Room for more convenience stores

emart24 chief executive officer, Vuitton Pang Hee Cheah targets to open another 10 stores by the end of the year.

THE convenience store industry is no longer in its infancy stage in Malaysia. From international brands like Family Mart, CU Malaysia, and Circle K to homegrown brands like KK Super Mart, 99 Speedmart and myNEWS, convenience stores continue to mushroom across the country.

So, how will this pan out for emart24, the rookie in the scene, amidst what appears to be an increasingly crowded playing field?

emart24 chief executive officer, Vuitton Pang Hee Cheah, tells StarBizWeek: “We are not afraid of competition. Competition is not a bad thing. In fact, there are still a lot of opportunities for growth in Malaysia’s convenience store industry.”

Pang shares that in terms of the public’s perception towards convenience stores, the frequency of visits, and the number of convenience stores in the country, there is still room for many more entrants in the industry.

“Most Malaysians still do not see convenience stores as a place to get food. They associate convenience stores with a place to buy emergency supplies. However, this changes as soon as they travel overseas to South Korea or Japan and it becomes the first place they want to visit for food.

“An average Malaysian will probably go to a convenience store once a month or once a week, but in South Korea, visiting convenience stores is a part of their daily routine.

“Over there, one outlet probably serves 1,000 people, but locally, one outlet serves roughly 8,000 people,” he says

emart24 Malaysia’s flagship outlet in Bangsar South, Kuala Lumpur.

Since its debut in the Malaysian market in June 2021, emart24 has 26 outlets to date. With its maiden reserve store in Bangsar South, Kuala Lumpur, the start-up has plans to open 300 outlets in five years. In the near term, Pang aims to close at 36 by the end of the year

Back in South Korea, emart24 is a burgeoning franchise. Established in 2014, it has rapidly expanded into 5,500 outlets in the course of seven years, earning the distinction as South Korea’s fastest-growing convenience store

“We will hit our target of 300 outlets eventually. So far, there is no pressure from our principal to deliver the numbers as we are still quite new in the market.

“Most importantly, we want to ensure that the fundamentals of our business are right as we take this opportunity to understand our customers better and refine our offerings at the same time,” says Pang.

In terms of choosing the right location, the entrepreneur reveals that the team learns by doing.

“We learned a lot from the outlets that we have opened, so we know what works and what doesn’t. Using all the data we have right now, it helps us to identify store locations better,” Pang says.

He added that emart24 is fortunate to have the support of Karrin Associates, a private equity firm, to provide funding for growth.

“Karrin Associates has a 30% stake in emart24. It helped us to optimise our operations and gives us financial guidance as well,” says Pang.

emart24 is operated by Shinsegae Group, a tycoon in South Korea’s retail industry, with whom Pang has more than a decade-long business relationship, even while he was still a director at Mamee-Double Decker (M) Sdn Bhd. This has certainly eased emart24’s penetration into the Malaysian market.

“emart24 is also quite well-versed with the local market and it could see the amount of untapped potential in the industry. Given that Malaysia is its first overseas market, this venture was as much of a test for it as it is for us.

“Hence, we are receiving a lot of support from our principal to establish emart24 as one of the top convenience stores in the country,” says Pang.

When the South Korean wave or Hallyu hit Malaysia in the early 2000s, it took the country by storm. The Hallyu wave amassed a significant following among Malaysians through its pop music (K-Pop), movies, television series (K-drama), games and food.

Pang opines that while locals seem to have accessibility to enjoy K-pop and K-drama, the same cannot be said for South Korean food.

“This led us to believe that there is a huge opportunity for us to set up a South Korean convenience store in Malaysia. We want to provide customers an avenue where they can enjoy South Korean culture to the fullest,” he says.

Although the enterprise has yet to acquire halal certification, it makes certain to source materials from halal-certified suppliers.

From rice bowls, pau, shaved ice to signature street food like skewered fish cakes, and rice cakes, emart24 has not only made South Korean food accessible, but also affordable.

“When it comes to South Korean food, many people have this assumption that it is expensive. On top of that, they are not sure whether the ingredients are halal or not. So our goal at the end of the day is to introduce affordable, halal South Korean food to Malaysians,” he says.

Pang resolutely echoes this sentiment even in the face of inflationary pressures.

“To keep prices affordable, we may need to sacrifice a little bit of our margins. Other means include working together with suppliers to contain costs or exploring alternative materials that can be used.

“But the bottom line is that the quality and affordability of our products cannot be sacrificed,”

Moreover, private exclusive brands like No Brand, Minsaeng and I’m e are also part of emart24’s offerings.

Stepping away from the stereotypical white-walled concept of a convenience store, emart24 blurs the lines between café, quick-service restaurant and convenience store.

“We want to make emart24 a lifestyle destination. Convenience stores should be a part of a customer’s daily routine. For customers to continuously have a reason to visit the store, it is very important that we understand what they want so that we can refine our offerings to meet their needs,” says Pang.

Apart from food, customers can find a range of K-beauty products by beauty distributor OnlyKorea.

Nevertheless, Pang is also conscious of maintaining that fine balance between the store’s South Korean identity and the market it is addressing.

“The mix of South Korean products versus local products is about 50:50. We need to have enough South Korean products to maintain that South Korean identity, but we also need to have local products which are already part of customers’ everyday lives,” he says.

Shinsegae Group also has a stake in Starbucks Coffee Korea Co Ltd. As such, it has incorporated the Starbucks Reserve concept in emart24’s operations.

emart24 reserve stores, like the one in Bangsar South, have customised interiors, and a larger space for better customer experience. It also has general stores, for instance its second outlet in Desa Sri Hartamas, Kuala Lumpur.

“Every reserve store looks different from each other. It gives us the opportunity to be creative in designing the stores’ interiors. If you head towards our reserve store in Sunway, the store will have a raw, unfinished look with graffiti because there are car workshops and colleges around it.

“This kind of execution becomes an added reason for people to visit emart24, to experience different concepts across our reserve stores. In terms of product offering, general stores have about 90% of what reserve stores have,” says Pang.

Moving forward, emart24 will continue to rise above the competition by forging ahead in technology adoption.

“We want to add on more services for our customers so that they can be able to top up their Touch ‘n Go, purchase mobile reloads and even pay their utility bills,” says Pang.

While Pang gives credit to his team for their sound judgment, the experience he garnered during his time at Mamee has surely enriched the pie.

“I learned that there is no such thing as loyalty among consumers. They are very fickle these days because there are so many options. Hence, instead of being a product centric company where we expect customers to buy the product we put out, we identify their needs and come up with the right products. Our objective is basically to resolve customers’ pain points.

“This is what’s happening in emart24 now. We give them a reason to come in because we have all these solutions for them,” Pang says.

Building on a successful collaboration with K-pop boy band TREASURE, Pang looks forward to collaborating with local small and medium enterprises (SMEs) and artists to keep the momentum going.

“I think collaborations are the best way to build brand awareness. We are more than happy to work together with local SMEs and other artists to promote Malaysian-made products in our stores.

“Right now there is nothing in our pipeline because of our ongoing contract with TREASURE. However, by early January next year, we will have to start planning for our next engagement,” says Pang.