Last year, both businesses achieved a total of RM1.67bil in sales and this figure, according to the company, will grow significantly come this financial year end. The company has an internal target of double digit growth.

It’s safe to say that SenQ’s larger-than-life shopping environment is what most customers are drawn to.

At least, that’s what one of Senheng’s bosses believes.

“In 2001, we observed that the modern consumer wanted to be able to experience products using their sense of sight, touch and hearing before purchasing it. In this regard our goods are placed in a test-friendly manner and not locked in a display case.

“At the same time, customers appreciate bigger and wider walkways so that the store has an inviting and relaxed ambiance. We also have sound rooms for them to try the sound-system products as well as relaxing chairs for them to do this in.

“They should feel like it’s home and we hope that it entices them to purchase more goods,” says Senheng Electric managing director Lim Kim Heng, candidly.

Optimistic strategies

Despite the magnitude of its branch network and the size of its stores, this year has been slightly lacklustre in terms of sales numbers because of the recent general election.

But the temporary slowdown will be greatly offset by the company’s long-term strategy for growth, which is to establish a store in every major city in Malaysia.

“We’re hoping to penetrate Kuantan, Tawau, Sandakan and Terengganu within five years.

“SenQ currently has outlets in Kuala Lumpur, Seremban, Malacca, Johor, Kota Baru, George Town, Butterworth, Ipoh and other large towns,” said Lim.

He added that SenQ would soon be a one-stop-shop for customers where people not only purchase their household electrical items, but through the access of its customer service portals, would be able to pay their bills that cover everything from utilities to credit cards.

Setting up shop is definitely an expensive feat where the company typically invests about RM2.5mil for each new store.

Add in inventory, and the total set-up cost for a new location amounts to RM4mil.

This, according to Lim, is something that the “small players” cannot emulate simply because it is very costly.

He describes SenQ as a retailer that practices economies of scale where they not only feature up to 1,000 brands, but their pricing and accompanying promotions are a competitive advantage.

SenQ’s customer demographics range between the middle to higher-income group who are about five years younger than those who shop at Senheng stores.

“We learnt through surveys that SenQ customers consist of young professionals who are very well informed about IT products and electronics and that’s why they appreciate being able to test them out at the store.

“About 65% of them are Chinese while the rest are Malays and Indians. It’s quite different for Senheng, where 65% of customers are Malays,” explained Lim.

Give a little, gain a lot

While all out to see profits rise, SenQ does put some cash aside for its marketing and promotional efforts.

“We allocate about 1.5% of our revenue for such events and campaigns.

“There is a full-year calendar in which we plan for promotional activities in four main campaigns for roughly every quarter. From January to February for example, we carry out the Chinese New Year campaign, followed by a generic one from March to May and so on, but we’ll always use the current major festivity as our promotional theme,” explains Lim.

One of the store’s most prominent features is its Loyal PlusOne membership where members are rewarded with special member prices and an extra one-year warranty for selected purchases.

Senheng was founded by Lim in 1989 from a small half shop lot with stock worth less than RM30,000.

Now both Senheng and SenQ employ over 2,000 employees in management and retail positions.

“With the right planning and direction, we started growing quite fast but experienced a bottleneck during the Asian financial crisis in 1998.

“We started brainstorming on how to reach out to more consumers because at that time, we had a limited customer demographic.

“Within a year, we tapped into the younger consumer group who wanted the trendiest and newest products, but wanted to shop for them in a comfortable and convenient environment. That was when SenQ was born,” recounts Lim.

In retrospect, Lim, who was raised in Kuala Lumpur, has no regrets and believes that the obstacles he encountered along the way were disguised as opportunities for growth and success.

“I never allow myself to get comfortable with anything so I keep striving for better things. Some say that when your business grows, it becomes difficult to sustain, but I went against all odds to keep on expanding and found that the business maintains itself,” said Lim.

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