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Stationery, but still Popular

Mr Chou says Popular is entering the Malay book market after many years of selling and distributing Chinese and English books.


POPULAR Holdings might have started out as a bookseller, but the household brand name is no longer making most of its money from books. In fact, "more than 50 per cent" of its core retail and distribution business, which has a turnover of S$470 million a year, comes from non-book sales, notably stationery, said executive chairman Chou Cheng Ngok in an interview with The Business Times.

The company is still a bookstore empire with 168 outlets in Singapore, Malaysia and Hong Kong. But it is behaving more like a general retailer. Popular is exploring new markets in high-end stationery under its UrbanWrite brand. It sells plenty of gadgets and IT accessories, and even stocks household items such as air fryers.

"Retailing is very interesting. It's basically common sense," said Mr Chou. "If you're willing to explore and think, you can have various permutations and combinations."

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While industry players might say online shopping has killed off retailers, Mr Chou refuses to believe it. "As long as there's civilisation there will be shopping," he said.

Latest numbers show that Popular, a company founded in 1924, is surviving, though not growing. Net profit attributable to shareholders for its financial year ended April 30, 2015, was S$16.5 million, a rebound from S$10.6 million a year ago, due mainly to the absence of impairment losses for its property arm.

Revenue was flat at S$552 million, from S$551 million a year ago. The information came from Popular's 2015 annual report, which was published and audited externally despite the company having delisted since May.

Popular's delisting came after an 18-year run on the exchange.

According to Bloomberg, buying Popular shares at end-May 1997 and holding them until end-March 2015 generated a total price return of 27 per cent (1.35 per cent a year), or 152 per cent (5.3 per cent a year) if dividends were reinvested.

An ill-timed venture into property development in recent years had forced Mr Chou to take the company private to avoid paying hefty penalties due to unsold units at its freehold Ei8ht Raja condominium in Balestier. Just 8 out of 26 units have been sold there, Mr Chou said, adding ruefully that the property market here is "as dead as a doornail".

"I'm going to go fishing," Mr Chou said, adding he is "lying low" with no major investments planned for now. "I'm 79 years old, can I afford to fall? I either crack my pelvis or crack my femur. If I crack both legs I cannot walk any more," he said.

Another memorable miss was Popular's acquisition of the Borders bookstore brand, which Mr Chou said he bought for US$15,000. A store opened in Jurong East's Westgate mall in December 2013. It closed after just five months.

At one point the store was making less than S$2,000 a day, which was not enough to pay rent, Mr Chou said. "We lost a million in a year. Now, (with a Popular bookstore in its place), hallelujah! It's booming," he said.

Popular is currently completing its 17-unit Permai Residences in Kampong Bahru, with its Temporary Occupation Permit (TOP) expected this month. The company has also recently moved into its new headquarters in Serangoon North.

Looking ahead, Mr Chou said he is exploring entering the Malay book market in Singapore. The company started selling Malay books in Malaysia two years ago. This is a major change for the 91-year-old company, which was founded by Mr Chou's father Chou Sing Chu in 1924.

Popular started out selling Chinese books, before moving into English books, publishing primary school textbooks, and selling music and audio products. It also launched electronic learning platforms. In Singapore, it is also known for selling assessment books and compilations of past years' examination papers.

The company never paid attention to the Malay book market in Singapore because of a lack of demand, Mr Chou said. But it has belatedly realised the enormity of the Malay book market in Malaysia. Asked why he did not think of it earlier, he laughed. "Stupid, lah," he said.

"We published a Malay cookbook (1 Hari 1 Resipi) . . . in three years, we sold over 300,000 copies," Mr Chou said. He sees potential in religious books and Malay fiction in Malaysia.

The company's Hong Kong operations remain highly profitable, more so than its Singapore or Malaysian segments.

Mr Chou cites how Popular broke into the English textbook market in Hong Kong, gaining market share over publishing rival Longman.

Today, Popular unit Educational Publishing House (EPH) publishes a range of Chinese, English, mathematics and general studies textbooks for almost all primary schools in Hong Kong, Mr Chou said.

EPH Hong Kong grew sales by 12 per cent and profit by 30 per cent in the past year, Popular's latest annual report showed.

The company is also setting up tuition centres in Hong Kong under the EduSmart brand, initially teaching math and English to kindergarten and primary school pupils. "We have four now and are planning to build more," Mr Chou said.

In China, Popular has tied up with BBC Worldwide, the commercial arm of the British Broadcasting Corporation (BBC), to open an English learning centre in Shanghai in May 2015, targeting children aged three to six. Mr Chou said he envisions up to 80 such centres in the country eventually.

Tuition might seem like an attractive prospect given the Asian focus on education. But Mr Chou said there is a limitation on the time of students.

"All these people go to regular schools. Whether it is profitable depends on whether you can get the students. You have to see how you can make use of the empty periods," he said.

The company also experiments with different concepts to keep itself relevant. One major programme is BookFest, the mega book fair it has been running in Singapore and Malaysia since the mid-2000s.

Popular lost money on them for the first five years but they have since become profitable. A recent fair in December in Suntec attracted over 600,000 people in 10 days. This year's fair sold imported snacks for the first time. A colouring competition was held for adults. Shoppers were enticed with gold bar rewards.

"I tell myself, you can no longer rely on people to come and visit your bookshops. But if you can make these book fairs very creative, it becomes a fair, and everybody will come," Mr Chou said.

Ultimately, the company's willingness to innovate - encapsulated in its book fairs - has ensured Popular's survival as a retailer, Mr Chou said.

He is still not giving up on his property development dreams, however.

Mr Chou quotes late property tycoon Ng Teng Fong, who told him: "If you want to be in property, don't look further, just stay in Hong Kong and Singapore".

Land supply is limited and assuming a stable government, population growth in both places will help the property market, Mr Chou said.

The other thing he remembered is how Mr Ng regarded the "buy low, sell high" advice in the property market.

"He said, 'an idiot also knows that, lah. Let me ask you, when you want to buy low, who's going to sell it to you low? When you want to sell high, who's going to buy it from you? . . . I tell you, buy high, sell higher! When the market is shooting up, there's no such thing as high'."