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Wednesday, November 22, 2017 | MANILA, PHILIPPINES
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Date posted: Friday, December 11, 2015 | Manila, Philippines


Heady times on the fashion lane (From racks to riches)

AFTER FOLDING a number of stores abroad, fashion retailer Golden ABC, Inc. is busy hanging up new items on its racks. The meticulously curated designs are from its brand Penshoppe -- shipped from the Quezon City warehouses where they were sorted to suit Southeast Asian tastes.

“There’s a lot of science behind it,” said Golden ABC President and Chief Executive Officer Bernie Liu, the man who put Penshoppe on the maps of Indonesia, Cambodia, and, only a month ago, Vietnam. He has embarked on a Southeast Asian conquest by needle and thread, as he mends mistakes from previous attempts to explore beyond Philippine shores.

For Mr. Liu, Association of Southeast Asian Nations (ASEAN) integration is a “welcome development” to expand his company, whose 600-strong retail network in the Philippines includes Oxygen, Forme, Memo, Regatta, Tyler, and a direct-selling subsidiary Red Logo.

While setting up shop in foreign countries isn’t new to Golden ABC, Mr. Liu is ambitious. The company remains in business in the Middle East and Southeast Asia, but pulled the plug in China and Norway -- "a tactical retreat,” he said, admitting to a “wrong business model” initially. But Mr. Liu is hell-bent on growing his international business to something bigger than what he has built back home.

The numbers make sense: the Philippines has a hundred million people, but ASEAN has a population of approximately 625 million. “It’s one big marketplace,” Mr. Liu said.

At the same time, there is pressure to stand up to international retail giants that are flocking to the Philippines. Recent years have seen brands like Forever 21, UNIQLO and H&M entering local malls.

“A lot of retailers are in denial,” Mr. Liu said, even though they had foreseen what he calls “the inevitable” as early as a decade ago, thanks to frequent travels that showed them how foreign brands one by one took up space in other countries.

“I suppose, until you see the waves coming in, you don’t believe there’s a tsunami,” he said. “You’re in denial and think, ‘I will be okay,’ because for the longest time, we’ve been living under protectionism.”

At that time, many retailers mulled petitioning malls not to accept foreign brands. “How can you do that?” Mr. Liu said. “It’s a free market. People have a choice and you have to give them that choice. We are part of the global economy. You cannot just address how the world is behaving by shutting yourself out in the mountain thinking that nothing is happening.”

He believes that the ASEAN Economic Community is “a good stepping stone to the rest of the world.”

The opportunity is no less marred by trepidation, Mr. Liu said. “We’re now talking about one huge economic marketplace and that can be both a benefit and a threat. The question is: ‘How do we get from here to there?’”

Mr. Liu walks across the pristine white halls of the Golden ABC building, a high temple of glamour where employees strut their stuff in fashionable garb, courtesy of their brands. “Before I can even convince the public to patronize our products, I make sure first that the people in this building are convinced that we have a good product,” he said. In a similar vein, the company has to perform well in its home country before exploring abroad.

Golden ABC first entered Indonesia in 2012, setting up shop in Jakarta, which is home to at least nine million people, or more than Manila’s a million. Unlike its venture in China, Golden ABC employed a different strategy in Indonesia: it took in a partner.

Mr. Liu found MAP Group’s PT Prima Mode Indonesia (PMI), which carries more than a hundred brands from food to non-food: Starbucks, Marks & Spencer, Zara, etc. “They are familiar with the business model,” he said. “But of course, like any new brand, it’s not an overnight success, we’ve been in Indonesia for a little over two years and I will be lying to you if I say it was easy. It is not.”

It took meetings -- “series after series,” Mr. Liu said of those encounters, to understand the Indonesian marketplace. It included walking Jakarta’s malls, and dipping his toes in the foreign culture. Likewise, PMI’s people visited Manila to study Golden ABC’s system: how collections are created, and which products should be brought to the Indonesian market. After all, Mr. Liu said: “They know their market better than us.”

With its smooth entry in Indonesia, Golden ABC employed a similar tack in Cambodia and Vietnam in the next three years.

The upside of targeting ASEAN, Mr. Liu said, is that their products, which were duly inspired by and manufactured originally for Filipinos, are more likely to fit.

The weather, for one, is similar. The seasons are limited to dry and wet, unlike those in the West where extreme changes in temperature demand frequent wardrobe overhaul.

Mr. Liu reeled in a failed attempt to stay in Norway, where a foreign franchisee was able to maintain Penshoppe for only a season because of the lack of winter clothes. “It’s very basic,” he said, “but you’d be surprised that many people actually overlook it.”

