Singapore’s Challenger loses flagship store

Singapore-listed Challenger Technologies, the state’s largest IT products and services provider says it will boost its push towards a digital retail ecosystem and advanced software development initiatives for continued growth.

Its statement followed news revealed yesterday on Inside Retail Singapore that CapitaLand Mall Trust plans to demolish Funan DigitaLife Mall to build a new integrated development which will open three years later. The mall is home to Challenger’s 53,000 sqft (4924 sqm) flagship megastore.

“The group is well-positioned to continue bringing value and relevance to its half a million members and established base of corporate customers,” Challenger said in a statement intended to reassure shareholders the store’s closure will not measurably impact on its trading.

CEO Loo Leong Thye said that Funan’s redevelopment was first mooted by CMTL more than seven years ago. Challenger’s planning had also began then.

“We relocated our entire back office operations from Funan to our Ubi Link corporate building in 2009,” he said. This was followed by rapid retail expansion, with a total store count at 47 as of 12 December 2015 and three new leases confirmed for the first half of 2016.

Apart from restarting its retail eCommerce engine in 2014 with a mobile-first revamp coming in early 2016, the group also announced its foray into a digital lifestyle ecosystem by establishing Challenge Ventures earlier this year to invest in digital businesses and services.

One such service is the group’s existing end-to-end integrated marketing solutions provider, inCall System, which has been injected into CVPL. Another business is eCommerce marketplace Andios, which provides customers a platform to buy or sell their smartphones online.

“To create the next wave of business growth, CVPL will continue to invest in relevant businesses from outside of the group,” said Challenger.

To cater for the rapid growth from its digital businesses, the group has plans to establish a logistics hub in Singapore for eCommerce warehousing and fulfilment.

The group believes the impact from the closure of its megastore is significantly reduced due to the extensive planning efforts over the last seven years.

“When we first listed on SGX in 2004, our Funan store contributed to 60 per cent of our total group revenue. As of the third quarter of 2015, this number is only about 20 per cent of our total group revenue,” Loo noted.

“Over the last seven years, many of our members and even tourists have also begun shopping at our heartland mall stores because of proximity convenience. With our mobile-first revamp coming in early 2016, more Challenger customers will switch to shopping with us online. They will enjoy online-only member deals, always-on rebates credited to their eWallets and even same-day express delivery.”

Loo says the concept of a destination specialist shopping mall is not as relevant as being able to provide a wider range of products for customers to browse on-the-go.

“We can stock 10 times more products online than at our megastore, creating a mega mall effect for customers to browse and transact on their mobile devices. We need to go where the customers are,” he said.

“Our physical retail stores will evolve to become more experiential, with our brand partners having better concepts to showcase their products’ capabilities. They will complement our online store, which will serve customers at their own time – not dictated by a mall’s operating hours.”

The group will keep its physical store expansion options open.

“Our retail strategy has always been and will continue to see us expanding at suitable locations with reasonable rentals,” Loo said. “We will continue to rationalise our retail store locations, including opening, closing and right-sizing our stores to improve operating performance.

“I have a big sales target of $1 billion to be achieved in five years’ time,” Loo said. “This is entirely possible because we have scalable business plans to roll out progressively to regional markets.”

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