Darren Chin, Country Head of Malaysia from Aimazing, shares with Jun and Imran on The Future of Retail Asia about the happenings in Malaysia, how the retail situation in the country is developing, and what malls and retailers are doing to adapt to the pandemic. He taps on his prior experience of working with Point-of-Sales systems and online marketing to capitalise on data to move the whole retail industry forward.
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Episode 5: “Malaysia's Lockdown: Retail Apocalypse or Opportunity?” with Darren Chin
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IMRAN: Welcome back to the Future of Retail Asia! My name is Imran.
JUN: And I’m Jun. Today we have a slighty more special episode. We’ve had some buzz among our viewers about the Malaysia Market, especially hearing about the daily news. We hear you! Today, we’re chatting with our Country Head of Malaysia, Darren Chin!
IMRAN: A little bit more about Darren, he started off in marketing and sales from 2006, and founded his own SEO and social media marketing firm in 2010 and 2011 where he manages clients like Indosat and Telkomsel! He later found his way into the retail industry by joining StoreHub Malaysia in their Business Development and Partnerships division, and now he has been here with us at Aimazing for almost 2 years now. Working with the mall management and retailers in Malaysia. So welcome again Darren!
DARREN: Thanks for having me, Imran and Jun.
JUN: First question, from your time doing online marketing and sales, to your time at StoreHub, serving F&B outlets and retailers with their POS system, what did you see at your time with StoreHub that made you want to be part of this retail industry?
DARREN: Thanks Jun. If you look at the data from the Malaysia statistics department, almost 99% of businesses in Malaysia are SMEs, cut across all sizes & sectors and the retail industry and F&Bs are contributing to more than 45% of the economy in Malaysia. In other words, it's the main source of income for the Micro-SME or SME business owners which means it's the heart of Malaysia. In the good old days, the point of sales technology was actually built for large corporations and it’s very, very expensive. And for the longest time now, SME is using this same technology to scale their business and automate processes. When I was in the point of sales scene, I noticed that not only solving day to day operations is important but data is the key to scale and in order to scale, businesses needed to make more informed decisions. Not all POS systems are intuitive. Business owners would need to change the whole entire system and operational routine just to have that new system. Let alone the replacement of costing. During the UOB FINLAB event, that’s the first time I saw Jun presenting AImazing’s technology. When I saw that it is so seamless where there’s no need to change the whole system hence no need to change operation routine, there’s no need to have capex involved , no need for integration. I figured that’s the only thing that SME retailers need to harness full data from their business to scale. Coming from the past experience on SME market and now working very closely with the shopping mall, I strongly believe that malls are in the right position to empower SME businesses to survive and thrive in this trying time. Being a part of this adventure is very exciting.
IMRAN: That is very cool. That is part of history that is even new for me today, these stories. It is very nice to hear. That is another common thing right, for us on the call, even the listeners. One thing that we do know is that the people today are very excited and feeling very strongly about the retail scene, especially in Malaysia today. That is even more why it’s difficult to talk about the situation today. Covid has hit Malaysia really hard. The numbers don’t seem to be improving, in fact it might be looking the other way. We are here in Singapore, but for you in Malaysia, and your clients and your team and your friends there. I think you would have a better understanding. What is the effect on the retail industry? How are the malls doing and how are the retailers doing now, in Malaysia?
