Changing fortunes for small retailers

PETALING JAYA: While shopping remains a firm favourite pastime among Malaysians, a number of retailers find spending to be more subdued so far this year, even as preparations for the Chinese New Year peaked. 

“Retail has definitely slowed down since last year’s oil price hike and for some reason, it does not seem to have fully recovered from it. I think the department stores are all right as well as some of the ‘masstige’ brands (brands with mass appeal but offer a notion of prestige to customers, like Zara, TopShop and MNG) but some of the smaller players are suffering,” a retailer who declined to be named told StarBiz.  

For fashion designer Eric Tho, extending the lifespan of his small chain of boutiques means having to be flexible and accommodating in changing times.  

Tho, who owns and runs E’Tho, was well known for his line of batik qipao and baju kebaya, but has had to diversify his designs to suit different customer preferences. These days, he also offers fusion-style garments like cocktail dresses with the oriental touch.  

Eric Tho has had to diversify his designs to suit different customer preferences

“It is really our customer profile that has changed since last year. From what I see, it is the younger generation that is enjoying greater purchasing power, while parents and older shoppers have opted to buy more necessities instead of luxuries. They find it a little less easy to indulge themselves these days,” he said.  

Tho and other smaller retailers not only have to contend with large department stores that are able to offer bigger discounts and sales, they also face greater competition as new retail businesses pop up.  

“There has been a proliferation of new shops opening as well, and with the anticipated competition, both new and established players have embarked on more aggressive marketing activities,” Tho said.  

Large department stores are said to import a bulk of their garments from China. The retailer said: “They buy at bulk prices, but there may be some differences in quality. However, that’s a subjective view.” 

Costs have increased, resulting in smaller margins. End products like lipsticks and perfume, and materials like needles, special fabric and threads are often imported.  

For players in the beauty industry, it is business as usual for the Chinese New Year period.  

“It’s more a time when people buy new clothes and shoes. For the beauty players, the highest sales happen at Christmas. For Chinese New Year, shoppers prefer to splurge on clothes,” said Ken Lim, owner and managing director of the Kensapothecary chain.  

But he also concedes that sales growth can be rather flat over the season. “I think my sales will grow this year, but the extent of that depends on how aggressive marketing and promoting the products will be. I foresee more niche brands and more players entering the market, and fighting for a share of the pie,” he said.  

Competition will also heat up with a number of new shopping malls scheduled to open this year. “Aside from bringing in the mainstream brands, department stores are looking for a point of difference, and searching for a concept that sets them apart from the rest. Many of these malls, in their bid to lure retailers, are now emphasising on concept-driven retail.”  

Another industry source said the mood for beauty products retail may be a little more sombre this year.  

“Mainstream brands will probably need to try a little harder to grow their market share. Some are also moving into new areas to achieve better growth. For example, Clarins has begun to push its line of colours. It was formerly known for its skincare. But there will be no surprise as to who will take the top three spots -- SKII, Estee Lauder and Lancome.”  

Most retailers though, hope to see an uptrend in sales come March and April when the mega-sale season kicks in. But for now, the influx of tourists and the promotions for Visit Malaysia Year 2007 have not yet made its impact on the retail industry.  

Ken Lim foresees more players entering the market

“For one, we are still building Kuala Lumpur’s reputation as a shopping destination and we need to play catch up with Bangkok and Singapore, which are long established as retail meccas,” Tho said.

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