MR DIY reaches 1,000th store milestone, continues to expand

 By Xavier Kong

HOME improvement retailer MR DIY has grown over the last 15 years or so to become a household name today. It was operating as a single hardware store at Jalan Tuanku Abdul Rahman in Kuala Lumpur in July 2005 and has now opened its 1,000th store recently.

“Back then, we were a traditional hardware store. But now we are more than just a hardware store with a wide variety of products,” managing director Adrian Ong tells FocusM.

MR DIY’s major shareholders include Bee Family Ltd with a 54% stake, Hyptis Ltd 18% and Platinum Alphabet Sdn Bhd 7.4%.

The shareholders realised then that the company could do better if a variety of products was offered to customers. By 2006, when the company’s third store was opened, it had transitioned to the 10-department format used today.

The 10 departments are hardware supplies, household items, furnishing, electrical items, car accessories, toys, gifts, jewellery and cosmetics, stationery and sports equipment, and accessories for computers and mobile phones.

“We have found the format (offering such a range) to be economical, to be attractive. When I say attractive it is not just servicing a male-dominated population in hardware, but it is also servicing whole families. There is really something for everybody in our stores, from every walk of life, whether you are an urban dweller or live in a small town,” shares Ong.

MR DIY also prides itself in offering convenience to its customers, opening stores in many small towns “to service the population, and to offer them convenience, that they can buy things that they would otherwise be unable to without heading to a bigger town or small city.”

January 2020 is a rather significant time for the company as it marks the opening of MR DIY’s 1,000th store in the region, which also happens to be the 580th store in Malaysia. The other 420 stores are located in Thailand, Indonesia, the Philippines, Singapore and Brunei. It should be noted that MR DIY’s Malaysian operations own the branches in Malaysia and Brunei only.

According to Ong, the focus for the rest of the year is to continue growing at the same pace.

“There is a demand for the things that we sell; there are still many places in Malaysia where we do not have stores, in the smaller towns, so there is demand,” says Ong, adding that the target is to grow at a pace of about 100 stores a year.

As MR DIY moves into 2020, Ong shares that the company will also be growing its offshoot brand MR TOY, a children’s store that caters to those aged 14 and below. He believes there is a need in the market for educational toys which are affordable and fun.

Treasure-hunting for the whole family

Ong notes that the company does not feel there is a direct competitor to its business; rather, each of its departments has its own competitors.

“The reality is that, because we don’t focus, walking into our stores is like a treasure hunt. Decorations for celebrations, gift packs for children’s parties, useful little items for the house, things that you may not even think existed at that point. We want to delight the customer,” Ong says.

According to the company’s Malaysian operations’ prospectus draft exposure on the Securities Commission (SC) website, it holds a market share of 25.4% in the home improvement retailer market based on its audited numbers in 2018.

The company’s Malaysian operations, under the name MR DIY Group (Malaysia) Bhd, has submitted a prospectus to the SC for approval. The prospectus is for an initial public offering of up to 941.5 million ordinary shares. It aims to list on the Main Market of Bursa Malaysia.

According to the draft prospectus, this makes up 15% of the company’s enlarged shares issues, of which 780 million will be institutional offerings, the remainder being retail offerings. No date has been set for the IPO so far and there are no price details yet.

The company also reported an average of 14,900 stockkeeping units (SKUs) at each of the company’s stores, with the branches in Peninsular Malaysia stocked by the company’s fleet of 94 trucks, from goods gathered at its storage facility in Balakong.

Asked how global events such as Brexit or the trade war between China and the US affects supply lines, Ong notes that the impact is “modest.”

“Our business fundamentally services the people, and while the Malaysian economy may be affected by what goes on in the global economy, our business is driven by everyday needs,” he explains.

Localisation and globalisation

The reason the US-China trade war would not jeopardise supply lines is due to the company’s policy of sourcing regionally as well as locally.

“In terms of sourcing, it does not disadvantage us when there is a trade war outside. We also purchase from manufacturers all over the region. In a way, we try to help Malaysian businesses sell their products through our stores regionally.

“We also try to create an ecosystem where we buy products from local suppliers in the other markets that we operate in,” said Ong.

On whether this has helped the brand integrate itself into the communities it joins, Ong shares that MR DIY’s efforts to integrate into towns and cities comes from its presence there, as well as from its efforts to service the population.

However, a relevant point in the company’s integration into communities is that it employs people in small towns, where there are not as many business opportunities, according to Ong.

Another way the company has worked to expand its brand presence is through the use of creative taglines, many of which are based on trending events, or matters of interest to the consumer. Ong shared that localisation is key to this approach, as Southeast Asia is a diverse and different market.

One example is when the implementation of the Goods and Services Tax (GST) of 6% was announced. The company came out with the tagline of “Biar Kami Rugi, Anda Puas Hati. 6% GST Kami Bayar” in December 2014, even though the tax was only supposed to come into effect in April 2015.

Entering the digital sphere

The company’s endeavours into e-commerce started in 2017, according to Ong, who calls it a “very convenient place to browse through” MR DIY’s offerings, and offers no transport cost for purchasing online “upon reaching a set minimum.”

Ong points out that the company generally keeps prices at the same level, regardless of whether the item was purchased online or at a brick and mortar outlet.

This way, the company’s e-commerce efforts are complementary to the brick and mortar stores of MR DIY. Ong also shares that the company will continue to remain committed to brick and mortar stores moving forward. – Feb 14, 2020

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