It’s not always easy for retail investors to gain access to a publicly-listed company’s top-level management to ask questions and gain a deeper understanding of the company’s business – we recognise that at The Motley Fool Singapore. Thus, when any opportunity arises for me or any of my colleagues to speak to important executives of publicly-listed companies, we would aim to bring you, dear readers, any interesting insights we can glean about the company’s business. We’ve done that previously with instant beverage manufacturer Super Group Ltd. (SGX: S10). Now, we’d like to do it with electronics and furniture retailer, Courts Asia…
It’s not always easy for retail investors to gain access to a publicly-listed company’s top-level management to ask questions and gain a deeper understanding of the company’s business – we recognise that at The Motley Fool Singapore.
Thus, when any opportunity arises for me or any of my colleagues to speak to important executives of publicly-listed companies, we would aim to bring you, dear readers, any interesting insights we can glean about the company’s business.
Four weeks ago, my colleague Stanley Lim and I had the chance to sit down for a cup of coffee with Courts Asia’s Chief Financial Officer, Ms. Kee Kim Eng, and Regional Head of Strategy Planning & Communications, Ms. Tammy Teo. The indented portions below are 15 interesting insights about Courts Asia’s business operations that Stanley and I heard from Kee and Teo.
On credit-risk control, employee culture, and experience
1) The first nine insights are related to: a) Courts Asia’s control of credit risks in its business of offering installment plans to customers; b) the company’s employee culture; and c) the management team’s deep experience in running the business. You can see all these here.
On Courts Asia’s growth strategy
10) Courts Asia has an omni-channel strategy that encompasses traditional retail sales and online sales. According to a recent UBS report, in Singapore, Courts Asia’s website traffic is ranked as the first amongst multi-channel retailers and ninth amongst retailers in general (the first eight spots are all occupied by pure online retailers).
11) Courts Asia plans to expand at a pace of 5-6 stores per year (an annual increase of around 120,000 square feet in retail area) in Malaysia from its current base of 60 stores in the country. The company sees a long term target of around 90 stores in Malaysia.
12) The company’s long term vision is mainly centred on growth in Malaysia and Indonesia. It is also looking at other potential geographies for expansion and as mentioned earlier, is also looking toward online sales as a driver for growth.
On what differentiates Courts Asia from other retailers in the eyes of consumers
13) There are a number of things Courts Asia does to try and differentiate itself from other retailers in the eyes of customers. The company has a “price promise”; it provides many different financing options; it provides extended warranties (more on that below); and the company provides some form of insurance for customers through its instalment plans (more information’s given below as well).
14) In terms of warranties, Courts Asia has more expensive warranties. But the company makes sure that the value recoverable at year 4 or 5 of the warranty (the crucial years when products start breaking down) is still very substantial – i.e. the warranty provides real value for money for customers.
15) In terms of insurance, Courts Asia has certain financing plans that have a built-in insurance component. For example, if the customer taking up the financing plan falls ill and can’t work, interest payments are waived for a certain period of time.
Foolish Bottom Line
Ser Jing here again. Knowing how Courts Asia thinks about its own growth and how it plans to differentiate itself from other retailers is important. That’s especially so when faced with the threat of online retail. The long-term success of the company is, quite simply put, tied to its growth in sales. If there’s nothing special within Courts Asia’s operations which makes it an attractive destination for shoppers to purchase furniture and household electronic goods, then the future of the company would be rather bleak. That’s something important for investors to keep in mind.
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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Chong Ser Jing owns shares in Super Group.