Michael Vong, Shopping Mall Director at Chip Mong Retail, provides his insights into the volatile, exciting and fast-growing Cambodian retail sector.
CUSTOMER EXPERIENCE IS KING
Chip Mong presented the ultimate challenge to me. They are a conglomerate in the industrial business – lately extended to banking and hospitality – but with no presence previously in retail, especially in shopping mall management. However, they plan to roll out 11 shopping centres and more than 50 supermarkets and convenience stores by 2023. This is the test where one finds out if he is as good as he thinks he is.”
The man in question is Michael Vong. Standing as Shopping Mall Director of Chip Mong Retail, he recently moved to Cambodia to take on a brand-new venture for Chip Mong – opening its first two malls in December 2019.
Having began his career in process-driven industries, Vong gradually became more interested in working in a consumer-led business, and Chip Mong Retail provided the perfect opportunity to test his credentials and drive change in a rapidly evolving Cambodian industry.
“Consumer behaviour started to fascinate me when I took the job as brand manager of a FMCG product 25 years ago,” he explains. “I began to realise the importance of consumers’ wants and needs – why they would buy the products we produce.”
This interest led to roles in Malaysia, Vietnam, Myanmar and now Cambodia, a career Vong describes as a fulfilling adventure. “I felt I could contribute more to emerging markets, share my experiences, train local teams and help to elevate the standards of the retail industry,” he adds.
A NEW PLAYER IN THE GROWING INDUSTRY
So, what is the story of the company he now presides over?
Chip Mong Retail is one of the 14 businesses of Chip Mong, a fast-growing corporation with a diverse portfolio encompassing industry, property development, beverages, retail, feed, hospitality and banking. Chip Mong has allocated a $300 million dollar seed fund to Chip Mong Retail that will enable it to open up to six shopping malls over the next three years.
The vision? To become the shopping destination of choice in Cambodia, with the largest number of locations and the biggest market share.
Vong describes the Cambodian retail industry as a fragmented market, with multiple companies serving a relatively small population. However, by the end of 2021, the supply of retail space will have doubled, stimulating increased demand. The Shopping Mall Director is cautiously optimistic, but outlines significant challenges within the sector.
“New malls will need to differentiate themselves from each other, and stay relevant to continue attracting foot traffic,” he explains. “There will need to be new market entries of both regional and international brands to continue attracting growing consumer interests. Finally, it is likely that growth will be driven by the food and beverage sector, entertainment and wellness segments at the expense of fashion.”
STANDING OUT FROM THE CROWD
In this challenging but expanding market, how does Chip Mong Retail Group plan on distinguishing itself?
For a start, through its understanding of the importance of consumer behaviour. For many customers, visiting a mall is far more than an opportunity to shop – it’s a mix of leisure and entertainment. Chip Mong malls are equipped with extensive food and beverage outlets, cinemas and even children’s play areas, all of which substantially extends and enriches the experience.
“We believe that shopping malls are not just about buildings but about the people who visit them every day,” Vong explains. “Our goal is to deliver exceptional shopping experiences for our customers through an effective category and tenant plan, and to develop customer-engaging marketing programmes that result in a higher frequency of visits.”
To drive this, Chip Mong Retail operates an advanced, ever-evolving digital marketing plan. It relies upon shopper analytics – gathering information about customers through targetted marketing and tracking customer metrics to draw traffic to malls. It also uses machine learning and AI to help interpret and predict customer behaviour.
When it comes to property, location is everything, and Chip Mong malls occupy ideal spots in Phnom Penh.
“A collaboration between Chip Mong Retail and Chip Mong Land gives us access to prime locations for our malls within the premier class residential projects of Chip Mong Land,” Vong explains. “The neighbourhood surrounding each of our malls represents a prized catchment area of high yield consumers that adds value to the malls, thus benefitting our tenants.”
