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PH retailer expands in Middle East

Penshoppe’s global program anchored on franchising scheme
/ 01:36 AM September 24, 2012

Retailer Penshoppe plans to expand its footprint in the oil-rich Middle East region where it aims to have 54 stores over the next five years as part of its ambition to globalize and become “the most admired Asian fashion brands company.”

Bernie Liu, president of Penshoppe owner Golden ABC Inc., said his company was enthusiastic about opening in more cities in the Middle East. “The number of international Penshoppe boutiques has been growing exponentially and we could not be more pleased with the reception of the brand in this part of the world,” he said.

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Penshoppe has boutiques in the Kingdom of Saudi Arabia and Bahrain. Two more stores will open in the United Arab Emirates before the year ends. Over the next five years, the plan is to expand its presence in these markets and break into new markets like Qatar, Kuwait, Oman, Jordan and Israel, said Albert Ong, Golden ABC vice president for business development.

As the Middle East has a heavy concentration of overseas Filipinos, Penshoppe typically seeks to establish core support among the Filipinos in those countries but also strives to reach out to the local population.

Penshoppe is set to open the first of its boutiques in Dubai on October 15 at the Reef Mall in Deira, one of the emirate’s most popular shopping destinations. The second store in Dubai will open in December at the brand-new Hamsah Commercial Complex located at the Al Karama district and close to the Consulate area along the busy Khalib Bin Al Waleed road.

The Filipino company’s global expansion plan is anchored on franchising, whereby it manages only the inventory, in lieu of outright operation of stores. The Penshoppe franchise for the emirates of Dubai, Abu Dhabi and Sharjah was awarded to KN Retail Inc., a unit of KN Interior Design LLC, one of the UAE’s fastest-growing home and retail store design and engineering construction companies.

Store footprint

The opening of the two stores in Dubai will bring to 10 the number of Penshoppe stores in the Middle East. It has seven stores in Saudi Arabia and one in Manama, Bahrain.

The existing Penshoppe boutiques in Saudi Arabia are in Jeddah, Riyadh, Al Jubail, Al Khobar and Dammam. By the second quarter of next year, two more stores are opening in the oil-rich kingdom.

Ong said Saudi Arabia would likely be the centerpiece of Golden ABC’s expansion strategy for the Middle East because it is the biggest market. He said the plan was to “use it as our anchor leading the way to increase our acceptance among the local population, not just our kababayan (countrymen).”

“Our customers in (Saudi Arabia) used to be 95 plus percent Filipinos when we started in late 2010. Today, the share of kababayan business—although increasing—has dropped to 65-70 percent of total revenue and 30-35 percent of the customers are now Saudi nationals and other nationalities,” Ong said in an e-mail to the Inquirer.

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Same-store comparative year-on-year sales in Saudi Arabia were up by a double-digit level, he said. For the next five years, he said the store network in Saudi Arabia alone should reach 29, or more than half of Penshoppe’s projected store network in the Middle East, by 2018.

The franchisee for Saudi Arabia is Eram-Penshoppe Trading Co. (KSA) led by its CEO and founder Imthiyas Palliveedu.

Over the next five years, Penshoppe’s store network in the UAE is seen to expand to 12, of which four will open in 2013-2014 in the emirates of Abu Dhabi, Sharjah and Fujairah.

New markets

From 2013 to 2018, Ong said Penshoppe plans to enter Israel and put up new stores in Tel Aviv, Haifa, Ramla and Nazareth. During the five-year period, the brand will likewise debut in Qatar, Kuwait and Jordan where it may see two stores in each market. Ong said the stores would likely rise in Doha, Kuwait City and Amman, Aqaba. One store is planned in Muscat, Oman.

“I mentioned only five other countries that we hope to penetrate because these are the more stable ones in my view. We are now actively looking for people and companies who may be interested to partner with Golden ABC as Penshoppe franchisees. Maybe after 2018 we can start to consider a presence in Lebanon, Iraq, Syria and Yemen,” Ong said.

Established in Cebu in 1986, Golden ABC now operates 600 stores in the Philippines and employs more than 3,000 people. Apart from Penshoppe, the company owns Oxygen, ForMe, Memo, Regatta, Tyler and direct-selling subsidiary Red Logo.

Last week, Penshoppe also announced a franchising deal in Indonesia, Southeast Asia’s most populous market, where at least 150 stores are targeted to be set up over the next 10 years.

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TAGS: Business, expansion, Middle East, penshoppe, Philippines, Retail
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