Aeon to open 10 new specialty-stores in 2021

Aeon Co (M) Bhd is planning to open 10 new specialty stores across the nation by the end of next year, according to CEO Shafie Shamsuddin.

“We believe the behavior of our customers has changed tremendously especially during the Covid-19 era. That said, we need to move towards more specialty retail, compared to the current GMS-focus (general merchandise store) model,” he told BFM-The Breakfast Grille this morning.

The 10 new specialty stores would be similar to Daiso, the Japanese dollar store, with items to be priced between RM2 and RM10. As for departmental stores, Shafie said the retailer is looking to open only one by the end of next year or early 2022.

“When we speak of expansion, it doesn’t have to be growing through the number of physical stores. Frankly, there is plenty of room for us to grow within the existing stores that we have. In 2021, we will be focussing on improving our business model and we are going to sweat our assets even more, with the property and retail segment,” he told BFM.

To put it in context, currently, Aeon has 34 departmental/supermarket stores, 10 max value supermarkets, 44 Daiso outlets, and 72 Aeon wellness pharmacies.

For the third quarter ended Sept 30, Aeon’s net profit rose by 123% to RM16.35 million, from RM7.32 million a year ago due to an improvement in merchandise gross margin. However, its revenue dipped by 6.9% to RM989.62 million from RM1.06 billion. Earnings per share were 1.17 sen compared with 0.52 sen.

Both its retail business and property management services revenue fell by 5.9% to RM836.23 million and 11.8% to RM153.39 million, respectively, due to shifts in consumer sentiments and cautionary consumer spending.

“That’s how we see the year 2020 may end, with an estimated 10-20% reduction in revenue,” he added.

According to the company’s filing to the local bourse, the fall was mainly due to rental waivers and rebates given to tenants, lower rental income, and sales commission receivable.

Shafie said year-to-date, a total of RM17 million worth of waiver was given to its tenants.

“The trend going forward is going to be different. As it is commonly known, the final quarter of any year would normally record high growth, even for us. However, with this current pandemic, we can imagine that the end of this year will be challenging. We could say that we would still grow in terms of our profitability but obviously not as much as the third quarter,” he said.

Moving forward, he reckons the need to bring in new business, growing the company’s top line instead of just continuing to cut down on costs.

“For us, this is the best time to reboot ourselves, we are looking at the topline differently. In 2021, we are looking at growth between 8-10%, at the topline,” Shafie said.

He also believes in the need to look into on-demand chain management instead of the usual supply-chain management.

“We have to be able to do guerrilla marketing and focus more on personalization like our personal shopper which we started this year March, due to the movement control order in place,” Shafie said, adding that in the last six months, Aeon has served more than half a million customers through its personalized shopping services.