* Plans to open first large store in Myanmar in 3-4 years
* Myanmar sales growth could hit 20-30 pct
* Cautious on Vietnam due to weaker consumer spending
By Charmian Kok
SINGAPORE, Sept 17 Seven years after entering
Vietnam, Southeast Asian department store owner Parkson Retail
Asia Ltd is battling headwinds, but that isn't
deterring it from expanding into Myanmar in search of growth.
Singapore-listed Parkson, which has 54 stores criss-crossing
Malaysia, Vietnam and Indonesia, was one of the first to enter
the Indochina market, and now hopes to apply some of the lessons
learnt from Vietnam to Myanmar, where it expects strong consumer
spending and economic reforms.
"We are dealing with a country with a huge population and
very little services provided. Retail is still very much,
compared to neighbouring countries like Vietnam, in the
backwaters," Parkson's group managing director Alfred Cheng told
Reuters in an interview.
Parkson competes with regional players such as Robinson
Department Store PCL, Aeon Co Bhd and
Ramayana Lestari Sentosa Tbk PT, but is the largest
player in Vietnam.
Comparing his experience in Vietnam, Cheng expects Parkson
to see double-digit sales growth in Myanmar in the first four to
five years, potentially in the 20- to 30 percent range.
Parkson's early years in Vietnam could give it an upper hand
in understanding consumer spending trends in Myanmar- a similar
emerging market, Cheng said, adding that many businesses in
Myanmar are already familiar with Parkson due to trading
activity between the two countries.
Although Cheng concedes that Myanmar is not ready for a
full-fledged department store now, it plans to open a relatively
small one at 40,000 square feet in Yangon before March 2013 to
test consumer behaviour and train local staff.
After years of isolation, resource-rich Myanmar has sped up
policy changes, prompting companies to express interest in
investing in the country.
Parkson's first store will be developed through a joint
venture with Yoma Strategic Holdings Ltd. Beyond that,
the group aims to open a full-fledged department store, at
around 150,000 to 200,000 square feet, in Yangon in three to
four years catering to the mid to upper-middle income segment.
Despite the country being one of the poorest in Asia, Cheng
expects Myanmar's economic reforms to boost middle-class incomes
and spending, especially in Yangon where Parkson's stores will
"Although as a country they are one of the poorest, but in
Yangon itself, there are a lot of wealthy middle class that can
afford to shop in Parkson," said Cheng, who estimates that the
city makes up about 45 percent of the country's total spending.
"Most of the developments in the next few years are going to
be pumped into and through Yangon. The development of Yangon
will be a lot faster than the rest of the country."
Shares of Parkson have gained 24 percent since the start of
the year, after listing in November. Analysts have highlighted
the stock's low liquidity as a concern for investors.
Consumer spending has weakened in Vietnam, where Parkson has
eight stores, and is likely to weigh on Parkson's performance in
"It's going to be very tough. We are not expecting
tremendous growth in the next 18-24 months because structurally
there're a lot of issues in the Vietnam economy and it takes
time to be sorted out," said Cheng.
Parkson, which is 67.6 percent-owned by Parkson Holdings Bhd
, saw net profit for the year ended June rise nearly 30
percent to S$45.5 million. Vietnam accounted for about 10
percent of the company's total sales last year.
Parkson expects Vietnam to see slower same store sales
growth in the low to mid-single digit percent for 2013, Cheng
said, compared to 9 percent for the fiscal year ended June.
(Editing by Anshuman Daga and Muralikumar Anantharaman)