DARREN: Thanks Imran. Yes, it definitely affects the entire shopping mall scene globally. Let’s talk about Malaysia malls in this context. The retail plays a very important role to attract foot traffic into the mall so to speak and if you look at Free Malaysia Today, FMT, headline says “No dine-in, lack of riders, a double blow for restaurants in MCO. MCO means in Malaysia, Movement Control Order, 3.0” In this current pandemic, F&B revenue has dropped 70-90 percent. Inside the news you can actually read that one of the restaurants named “The Fire Grill” located in Taman Tun, the owner said that quote “Every time dine-ins are banned, we lose approximately 80% to 90% of our revenue. So we’ve been surviving on 10% to 20%. In fact, we depend more on self pick-ups than deliveries.” So this speaks a lot about what is happening in Malaysia. And after talking to so many retailers from our end, most of the restaurant owners, not just Fire Grill, share the common concern. On top of this issue, a lot of the food operators are reluctant to open because revenue is not able to cover expenses. And once you have that kind of sentiment, it has created a chain reaction. Means, a lot of food operators are not willing to open because they felt that it doesn't make sense from an economic standpoint. Mall landlords have to choose either to reduce rental or to continue with the full rental irregardless if the business is open or not. This has been happening since on and off lock down in Malaysia from last year 2020. And just the other day, the Malay Mail healined. If you guys already read it, “Survey shows 90% sales drop in Malaysian malls; association predicts more tenants to permanently leave by Dec” When tenants and malls are affected you can see a causality in these events. A vicious cycle.
IMRAN: Yeah, it’s like do or die. Already.
JUN: Actually quite sad to hear that the Malaysia market is in this situation. So you’ve been in contact and talking to many players in the industry, what are some of the efforts that malls have done to address this situation, and do you think that malls should be the voice in the retail industry and help the retailers tide over this period?
DARREN: Yes, I think some of the malls which we spoke to, which I don't want to mention names here, have tried their best to have their own dedicated ecommerce, food deliveries to actually help the tenants. Some malls are also changing their tenant mix strategy, getting more service related or education-ish entertainment businesses to join them to prepare to bring in the crowd once the country has relaxed on the lock down. In house, loyalty programs have been implemented so that shoppers can actually use the reward points to spend inside the mall premises. Will we see immediate results? I wish I could have a solid yes but it really takes time. I think communication is the key right now between tenants and landlords; to have everyone meeting in the middle.
IMRAN: And you were mentioning earlier about the malls implementing their own e-commerce sites and food delivery sites. I think this is also in contrast to the existing e-commerce and food delivery platforms out there in the market. The big ones which we all know. So what are you thinking around the omni-channel strategies that the retailers should be embracing today. Is it essential to recovery, is it part of the new normal? How is the thinking over in Malaysia now?
DARREN: It is a good question. In my opinion, omnichannel is an overused word especially during the pandemic. Don’t get me wrong. I am pro ecommerce. I think that ecommerce right now, can be a temporary solution. Why do I say that is because people want contactless experience, in terms of hygiene perspective, and want it to be super convenient during the pandemic. Purchasing in a physical environment is not just about buying things. If you guys agree. It’s about the experience when you walk into a shop , being greeted by a human, which we haven’t experienced for quite some time, especially in Malaysia, and the interaction one has with store assistants before completing the pay wave transaction. It’s about customers being engaged at a personal level.And I believe that having both is like a two edged sword and it definitely helps but it should not be a replacement.
JUN: I think understanding the situation in Malaysia, and also knowing the capabilities of the solution that we provide to the market. How do you think mall managements can use data to help their tenants?
DARREN: Very very good question. I think turning data into information is verye important right now. For example, one of the solutions we provide is helping malls to automate or to get tenant’s GTO, Gross Turnover Data, in real time, if the malls don’t already have one. By understanding the tenants’ performance in real time, the malls can help. I think there’s a few options here. Number 1, with packages like low fix rental with X percentage on revenue, from the tenants. It can be to decide how much subsidy or rebate, on the rental. Or how can mall use data to forecast potential red flag tenants.
Meaning to say, whether the tenant, are they in dire need in terms of revenue, there is a forecast of that. Lastly, using SKU data to do cross promotion like how marketplace does for consumer to have better deals. I think these are the few aspects which covered the consumers, tenants and the mall landlord part and a win-win relationship for all is not impossible to achieve.
IMRAN: So, let’s say just to jump on the cross promotion idea that you just mentioned. For example, I sit down and have a latte and then from the receipt, based on the data or what I am transacting, I get certain recommendations for let’s say a pair of shoes or a dress as my next offer with a certain discount code or QR code. Is that what you mean by cross promotion?