Another upside is the similarity of Southeast Asians’ physique. Styles will easily adjust to the Indonesian, Cambodian or Vietnamese complexion and size. Tastes are also similar: the food they eat, or the cars they drive, are pretty much what’s devoured, or taken for a spin here. Taste in fashion may not stray too far.

Yet, Mr. Liu warned: “There is no guarantee. No matter how good a partner you may have who understands a business, the biggest challenge is how to make yourself relevant to the consumers.”

Even the designs that hit varies within a country, in the same way that not everything that sells in, say, Manila, will sell in Cebu.

“Can you imagine churning out thousands and thousands of designs? How will you know what color, what size, what print will sell?” Mr. Liu said. “People see our stores. What they don’t see are the hundreds and thousands of hours we put in analyzing our data.”

According to him, this process involves everyone in the business. This kind of skill is acquired through years of practice -- not in school. The designers, for example, though they are creative people, are trained to design products that sell. After all, this is a business, not a charitable institution that caters to the whims of the artist of the most beautiful design. “The ‘most beautiful design’ will have to pay your bills,” Mr. Liu said. Thus, even designers have to understand why some designs sold, and some failed.

Wherever the data lead the designers to, they have to remain loyal to the brand DNA. Take the case of Forme’s foray in Cambodia last October. The team that works on the local brand is the same team that sustains the brand DNA in Cambodia, be it in terms of product development and the aesthetics of the store.

The brand identity has to be authentic and consistent. “If you go to a Penshoppe in Indonesia, it looks the same as the store here,” Mr. Liu said. It should feel the same: the music, ambience, product offering, although the designs are meant to suit the market. “What I think is crucial is finding the right system and prospects and partners that will deliver that same kind of customer experience,” he said.

Seventy percent of the goods are sourced in the Philippines: materials and labor. The remaining 30% is sourced abroad because of the demand to augment volume especially during the busy seasons. When the peak season requires double or triple the usual volume, the volume of manpower in the factories won’t necessarily follow. Sticking to the local suppliers is a way of letting them grow with the company.

Despite its strong local character, Penshoppe has, at times, been criticized for having foreign models. Since 2001, it has had celebrities like Mandy Moore. Most recently, it signed Cara Delevingne, Sean O’Pry, and Kendall Jenner.

To cynics, Mr. Liu has only one answer: “You’re a Filipino, why are you using Samsung? Why are you using Apple? Does it make you less a Filipino?” For him, Filipinos should instead be proud that a brand that originated in the Philippines is felt in the international marketplace; that international celebrities accept invitations to represent a Filipino brand.

“That makes me even a prouder Filipino,” he said. “Our heart is here. I will not prevent myself from using whatever resources, even international, to advance our agenda.”

Mr. Liu is a sprightly entrepreneur, but the figures tell him that he has his work cut out for him. To date, the international ventures account for less than 10% of total revenue, but the businessman expects the ratio to rise to as much as 20% in five years. Last year, Golden ABC recorded P4 billion in systemwide sales.

Margins abroad are not yet larger than back home, Mr. Liu said, adding that: “We are still in the investment mode. That’s why it’s important that you have a very stable business here that can support our global initiatives.”

Unlike in the Philippines, where Golden ABC is celebrating 30 years, the company is spending more to expand its ASEAN business, which already counts 30 stores, to six markets. Most of the stores are Penshoppe, but due to the confidence of the local malls, Golden ABC has started shipping out its other brands, like Forme.

“We are very positive. We are very inspired and we are very encouraged by our thrust abroad,” Mr. Liu said, adding that it’s important for a company that is besieged by foreign rivals in its home turf to go out of its comfort zone.

“As a businessman, it’s your choice not to participate in the global economy,” he said, but added that there’s a downside to that: “You’re not the only one that sees the potential of a hundred million Filipinos in the country.”

But a foreign venture is not for the faint of heart: “If you are down to your last million, and you want to gamble it all out of the country, I will tell you, don’t. You’re just gonna lose it. I was in China for 10 years. We lost terribly,” Mr. Liu said.

The risk, however, is worth it. “ASEAN is a big gold mine, a new frontier,” he said. “If we look at our potentials and the skills that we have, we can compete. It just takes a lot of courage, science, determination and a lot of heartaches, and challenges, and difficulty. To me, it’s at the core of every opportunistic businessman. If you’re given the chance to participate in the global marketplace, why don’t you?”

After all, why is it only American- or European-branded clothes that are hung up on the racks of department stores? Why can’t Asian brands dominate the world?

“You can say they were ahead,” Mr. Liu said, “but they’re not gonna stay ahead forever. If it takes us 30 years, or 40 years, then, I start now.”

Ms. del Monte is Assistant Editor of BWorld University Edition.
*Follow Pola on Twitter: @MmePola.

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