What will the impact be to AEON Malaysia as a traded co? Well, let me do some guessing...
- Since the expansion will not only involve Malaysia but also other countries such as Thailand, Indonesia and Vietnam, they may use Malaysia's success as a platform. However one must realise that AEON in Thailand is one with heavy competition against likes of Tesco Lotus group. Other than Thailand, the expansion to Indonesia and Vietnam, I probably see it as interesting and more positive.
- Aeon Malaysia intends to increase its outlet from current 27 to 100 in next 9 years - which means they are going for the smaller township I believe as I do not know how many more outlets they can open in the cities. They are also probably looking at expanding their Maxvalu brand as well. Is this happens, competition which is already great will be greater as the main competitors are Tesco, Giant and Carrefour. I do not look at this as largely positive although costs wise it may benefit out of this strategy. Having said that, I believe the expansion to smaller town, may compete against the smaller groceries outlet as well as local owned stores such as The Store and Mydin.
- If we look at South East Asia as 1 large market with 500 million population, in theory it makes sense, however I am not sure if strategies that are proven in Malaysia can be replicated elsewhere in other neighboring countries.
- One of the things that I notice AEON does very well is the localization of its products. For example the things they sell in Mid Valley is different from the one in AU2 and Alpha Angle. The one in Mid Valley has more upscale products on its shelves while AU2 and Wangsa Maju carries lower end brands. I believe if they do push to smaller towns with this mindset, they will do well.
- Overall I continue to believe that AEON as it has proven to be successful to do well in future.
I reproduce the article below:
AEON eyes M’sia for Asean growth
KUALA LUMPUR: Japan’s second largest retailer AEON Co Ltd and owner of the Jusco retail chain store is placing greater weight on Malaysia as the group seeks to strengthen its position and grow sales from Southeast Asia to RM45 billion by 2020.
“In 10 years, there will be a big change in our retail situation and market share here. The Asean region experiences 5%-6% growth annually and the market keeps getting bigger,” said Nagahisa Oyama, who is tasked with spearheading AEON’s expansion in the Asean region from its new Kuala Lumpur headquarters.
Speaking to reporters after AEON Co (M) Bhd’s AGM here yesterday, Oyama said the group plans to open more stores and introduce more brands under its umbrella to the region. “Many of our group companies will be coming here,” said Oyama.
The group will also invest in new retail companies as it seeks to speed up expansion to capture a larger slice of burgeoning consumer spending in many parts of populous Southeast Asia and be among the top three retail brands in the region over the next decade.
“My new mission is to expand the retail business in the Asean region. Now, I have three projects which are Vietnam, Indonesia and Cambodia... we are still studying these markets,” said Oyama who is leaving the post of managing director of the Malaysian subsidiary to be CEO of Asean business at the parent company.
Pressed for a timeline, he said AEON hopes to set up shop in Vietnam by 2013, and thereafter in Indonesia as well as Cambodia by 2014.
The group’s increased aggression in expanding in Asean and China followed the devastating March 11 earthquake in Japan which AEON last month warned may cut this year’s net income by 33% to ¥40 billion (RM1.5 billion).
AEON seeks to expand market share in the Asean region's burgeoning retail segment over the next decade.
Apart from Kuala Lumpur, AEON will also set up headquarters in Beijing to speed up its regional expansion in and gradually cut reliance on Japan.
Some 25% of the ¥830 billion allocated by AEON to open and refurbish existing stores over the next three fiscal years ending February 2014 will be for China and Southeast Asia, up from 8% of ¥960 billion allocated in the earlier three-year period, Bloomberg reported last month.
“Directions to these new companies will come from the Asean headquarters, so things will be faster,” he said.
Within the region, AEON Japan is the holding company of businesses in Malaysia and Thailand through AEON Co (M) Bhd, AEON Credit Service (M) Bhd (ACS) and AEON (Thailand) Co Ltd. AEON Japan has a controlling stake of 51% in AEON Malaysia.
Through its substantial shareholdings in AEON Credit Service Co Ltd and AEON Malaysia, it is also a major shareholder of ACS. AEON Credit Service Co Ltd and AEON Malaysia have direct interests of 58.2% and 2.15% respectively in ACS.
“There will be changes in the group (as Asean plays a more active role). For example, the headquarters in Japan are now planning for merchandising for the whole group, but in the future it is necessary for (this part of the business to be directed from) the Asean region and China,” he added.
AEON’s house brands include the Topvalu label. As the sole agent for South Korean cosmetics maker TheFaceShop in Japan, AEON is looking to open as many as 700 shops there.
In Malaysia, AEON is looking to grow the number of stores to 100 over the next nine years. It currently has 27 stores, all situated in the peninsula, 18 of which are in Kuala Lumpur and Selangor. The rest are in Johor Bahru, Penang and Melaka.
As the group expands outside the main cities here to the heartland to attain its 2020 target, some of the new outlets would not just be supermarkets but may include other retail formats like convenience stores, discount outlets or even new retail businesses.
The company has set aside RM300 million in capital expenditure to open two new stores — a community shopping centre in Rawang, Selangor this year, and a shopping centre in Ipoh early next year. On its expansion into Terengganu, Kelantan and east Malaysia, Oyama said the company has made progress but is currently “still looking”.
Oyama, who spent six years with AEON Malaysia, is credited with tripling the company’s sales to RM2.89 billion in FY10 from RM1 billion in 2005.
Replacing Oyama as AEON Malaysia’s managing director is Nur Qamarina Chew. “Last year sales were close to RM3 billion and we had growth of 5.3%. This year we hope to better that and have incremental growth (over the next few years),” said Chew.