DARREN: Yes, exactly. And this is what we are seeing in the marketplace, but I think the mall is able to achieve that.
IMRAN: Right, and I think that is very interesting. BecauseI think you were talking about data to look at things like rental, rental invoicing, rental contracts or even rental subsidies. And I think that is a very important foundation. And an even important in, let’s say, addressing the situation right now. Like even more important. Let’s say you are looking to the future, we do know that retail will make a resurgence again one day. How do we use data and plant a win-win-win for all parties there?
DARREN: I think using data to achieve what the marketplace is able to do. For example what I mentioned earlier, crosspromotion. If a group, a category of shoppers or consumers like certain stuff. How you actually run a cross promotion to actually increase the basket size, or increase the revenue for the tenants itself. I think the mall actually is in the right position to use data, especially SKU level data, to achieve that kind of strategy. If all these are achieved, the win-win situation between these three parties, tenants, consumers and malls are able to be achieved.
IMRAN: So you have the consumers getting what they want. You havet the mall managers saving time, saving money, saving effort. They don’t need to go out and calculate. It automatically calculated for them, it is accurate, it is real time. Then they can start acting as a marketplace to really connect tenants together, brands together. Cross promotions, up promotions, and consumer promotions.
DARREN: Exactly.
IMRAN: Very cool!
JUN: I think we just now mentioned about the cases in Malaysia everyday, I think now it is still five figures. What do you foresee the mall management can do this year, or even for next year?
DARREN: I think having an honest conversation with each other is important. Between tenants and landlords. A discussion can be like, what help do I need in order for me to achieve this? This is coming from a tenant’s perspective. Or if we help you with this, can you do this? I think having that kind of conversations is very important. And what are the commitments for both if they should reach an agreement and why? This kind of honest conversations between both parties is very important. Because I see there’s a huge gap between tenants and landlords but I believe both can come to an agreement.
JUN: One thing very interesting we talked before this is actually when we are talking about, definitely very sad to hear the cases is increasing every day. But this also accelerated the entire industry going digital. I think two years ago you cannot imagine the hawker centre accepting food delivery or pick ups. Aunties and uncles are using a terminal to receive the food order. So I think on the good hand is actually it has accelerated the industry, because people want to survive, so people have to accept something moving forward and then they can survive. From there one day, we believe, the market will be opened up again, and people will still go back to the shopping mall. So I think this time period will be a very good time for a retailer, F&B, and even a shopping mall to prepare for when they open up again, then the shopper will go back to the shopping mall.
IMRAN: The best time to actually do it.
DARREN: Yup.
IMRAN: We do have a final question which is, do you think retail, or physical retail, is king. Do you think that it will still remain king?
DARREN: I think physical-only retail might not be relevant in time to come, only physical retail, but I think retail is going to stay for long. Some studies indicate that an e-commerce retailer who opens a physical store will see online traffic from local residents increase by around 50 percent within weeks of opening. Studies also tell us that brands which have implemented BOPIS, buy online, pick up or pay in store strategy, will have an incremental sales to the original reservation and down the road they will see high traffic online but lower sales (online) and higher sales in-store. Example, Crumpler Malaysia did a brilliant job some time ago by giving more discounts in store than in the marketplace. This is really pushing online customers back to their own physical stores. I think the malls can actually act like an e-marketplace and all happening inside the shopping mall premise with data. So, to answer your question, I think retail can always be king.
IMRAN: I think that is really cool. The takeaway here is that it is not about online or offline, it is the idea that omni-channel is really here to stay, and we need to think about what to put into place now to win-win-win long term with data and working together. So I think that is the time that we have for today, thanks again Darren for taking the time and sharing, especially with what is going on in the marketplace in Malaysia. I think it is a very very important time for players in the industry to come together to make very important decisions for the future. If there is anyone with any questions, especially from the Malaysia side, or entering the Malaysia market, please feel free to share your comments in the comment section in LinkedIn, I am sure Darren is happy to answer every one. Until then, stay tuned for the next episode. Thanks Darren.
DARREN: Thanks Imran.
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