Retail giant Parkson turns 25 this year. Syida Lizta Amirul Ihsan talks to two individuals who helped build and grow this Malaysian name
OVER a cup of black coffee at Zang Toi Cafe in Parkson Pavilion, Parkson Corporation chief operating officer Toh Peng Koon is speaking about the changing local retail landscape over the last two decades. “Do you remember those days when before you enter the store, you surrender your bags?”
I frowned. No, I don’t remember. Wait... suddenly, I was transported back to Teluk Intan, circa 1994. I remember going with my friends into Sungei Perak department store.
We surrendered our bags and my friends’ bike helmets to the security guard. Our belongings were put in square wooden boxes behind him. We were given numbered plastic tags to identify and retrieve our possessions when we left the store.
“We will never do that to our customers,” he says.
Toh knows how the shopping scene has changed. He has been working for Parkson the past 24 years, growing and building the local retail player to where it is now. He joined the company in 1988, heading its IT arm. At that time, the company took over department stores from the Emporium group.
Chief executive officer Raymond Teo, who has also worked 24 years in the company, remembers the brand’s stores in towns such as Batu Gajah, Pontian and Mersing.
“We have 20 to 30 stores across the nation. Over the years, we closed some, and we built some. But the numbers have been consistent,” Toh says.
“Those days, there were even stores without escalators, which is unthinkable now.”
In 1987, Parkson (the retail division of The Lion Group) started its venture. Back then, it was segregated into Parkson Grand in urban areas, and Parkson Ria, in second-tier cities. “Now, everything is re-branded under the Parkson name, with only three or four stores called Ria,” Teo says.
But what’s interesting about this department store chain is its chameleon-like ability to shape its stores to match the different types of customers.
Toh says the department store serves “middle to upper middle income groups but there are differences between the same sets in different areas. There are even differences between Parkson Pavilion and Parkson Sungei Wang Plaza, which is just a stone’s throw away,” Teo says. “Our stores have the same departments, but different products and brand mix.”
It is that same ability to understand consumers that has stamped the company’s success in its overseas ventures.
Parkson entered China market in 1994 and was among the earliest foreign players to enter. It now has 54 stores in 30 cities in China and hopes to open eight to 10 more there yearly.
“China will grow for many more years to come. There are opinions that there is a burnout there, but there are still many cities hungry for retail experience, we are already looking at the potential to expand in 80 cities. There is still a long way to go,” Toh says.
Due to the different retail scene, its stores in China are massive, the average being 50 per cent bigger than its Pavilion store. The biggest in China is three times the size of Parkson Pavilion.
“Parkson is so localised in China that when tourists come to Kuala Lumpur, they’d say, “Oh, Parkson is also here? They think it’s a Chinese brand,” Teo says.
“And we are proud of that. It shows that we know our local market.”
Both Teo and Toh say the company is big on going local. “We have a 20,000 workforce in China, but only 40 expatriates of which only 20 are Malaysians.
“We have six Malaysians working in Indonesia and and three in India,” Toh explains. “We want to use local talents because they know the local culture and the market.”
He adds: “And since we are in a few countries, we also serve as a stepping stone for local brands to expand their presence in this region,” he says.
Today, 80 per cent of the brand’s profits come from overseas stores in China, Vietnam, Indonesia and Sri Lanka. It will soon venture into Cambodia and Myanmar.
Toh and Teo say that they are observing, but not overly worried over the financial gloom. Toh says the more people earn, the more they spend and this is especially true on non-essential items.
“For the last six years, our year-on-year growth is between nine and 10 per cent, with the retail industry growing at half the rate.
“The market condition isn’t easy. It is cautious, yet we record consistent growth. We are not on negative ground yet, as we were during the 1997-1998 recession,” Teo says. “Ours is a recession-proof business. Cosmetics, for instance, is less sensitive to economic slowdown and, our shoppers are 70 per cent women.”
SMALL THINGS MATTER
Besides sales and revenue, Toh and Teo are proud of the service the chain gives to shoppers.
For example, Parkson Pavilion has sitting areas, a nappy changing room with hot water supply, wheelchair service and personal shopper.
“Small things count. We want to treat our customers well and make them more discerning,” Teo says. “We won’t have the “Nice to see, nice to hold, once broken considered sold” tag. I think that’s the risk we have to take as a retailer. We believe in respecting our shoppers.”
When they look back to the days when they joined the company in their 30s, both say things have changed tremendously.
Both agree that they didn’t even realise that they had been with the company for 24 years. Teo says, of the first 10 people who joined the company since its inception (bearing the staff number 1 to 10), three are still with the company.
Says Toh, “When you work with a company that’s constantly expanding, time flies because there are always new things to do and ways to expand your skills and knowledge.”
On the ball
TO be in touch with customers’ demands, Parkson changed some of its previous strategies. Parkson Corporation’s chief operating officer Toh Peng Koon and chief executive officer Raymond Teo explain:
“We have moved away from in-house brands. Malaysians are widely travelled. How do we compete with giant retail manufacturers such as Zara and Mango? Without in-house labels, we don’t have an interest to protect our own brands and we can give what the shoppers want.”
“This is a high volume, low margin business. I think we would like to focus on the department store. By streamlining our business, we focus better and have more resources to go overseas. Let the experts run the supermarket.”
“All our local stores are in shopping malls. This works better for us.”\
Parkson in numbers
25 years in business
38 stores in Malaysia
54 stores in China
125 stores in five countries
500 brands in a store
20,000 workforce in China alone