Walk, don’t run

SUPALUCK UMPUJH

By PITSINEE JITPLEECHEEP

As can be expected, 2009 looms as one of the hardest years for the one-trillion-baht local retail business. But Supaluck Umpujh, vice-chairman of The Mall Group, believes she could steer her business safely through the perfect storm.

Though the political situation eased in early December after a court ruling disbanded three political parties, the impact of the global financial crisis has emerged as a serious threat for the retail industry and the consequences are expected to be clearly seen early next year.

A drop in foreign tourists, projected unemployment of around one million next year, and the slowdown of public and private investment will result in a flat or 3-4% growth rate for the retail business in 2009.

"But I believe there are still some business opportunities amid the crisis,'' said Ms Supaluck, a industry veteran of 27 years.

For The Mall Group, which operates The Mall, The Emporium and Siam Paragon department stores, overall sales in 2008 were expected to grow by 5-7% despite many obstacles caused by economic and political uncertainties.

"We could boost our sales even during tough times because we have set a clear vision to avoid over-expanding. Our investment has to be realistic and practical and based on our fundamentals. We think big but it has no risk. If we are not confident of winning, we won't enter the battle,'' Ms Supaluck said.

Other factors helping The Mall Group steer through the bad times include a trained focus, efficient cost management, partnership and moral support.

In terms of focus, Ms Supaluck explained that when the company operated two department stores, it did not bother thinking about doubling its outlet expansion in the upcoming year or even in the same year as this was too risky.

However, after the group had smoothly operated a handful of stores, it began to think of opening a new outlet.

"We are cautious with our expansion but we're not conservative. We walk step by step and we won't run because there is always a risk of falling,'' she said.

Sometimes, it takes about two or three years for each development to be fully established with a strong foothold and it is only then that the group starts thinking about building a new mall.

Even more importantly, all of the retail space in a given project must be sold before the construction starts.

If the company expands too much and too fast, it will have no time to take care all the projects.

"I never dreamed of having a business with a value of 300 billion baht and debts as high as 100 billion baht at the same time,'' Ms Supaluck said.

She added that since the group had limited resources, it might face bankruptcy if it overexpanded.

Another rule of thumb she always keeps is that it is not necessary to develop new outlets only in new locations. Sometimes, extra sales can be generated simply by extending the space in existing shopping centres.

A testament to this strategy is clearly seen in 2008, when the group spent 400 million baht to upgrade its two shopping complexes in Bang Khae and Ngam Wong Wan.

To Ms Supaluck, it is not difficult to develop a retail complex. What is more challenging is to find the right land plot at a good price. A low cost means more efficiency and affordable rents for tenants.

Apart from focusing on business, another important contributor to the group's success is strategic alliances. Co-operation with strategic allies not only helps lower costs, it also widens the group's customer base to cover the partners' networks.

Though sentiment might not be good next year, The Mall would continue to invest, particularly in marketing and promotional campaigns.

"Fewer Thais will travel abroad in 2009. Therefore, we will create activities to draw shoppers to our stores. I think that hard-sale campaigns that offer bold discounts will end next year. It's time for promotional campaigns that make shoppers happy,'' she said.