KUALA LUMPUR: Al-Ikhsan Sports Sdn Bhd believes its sports retail business would continue to experience healthy growth despite weaker consumer sentiment and softer economic growth.
Its chief executive officer Vach Pillutla said the company has outlined several initiatives and concepts to weather seasonality challenges involving consumers’ trend of buying sports attire and equipment.
“Consumers’ sentiment is expected to be sluggish this year as they becoming more prudent in their spending. However, we believe consumers will be attracted to products with good-value offerings including better pricing, good bargain and various high quality products availability,” he told NST Business in an interview recently.
Vach said the company is likely to capture bigger market share in sports retail segment if Al-Ikhsan offers attractive deals amid weaker consumer sentiment.
He said this is because consumers are more cautious in their spending and would rather buy products that have good value for money.
“Sports retail segment is a highly seasonal business as consumers would rather buy sports attire or equipment for specific matches such as world-known football premier leagues, tournaments or for leisure,” he added.
Vach said the company’s three concepts – Al-Ikhsan, Football Republic and Sneakers Street – are vital to promote sustainable growth for its retail sports business in order to mitigate the seasonal impact.
“Our three concepts are catered for entry to mid-level consumers and up to high-end consumers. For example, Al-Ikhsan houses a multi sports performance brands with over 115 stores nationwide.
“Football Republic is a specifically designed for personalisation or customisation of football’s boots and attire, targeting professional amateur players or fans.
“Sneakers Street category is a sports lifestyle concept that offers affordability for sneakers and accessories to consumers,” he said.
Vach said the company aspires to have stability in its business earnings with promising growth for long-term sustainability, while adapting to the current market needs.
“We want to aggressively expand our market reach, especially in East Malaysia and outside the country with about eight stores are expected to be opened this year.
“For long-term expansion plan, we target to open up to 30 stores in the next three years or by 2021,” he said, adding that this would allow the company to reach about 145 Al-Ikhsan stores nationwide.
Vach said the company also plans to open 15 Sneakers Street stores in the next three years, with initial four stores to be opened this year, followed by additional five Football Republic stores in the future from the current five stores.
He said Al-Ikhsan is currently in the discussion with various parties to expand its business in other market in Southeast Asia region, while providing numerous choices to consumers.
“We have ‘reasonable’ allocation for capital expenditure (capex) as it will be financed internally. The cost of each store will typically be depended on its size and location,” he said, citing that it is important for the company to have single-digit or lowest double-digit rent-to-sales ratio.
Vach said capex should not be extremely high as the company on its self-sustaining mode to generate sustainable earnings, while reducing its debt.
Vach said managing the company’s inventories is also important to keep its earnings healthily to avoid inventories not age beyond certain points.
“We will also embark on digital platform – Omni Channel – to complement our existing retail stores. This allows customers to choose and buy our products virtually through mobile app or online platform. The initiative would also enhance our efficiency and productivity, as it easily helps us to monitor our inventories,” he said.