Furthermore, Chip Mong Retail is able to collaborate with other businesses within the group – Chip Mong Insee Cement and Chip Mong Trading – to procure raw materials, such as steel and cement that can be provided to mall constructors. What’s more, Chip Mong Bank provides financial support to suppliers, builders, contractors and tenants. All these measures help lower the cost of entry for partners and vendors.
Vong also believes that building relationships with stakeholders and customers is integral to the success of Chip Mong Retail.
“This involves always striving to satisfy our customers, fostering sound relationships with our business partners, and to provide rewarding careers for our employees, while adhering to good corporate governance and social responsibility,” he explains.
Ensuring the satisfaction of the malls’ tenants is also integral to the success of the business.
“Successful shopping mall management performance is about creating a conducive environment for tenants to help them grow their businesses,” he continues. “This involves managing their expectations and collaborating with them to attract repeat customers to the mall. That is very much the most important part of our job, for without the right tenants and their customers the mall is just a shell of a building.”
However, even the best laid plans can be derailed by unforeseen circumstances, and the recent COVID-19 outbreak has proved challenging for Chip Mong Retail.
“It’s a grim picture,” the Shopping Mall Director says. “Crowds are thinning out, which malls fundamentally thrive on. We have had to close cinemas, restaurants and bars, children’s playgrounds, fitness centres and themed events meant to drive foot traffic to the malls were curtailed, all these in an effort to stem the spread of the coronavirus.”
“Needless to say, foot traffic declined drastically, resulting in a ripple effect on the tenants in the malls who now find their businesses no longer sustainable. They can’t pay their rents, and landlords like us have had to offer substantial relief of up to 50 percent discount on rent for the next three months.”
In Cambodia, schools, casinos and close-contact businesses such as hair salons have resorted to temporary closures. This has led to people losing their jobs, and declining consumer spend.
Chip Mong Retail has had to downsize its outsourcing teams, slash operating costs, shorten business hours and aggressively promote home delivery services across social media, but its malls remain open.
“Our malls still operate as we want to retain our well-trained staff,” the Shopping Mall Director explains.
“Keeping them healthy is our priority, especially those on the front lines. We invest in PPE for them, constantly educating them and ensuring they follow strict hygiene protocols.”
AN EXCITING FUTURE
Despite these difficult circumstances, Vong is determined to stay positive.
“There is an upside though,” he says. “It has helped accelerate our digital transformation programme. We now connect regularly through video conference meetings, webinars and e-training, and we have more time to conduct staff training.”
Chip Mong Retail has ambitious plans to digitise its services. As well as developing more advanced marketing tools, it also plans to roll out a Shopper Rewards Scheme and e-payment system that serves its expanding network of shopping malls.
“As Chip Mong Retail continues to grow, we want to ensure that our tenants and customers have an experience that is unique, by delivering quality products, competitive prices and outstanding services,” says Vong. “To help us achieve these goals, Chip Mong and Cambodia-based fintech company Clik have created a partnership to boost tenant profits while providing customers with exceptional rewards through an improved understanding of our customers.
“New insights into spending patterns, demographics and instore behaviour are now possible, granting our retailers the ability to engineer effective marketing strategies, monitor in real-time campaign performance and made data-driven decisions to improve.
“This cashback-centred approach, which rewards loyal customers for their purchases, will be more effective at generating repeat purchasing for our tenants, and increased footfall than with boring expensive discounts. Backed by empirical evidence, this is highly beneficial to both our tenants and customers, as exclusive cashback rewards can now be redeemed between stores in the Chip Mong Retail group, driving repeat purchasing and hence sustainable revenue growth.”
And over the next few years it will continue to grow, with ambitious targets to open one mall by end 2020 and another four in the next three years.
So, despite facing sizable and complex challenges, Vong concludes our interview on a positive note.
“We will continue to invest in human capital by attracting, training and retaining key team members. As well as growing a strong and effective mall management team, we will continue to use technology to optimise our operational efficiency,” he says.
“There are also abundant opportunities in a softer market for us to dig into and grow via mergers and acquisitions. Any which way one looks at it, the future will be volatile, but exciting.”