Everyone Needs to Shop

A Leading Retailer Revamps Online And Offline Business To Face Challenges

With retailers here feeling the heat from e-commerce and falling footfall at shopping malls, local electronics and furniture giant Courts is turning to experiential retail to beef up their offline offerings, and woo the crowds to their stores.

From “guru” after-sales counters to help customers fix their faulty mobile phones to regular cooking demonstrations by chefs, Courts’ move is also part of a larger retail shift in Singapore as malls fill their spaces with activity-based retailers such as mega gyms and culinary-themed shops to draw people away from their computers and mobile screens.

Harking back to its roots when Courts was a brick-and-mortar furniture store, the company, which was founded in England and opened its first store here in 1974, is also doubling down on its furniture business by offering a one-stop shop for customers to buy furniture, find a home designer and renovator.

In a recent hour-long interview with TODAY, Mr Ben Tan, Chief Executive Officer (CEO) of Courts Singapore, said that providing customers with an “omni-channel experience” — which refers to the integration of online and offline shopping — is the way forward for the retail giant.

“Customer experience is vital… That has to be a good experience, to make you come out of your home, to make you want to go shopping,” said Mr Tan.

Plans to integrate both shopping channels started 1.5 years ago, soon after Mr Tan took over the helm of Courts Singapore in April last year. The 50-year-old was previously CEO at used phone retailer Andios — a subsidiary of IT retailer Challenger — and spent 17 years at Microsoft.

As part of its overall strategy, Courts is also revamping a number of its 14 stores here. On Oct 20, its 35,000 sq ft Ang Mo Kio store was reopened after completing a two-month long renovation, while its flagship Megastore in Tampines was revamped in November last year.

The company’s strategy for its online and offline businesses comes amid declining overall profits, as it reported a net loss of SGD2.2 million for its latest first quarter earnings ending June 30 — a 136 per cent drop from the same quarter a year ago.

This followed a 175 per cent dip in net profits for the fourth quarter of the previous financial year (FY) as the Group made a loss of SGD3 million, as compared with the previous results from a year ago.

In FY2017, the Group made a profit of SGD8.1 million, a significant drop from the previous FY’s figure of SGD23.7 million.

While the financial figures are for its businesses in Singapore and other South-east Asian countries such as Malaysia and Indonesia, Singapore contributes the bulk of the Group’s revenue at 70 per cent.

To build customer loyalty, Courts offers after-sales services such as its “Guru” counters which provides repairs and consultation for the electrical or IT products purchased from its stores, as well as trade-in and warranty services for their new gadgets.

Such services will help reinforce the idea that Courts is a one-stop shop for customers, said Mr Tan.
In the past year, it has ramped up promotion for its home renovation services, which have been on offer since 2015. For instance, its refurbished Ang Mo Kio store features a real-size showroom of a three-room Housing and Development Board flat to showcase their renovation services, furniture, and other products.

Courts’ move into interior design services is also a result of the wider trend of homes becoming smaller as customers look for creative ways to store more with less.

Mr Tan said: “We found that a lot of people do customisation to make sure they maximise space. Therefore, doing renovations is even more key.”

Since rebranding its home renovation services, the take-up rate has increased by 200 per cent year-on-year, with the firm carrying out about 20 renovation works weekly over the past year, said Mr Tan.

To provide a smooth and seamless online shopping experience, Courts is also digitising its backend delivery systems. Customers are now able to track and monitor their ordered items for selected products in real time through its online store.

While online transactions make up 2 to 3 per cent of the company’s total revenue, Mr Tan had previously said that he is aiming to grow online revenue to 15 per cent over the next decade.

As part of its strategy to make offline shopping more relevant to its customers, Mr Tan said that growing the firm’s furniture business is a “key priority”.

“We want to re-establish ourselves as top-of-mind among Singaporeans for stylish furnishing at great value,” said Mr Tan, referring to Courts’ early days when it was a brick-and-mortar furniture store here 44 years ago.

Based on its performance in the last financial year, furniture sales accounted for 17 per cent of the Group’s revenue, while electrical and IT products took up 49.2 per cent and 28.1 per cent, respectively. IT repair, interior design and other services also contributed to its takings.

While declining to reveal figures, Mr Tan said that furniture sales generate the highest profit margins, as compared with electrical and IT products.

With that in mind, the retailer is aiming to boost sales in that area by providing more customisation options, and quicker delivery time.

The furniture business also allows a retailer to provide more value-added services, as compared with an iPhone, said Mr Tan.

He added: “It’s a differentiator for people to come in, because to get Courts furniture, you can’t buy it in any other store except for Courts. But if you want to buy an iPhone, there are so many places to go buy an iPhone.”

Aside from higher profit margins, the retail veteran is also targeting this sector as furniture is a big-ticket expense for customers, who often feel a need to touch and feel the product before forking out money for it.

“Today, there is still a mental block for people on price point for buying online,” Mr Tan said.

“For the majority of people who buy stuff like that sofa, you want to sit in it. For dining tables and chairs, you also want to sit on it before you buy it.”

While he has charted a business direction for Courts, Mr Tan acknowledged that it needs to stay nimble and adapt the strategy to the retail scene as it evolves. These are lessons he has picked up from over two decades spent in the retail and IT business, particularly at his previous firm Andios, where he had to change its business model from that of an e-marketplace for buyers and sellers of used phones to a second-hand phone retailer when its initial strategy failed to take off.

Stressing that retail has always been a “tough challenge”, Mr Tan said the competition and challenges caused by e-commerce are “nothing new, per se”.

“Retail is life. You will always need to shop, you will always need to buy.”

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