MALAYSIA. Syed Ahmad Syed Salim is chief executive officer of Eraman, registered as Malaysia Airports (Niaga) Sdn Bhd. Eraman is the largest airport retailer in Malaysia and has over 40 outlets in four international airports across the country (Kuala Lumpur International Airport, Penang, Kuching and Kota Kinabalu). The retailer works closely with prominent international brands such as Bally, Burberry, Royal Selangor Pewter and Tie Rack in strategic partnerships to create a strong specialist store portfolio. The Eraman ceo spoke recently to Martin Moodie, publisher of The Moodie Report.
The Moodie Report: News has just broken of the government’s decision to extend the retail contracts at Kuala Lumpur International airport (KLIA). Can you update us on this?
Syed Ahmad: Yes, the extension is given for a two-year period from July 2003, as the existing concession period expires in June 2003. Acutally, the government was already looking at introducing some form of economic aid package to cushion the effect of the slow world economic performance as well as the Iraq war. When the SARS epidemic happened, the immediate impact on the tourism sector was quite bad and this included retail operators at the airport.
We are indeed thankful to the government for showing understanding during these trying times. It clearly shows that we have a business-friendly government.
The Moodie Report: Other assistance includes a -50% rent discount for duty free and travel retailers at the country’s international airports. What’s your reaction to that?
Syed Ahmad:The relief in the form of a 50% rental reduction will definitely help to overcome the current soft market environment in the travel industry due to SARS and the weak world economy.
The Moodie Report: Unlike other Malaysian retailers, Eraman has been able to champion many categories under one roof; is the generic rather than specialist approach your favoured one and why?
Syed Ahmad: To me, both are equally important, particularly in our effort to turn KLIA into a shopping destination of choice in the region for the travelling public. Eraman will continue to play a responsible role in ensuring that the product offerings at KLIA meet the needs of the discerning travelling public.
While the core products of chocolates, tobacco and fragrances and cosmetics are essential, today we are also proud to be involved with major international fashion brands. For example, many may not know that the world’s largest Tie Rack shop is located at KLIA. We are also involved with both Bally and Burberry at the airport.
We are also looking forward to the opening of the first Lanvin boutique in the Satellite building at KLIA by the middle of this year. At the moment we have commenced discussions with two major international fashion brands to open shops at KLIA. While having core products grouped under “˜one roof’ helps in cross-selling the products, fashion brands are operated as individual outlets to maintain their respective product image.
Pictured: Burberrys and fragrances & cosmetics, two of Eraman’s outlets at Kuala Lumpur
The Moodie Report: Can you give us a brief overview of Eraman’s operations at KLIA and other locations such as Penang?
Syed Ahmad: Eraman today is arguably the largest airport retailer in Malaysia with retail operations not only at KLIA and Penang but also to a smaller extent in Kuching and Kota Kinabalu airports in the states of Sarawak and Sabah, respectively.
In terms of product range, we carry the basic core products of cigarettes & tobacco, perfumes & cosmetics, chocolates and several international fashion brands.
In addition, Eraman is also entrusted to oversee all food & beverage operations at KLIA and is responsible for a total of 25 outlets, comprising of fast food, casual dining, café and restaurants as well as a food court. In March 2003, we launched our official website. You can visit us at www.eraman-malaysia.com
Established in 1993, Eraman is a wholly-owned subsidiary and retail arm of Malaysia Airports Berhad. The abbreviated name Eraman was adopted from the combination of “era” – which signifies the dawn of a new dimension – and “man”, the company’s initials.
The Moodie Report: Let’s talk about market conditions, 2001 (final quarter) was obviously tough, the same for the first half of 2002, after which business seemed to be coming back. Now we have war and SARS. How are these affecting Eraman and traffic and spending generally in Malaysia?
ON THE RECORD: “THE WAR IN IRAQ WAS NOT AS BAD AS THE IMPACT OF THE CURRENT CRISIS INVOLVING SARS. LIKE MANY AIRPORTS IN THE REGION… THE DROP IN TRAFFIC IS -30% TO -50%”
– SYED AHMAD
Syed Ahmad: Yes, the last few years have been challenging for all of us in the trade. However, I believe in the strength of the travel retail trade and as with past experiences, we will overcome whatever difficulties over time.
In my view, the war in IRAQ was not as bad when one compares it with the impact of the current crisis involving SARS. KLIA enjoys a fair bit of traffic from East and North Asia and SARS has affected traffic numbers arriving from these markets.
Like many airports in the region, I believe the drop in traffic is between -30% to -50%. Obviously, with lower traffic numbers this ultimately translates into lower sales for us at KLIA.
However, in recent days there seem to be an improvement in sentiments towards air travel. Both Cathay Pacific and Singapore Airlines have announced the resumption or increase of flights into KLIA. I am confident that we will overcome this crisis.
