Aeon extends its community reach in region

KUALA LUMPUR: Established as part of Tun Dr Mahathir Mohamed’s Look East policy in 1984 to help boost the nascent local retail market, Aeon Co (M) Bhd, formerly known as Jaya Jusco Stores Bhd, has grown from its initial store in Dayabumi to 29 stores nationwide and with its annual sales now reaching RM3 billion with close to RM200 million in net profit.

Not only did Aeon modernise the local retail industry, it did so by entrenching itself as a community-centric player catering to the prospering middle-income market in the cities and towns in Malaysia where it has a presence.

In a recent interview, Aeon group managing director Nur Qamarina Chew Abdullah and executive director of corporate finance and investor relations, Poh Ying Loo, told The Edge Financial Daily of the strategy to further expand its reach in Malaysia and how its aggressive rebranding exercise will help strengthen its name in a regional context.

The group, which is in the midst of entering the northern region in a big way, will launch two new malls in Perak — Sri Manjung and Ipoh — and has acquired land in Kedah and Penang worth RM86 million, with plans to develop these sites into malls by 2014. It also recently purchased land in Johor for RM22.22 million.

Aeon plans to spend some RM15 million in the next two years on the re-branding exercise to move away from the long-time Jusco brand that Malaysian consumers are accustomed to. The rebranding is not only aimed at promoting the group’s new image to be aligned with its corporate identity but as a means to enter regional markets where the Aeon brand, instead of Jusco, is being used.

At present, its parent Aeon Group Japan owns and operates shopping malls in Hong Kong, China and Thailand. The group is currently exploring opportunities to enter other emerging markets like Cambodia, Indonesia and Vietnam.

“The potential of Asean is huge. I believe we (Aeon Group Japan) are making the right move to go global. Japan has matured and since last year the group has been exploring new markets like Asean and China. The Asean office is based here in KL as Malaysia has a very stable business and economic environment,” said Chew.

On whether Aeon, which is 51% owned by Aeon Group Japan, will take part in those regional moves, Chew said that all regional expansion decisions will be determined by the parent company.

Since 2002, Aeon has been expanding aggressively in Malaysia, launching at least one store or shopping mall a year except for 2009, at the peak of the US subprime mortgage crisis.

But despite having a presence in Malaysia for the past 28 years, it is worth noting that Aeon has yet to enter the East Coast and Sabah and Sarawak, which leaves room for growth.

“We have not finished our focus study yet on the East Coast. When we do, we want to bring — as always — a certain lifestyle change to the new area even if it may not be as sophisticated as the shopping scene in Kuala Lumpur,” said Poh.

“I believe we can contribute to the modernisation of the retail landscape on the East Coast and Sabah and Sarawak. For example, when we first opened our Ayer Keroh mall 15 years ago, it was something like Manjung (Perak) and along the way it has developed. We aim to modernise the lifestyle scene in that area,” said Chew who has been with the group for nearly three decades, having started on the retail floor.

She said Aeon positions itself as a community-centric retailer. Population size plays a role in determining where to set up a mall but essentially, the group is focused on creating an impact when entering new areas and wants to ensure that it captures the middle income group.

For instance, its foray into areas like Klang, with its Aeon Bukit Tinggi, the largest Aeon mall in Southeast Asia, has changed the local retail community in a substantial way, Chew said.

“If we enter a new area, I believe we need to have a dominant market positioning first before looking into something more community-based like MaxValu,” she added, referring to the convenience store brand that Aeon is experimenting with.

MaxValu, Aeon’s convenience store equipped with a mini-wet market, was launched in 2008 in Kota Kemuning, Ampang, Damansara Damai and Desa ParkCity. However, since its initial launches, the group has ceased further expansion of the MaxValu stores.

Poh said the MaxValu stores were a prototype set up in various environments as a neighbourhood store, in a shop lot and part of a petrol station to gauge consumer perception.

“I think we have to get the format and model right before we can make it [MaxValu] more commercialised. The feedback from customers has been positive as openings hours stretch till 11pm. Potentially the best place to open up these stores would be in the housing areas,” Chew said.

In line with its re-branding exercise, Aeon is re-branding its Jusco Selection house brand to TopValu by the end of the year. Additionally, it has 12 in-house clothing brands which are well received.

Chew said consumers are now after value for money and quality products, not necessarily buying big brand names if standards are not met.

Chew was appointed Aeon managing director last year. She is the first woman to that position in the company. Considered a pioneer staff, she has extensive experience in Aeon’s retail operations, having joined in 1984 as a management trainee and started off as a floor executive, and steadily rising through the ranks as a merchandising manager in 1990 till 1993.

After transferring to Jusco Bandar Utama in 1998 as store manager, she was again transferred to another major outlet, Jusco Mid Valley as store manager as well. In 2001, she was promoted to senior manager  and general manager in 2002, in charge of store operations.

In 2006, Chew was made general manager in charge of the group’s new business development division and in 2008 was promoted to senior general manager to head the neighbourhood shopping centre business division.

She became senior general manager of merchandising in 2009 and store operations in 2010, culminating in her promotion as group managing director in May 2011.