Can Challenger Technologies Limited Successfully Conquer This Latest Challenge To Its Business?

CapitaLand Mall Trust  (SGX: C38U) announced earlier this month that it will be closing down Funan DigitaLife Mall, one of the malls in its portfolio of retail properties, by the fourth-quarter of 2016 for redevelopment.

At the moment, Challenger Technologies Limited  (SGX: 573), a major electronics retailer in Singapore, has its flagship retail store at the mall. In the third-quarter of 2015, the store in Funan had contributed 20% of the company’s total revenue.

With the impending closure of Funan, can Challenger Technologies mitigate the risks that come with a potential loss of a big chunk of revenue after 2016?

Although the closure of the mall had only recently been announced, the plans have been around for seven years. Therefore, Challenger Technologies had long been planning for the event.

According to the company, it has already relocated all its back office operations from Funan to its Ubi Link corporate building back in 2009. Moreover, the company has also been aggressively expanding its retail store count in order to lessen its reliance on the flagship store at Funan. The company has been successful in reducing the flagship store’s overall revenue contribution from 60% back in 2004 to the current 20%.

The new Challenger Technologies

Going forward, the company is focusing on its online distribution platform. Challenger Technologies will be launching its mobile-first revamp in 2016 and it is hoping that more customers will switch to online purchases.

According to Challenger Technologies’  chief executive, Loo Leong Thye, the firm has the ability to stock up 10 times more products online as compared to in a brick-and-mortar store.

Therefore, the company is planning to redesign the concept of its stores to emphasize the product-browsing experience for customers. Purchases can then be made by customers online after they have looked at the physical products in stores.  In this way, Challenger Technologies’ brick-and-mortar stores will complement rather than compete directly with the firm’s online sales channel.

Instead of worrying about the closure of its flagship store, Loo actually has a sales target of S$1.0 billion for the company to hit in the next five years. In 2014, Challenger Technologies had achieved ales of S$355 million. It seems that the company has high hopes for its online strategy.

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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 Stanley Lim doesn’t own shares in any companies mentioned.