The Moodie Report: As a Muslim country, Malaysia should benefit from increased holiday traffic from fellow Muslim countries in the Middle East. Figures we published last year suggested this is starting to happen. Is this the case?
Syed Ahmad: The Ministry of Culture, Arts & Tourism have been doing tremendous efforts in promoting Malaysia as a tourist destination for the Middle East market for a few years now. There have been positive results as the number of visitors from the Middle East region has been growing steadily. Being a Muslim country may be a contributing factor but I believe that our country has much to offer all visitors alike.
From our sandy beaches, to the world’s oldest equatorial rainforest to cool highland resorts – Malaysia has it all. Given the situation in the Middle East today, we will be watching the number of arrivals this year, particularly during the period July to September.
It is my hope that the people from the Middle East will continue to visit Malaysia as the situation in the country is the same as when they were here last year. Even on SARS, to date we have not had any localised infections and only two reported deaths related to the disease.
The Moodie Report: KLIA has been responsible for some of the best promotional activity in the travel retail world, notably the KLIA Shopping Experience which all the confectionery suppliers rate as something extraordinary. What plans have you got for the future? On a similar subject, the low penetration rate in most duty free stores around the world is one of the industry’s biggest issues. How do you feel about that and what are you doing to address it? Is there going to be a significant rationalisation of operators and the retail offer?
ON THE RECORD: “I WOULD LIKE TO STRESS THAT UNLIKE SOME AIRPORTS WHERE THE SHOPPERS NEED TO BUY RAFFLE TICKETS, AT KLIA YOU JUST SHOP YOUR WAY TO WIN A JAGUAR X-TYPE.”
– SYED AHMAD
Syed Ahmad: Currently, we are running the KLIA Shopping Campaign, which was launched during the last quarter of 2002 and will end in June 2003. A lot of activities have been arranged during this period to make shopping at KLIA an exciting and vibrant experience. With a promise of “Real Value, Real Style”, shoppers can be sure of getting good value for money.
For purchases of as little as MYR 250 (US$65) on a single receipt made within 24 hours, shoppers can take part in a “Scratch & Win” contest, any purchase from MYR 450 (US$118) and above entitles the shopper a chance to spin a wheel with attractive prizes, including seven cars. The more they spend, the more chances they get to spin the wheel.
The grand prize for this shopping campaign is a fully-paid Jaguar X-Type. The grand draw will be held sometime in July 2003. To be eligible, a shopper needs to spend a minimum MYR 500 (US$132) with a single or multiple receipts within 24 hours at any KLIA retail or Food & Beverage outlet”¦ and answer a simple question on KLIA.
I would like to stress that this is unlike some airports where the shoppers need to buy raffle tickets. At KLIA, you just shop your way to win a Jaguar X-Type.
Since October 2002, I believe that the KLIA Shopping Campaign was able in a small way to cushion the effect of several shocks that hit the travel trade, including the Bali bombing incident late last year and the Iraq war recently. Up till March 2003, the impact of these major setbacks on the sales performance at KLIA has been minimal.
The Moodie Report: How is the Penang airport business doing?
Syed Ahmad: The Penang shop is not that bad given the current scenario. With the impending re-instatement of [Asian] flights, I am confident that things will get better.
The Moodie Report: What is your company’s retail pricing philosophy?
Syed Ahmad: In support of the overall KLIA objective of making the airport a shopping destination of choice for air travellers, our pricing policy is to ensure that our customers get “value for money” whenever they shop at any of our outlets.
The Moodie Report: If you had one wish for the coming year in business, what would it be?
Syed Ahmad: My wish for the coming year would be “world peace” which will be good for everyone!
Footnote: Syed Ahmad is a speaker at the forthcoming Trinity Forum in London, due to be held on June 18-20.
BIOGRAPHY
Syed Ahmad Syed Salim has around 20 years of experience in the retail industry covering both Singapore and Malaysia. He started his retailing career with a reputable Japanese retailer in Singapore in 1980 and over the intervening years has assumed numerous positions covering various aspects of the trade. In 1990, he moved to Kuala Lumpur as a member of the project team responsible for the construction and development of the Japanese group’s maiden retail outlet in the country. In addition, during this period, he also oversaw the duty free retail operations of the company at the old Kuala Lumpur International airport in Subang as its general manager.
In 1995, he moved on to assume a senior management position with a privatized Federal government establishment in the southern state of Johore in Malaysia. Prior to joining Malaysia Airports (Niaga), better known as Eraman, in 2002 as its chief executive officer, Syed Ahmad was the chief operating officer of Malaysia Airlines Golden Boutiques, responsible for the inflight sales of the national airline. During his two-year tenure with Golden Boutiques, he was responsible for several initiatives to further improve the merchandising and inventory management of the company. Syed Ahmad has not only spent many years in the retail trade but enjoys a unique experience of having worked in downtown retail, airport retail as well as airline retail.
Syed Ahmad, 44 years, holds an MBA from the University of Stirling, Scotland, UK.
