Thursday, May 15, 2014

Malaysia's King of Mini-Marts

Malaysia's King of Mini-Marts

There’s a Chinese belief that sons born in a Year of the Dragon are highly desirable because Dragons are powerful people who will lead extraordinary lives. This could explain wheelchair-bound Lee Thiam Wah, born in Dragon year 1964. In Klang, the bustling port city of Peninsular Malaysia, he’s called the King of Mini-Marts.

Streets there are replete with bold green-and-orange 99 Speedmart signs. For now Klang is where Lee has most of his 175 stores, which bring in better than $150 million annually and employ 2,000 people. This is a drop in the ocean compared with what hypermarkets and convenience stores like 7-Eleven do in Malaysia alone, but he is giving them a run for the money in this cutthroat business.

As a baby Lee was struck with polio and lost the use of his legs. His father, a construction worker, and his mother, who was a hawker, worked day and night to fend for 11 children. Six years of primary school was all they could afford for young Thiam Wah. To keep busy he read books borrowed from neighbors and sold snacks in a roadside stall. “I have to help myself. Nobody would hire me due to my physical limitation,” he says matter-of-factly. He did enjoy prodding from his paternal grandmother, who said to him in the old Chinese way of affirmation: “If you don’t work hard, what will you amount to?”

He saved $5,000 by age 23, enough to start a grocery. Thus began his retail education. He says, “I learned what customers buy. I know all the suppliers and their pricing. And I studied my competitors thoroughly.”

In 1992 Lee sold the business, and now with $88,000, he opened a mini-mart. He says, “I wanted the challenge of running a bigger business. If you don’t have scale you can’t compete with Chinese medicine halls on pricing, and you can’t compete with hypermarkets in terms of range.” In 1999 he changed the name of the store to 99 Speedmart.

Where closely held 99 Speedmart cannot undercut on price, it sells in smaller sizes. For fast-moving necessities Lee stocks for each price point–the closest comparison would be discount stores in the West like Aldi, where only products with the highest turnover are sold. Lee recalls, “For the first mini-mart we sacrificed margins on some products to sell at the lowest price and to gain market share. This built our reputation. The purchasing side of the business is very important, and I spend most of my time overseeing it.”

To get good discounts he makes things easy for suppliers. Big stores are notorious for dragging out payments. At 99 Speedmart, vendors can usually complete the process of negotiating price, getting the current order and collecting payment for an earlier order within 30 minutes. They appreciate Lee’s square dealings. “We’ve not lost sleep because we found him to be very honest, and he has a strong trade reputation,” says the national sales manager for a global food and beverage company that he didn’t want named.

Lee has always funded his operation from sales and not from bank debt, but the 1997 Asian financial crisis hit hard. To overcome, Lee stocked cheaper goods and shaved already razor-thin margins. Lee says the recent economic slowdown has been but a minor bump.

In fact, 99 Speedmart is now moving well beyond Klang, though it still largely targets lower-income and migrant worker groups. The plan is to open 40 to 50 outlets this year in high-density neighborhoods and to boost sales by 25%. In two years Lee may expand farther outside Selangor and Kuala Lumpur to neighboring states like Perak. He can’t afford to rest: 7-Eleven’s Malaysian franchisor is planning to open 2,000 stores nationwide in three years, half to be run by franchisees.

Lee pulled back from early franchising and owns all but one of the 99 Speedmarts. He watches the balance sheet by renting all his properties, however, save for two warehouses occupying a total of 5 acres.

This entrepreneur has become his country’s most notable example of how a physical handicap can be overcome in business.

Malaysia has grown more accommodating of the disabled through various regulations and benefits, but except for a small state allowance, Lee has made his own way. During the early years he relied on relatives to help carrying and weighing heavy items. He sees vendors when they visit or speaks by phone. “I don’t mull over the fact that I’m in a wheelchair, that I can’t speak English and that I only went to school for six years,” he says. “You have to be self-reliant. Sure, you have to work harder than anyone else, but the knowledge you gained will build up your self-esteem. Being of use to customers makes me feel grateful and gives me a sense of purpose.”

If those he does business with even know of his condition, Lee expects no special consideration. “As far as suppliers are concerned, it’s business as usual for them,” he says.

Wife Ng Lee Tieng, 15 years his junior, is his sounding board in business and in life. They met when she joined the company as a purchasing assistant, attracting him with her vivacious personality. He quips that she knew how to take care of things. Now she is also the mother of their two children.

In the Tiger year of 2010, Dragon people are fine, according to CLSA Hong Kong’s Feng Shui Index, an annual zodiac-inspired market outlook. It says “All signs point to steady inflows throughout the year, while patience and perseverance will bring unexpected satisfaction from work. Applying your renowned willpower will see you safely through any Tiger troubles.” Based on Lee Thiam Wah’s record so far, this is one horoscope that’s likely to hold true.

-Source of Forbes-

No comments: