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Valiram eyeing further expansion in 2017
MALAYSIA-BASED retail and lifestyle group Valiram plans to scale up its network this year, leveraging on its core brands to fuel growth across the region.
The family-owned business will add New Zealand to its geographical portfolio as well as deepen its presence in existing markets such as Malaysia and Vietnam.
Starting with humble beginnings as a textile merchant in Kuala Lumpur in 1935, it branched out into airports with a textile store at Subang Airport in 1996 and later a stand-alone Dunhill boutique at Kuala Lumpur International Airport (KLIA) in 1998. The early 2000s saw the launch of the multi-brand Swiss Watch Gallery store in Penang International as well as the expansion of its retail portfolio with brands such as Coach, Montblanc, Hermès and Godiva at KLIA.
It then made its maiden foray into Singapore in 2004 with a Bally store at Changi Airport, and opened its first downtown store in Kuala Lumpur the following year.
Steered by the Valiram brothers - Sharan, Ashvin and Mukesh - the group's footprint has since grown to 343 stores across nine markets, of which 160 are in Malaysia.
Besides Singapore and its home base, it also has a presence in Indonesia, Australia, Thailand, Macau and the Philippines.
Much of its growth in the region going forward will come from its core brands, executive director Mukesh Valiram said in an interview with The Business Times. These are Bath & Body Works, Tumi, Michael Kors, Victoria's Secret and Kate Spade.
"This year, we went into a new country, Vietnam. I think that there is tremendous growth potential for us with our existing brand portfolio. Some of our brands are very young and under-distributed," he said.
It has started with a Kate Spade store at Takashimaya in Ho Chi Minh; in addition, it has earmarked Hanoi as another market to enter. In Malaysia - where it distributes more brands including major international labels Tory Burch, Ferragamo and IWC Schaffhausen - it will expand with new outlets in the suburban malls.
"We're always looking for new brands," Mr Valiram explained. The group is also keen to expand into sportswear. According to him, the group's competitive advantage for prospective partners is its sizeable presence in South-east Asia and Australia, allowing it to leverage on its infrastructure and manpower in the different markets.
In particular, it is keen to expand its food and beverage (F&B) business in Malaysia and is currently in talks with Godiva to open Godiva cafes. "We're actively looking for franchise opportunities that could be relevant in other markets," Mr Valiram added. Other F&B businesses that it operates in Malaysia include TWG Tea and Mediterranean restaurant Quivo.
In the last financial year, the group earned RM2 billion (S$647 million) in revenue, with growth at 30 per cent annually, he said.
In 2017, it hopes to open up to 100 new stores across its various markets and stable of brands, which range from Charles & Keith to Rolex.
"We play in different price points. The key focus is to give consumers what they want," he said. Mr Valiram joined the family business in 2001.
In Singapore, the Valiram Group opened a Michael Kors store and a flagship Victoria's Secret store at Mandarin Gallery mall in the second half of 2016, securing long-term leases of seven years and 10 years respectively, according to a report.
At the same time, it is realigning its network, letting certain stores close as leases expire. For instance, a Michael Kors store at Scotts Road and a Victoria's Secret at Ion Orchard - both of which are near Mandarin Gallery - have been closed.
The retail group has a total of 55 stores in Singapore, including Tumi, Bath & Body Works, Kate Spade, Chopard and Rolex. Aside from retail malls such as Vivocity and JEM at Jurong East, it also has boutiques at Changi Airport's three terminals and will open at Terminal 4 in the second half of 2017.
Mr Valiram believes that despite a tough retail operating environment in Singapore, brands which can deliver good value and creative concepts or products will succeed.
Retailers here face headwinds on multiple fronts, including high operating costs, a tight labour market and a strong Singapore dollar, not to mention the growing popularity of online shopping. Supply will also be added to the market in 2017 as new malls come onstream. According to the latest figures from the Urban Redevelopment Authority, retail vacancy rates have risen from 7.8 per cent in the second quarter of 2016 to 8.4 per cent in the third quarter of 2016.
"The notion of consumers going to malls, either indulging themselves or gift-giving, that concept hasn't gone away. It's just that the average retail sale per transaction in certain businesses may have come down," said Mr Valiram.
One bright spot is the pick-up in tourist arrivals. Preliminary data from the Singapore Tourism Board put visitor arrivals for the nine months ended September at 12.42 million, up about 9 per cent, fuelled in large part by a surge in visitors from China. The number of travellers from China - Singapore's biggest source market - has leapt by nearly 41 per cent.
The influx of tourists is pushing up sales, although tourists from markets such as China are opting for products with more accessible price points, he added.
On the e-commerce front, the group has already started an online business for its Tumi and Kate Spade brands and is keen to add e-commerce avenues for its other major brand partners going forward. The upside for consumers to shop on the local website is speed of delivery as well as perks such as free shipping. It is also looking into rolling out a Valiram-owned multi-brand site in 2017, which will be operated out of Malaysia and serve as a distribution centre for South-east Asia.
"Our e-commerce business, while small today, has been incremental. I don't think we've taken away business (from the brick-and-mortar stores)," pointed out Mr Valiram. "We have taken a conscientious approach to see how we can get our pricing very close to the home market (of the brand). We're slowly bringing it down to what we think is an acceptable premium of 10-15 per cent."
In addition, it works with its partners to come up with selected limited-edition products to give consumers a reason to shop at home.
Meanwhile, the retail group is eyeing an initial public offering (IPO) over the next three to five years, although no decisions have been made on a location as yet. "We've always said that the company should be IPO-ready, that we have the resources, talent and corporate governance. While we are a private company, we try to operate like a public company," Mr Valiram added. "We're still growing, we're profitable. (In three to five years) ... the company would be quite sizeable to warrant a listing status."