Inside Business: For Cambodia's mini-marts, it's all about convenience

Photo by: SOUEN SAY
A shop assistant waits for customers behind a counter of a Smile mini-mart in Phnom Penh.

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We know the financial crisis will improve over time, and we know Cambodia has big opportunities.
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The Phnom Penh Post
Wednesday, 08 July 2009
SOUEN SAY

With the property boom over, Smile mini-mart has been able to find affordable, well-placed locations in the capital while it waits for economic recovery

THE end of the real estate boom may not have helped the country's building developers, but it certainly helped Kirk MacManus.

Over the past year he has been building up Smile mini-mart, a food and convenience retailer that has now expanded to three outlets in Phnom Penh.

"It was very difficult finding good locations because the country was in the middle of the real estate boom," he said. "But now the boom is over, we are finding increasing numbers of good rental locations at more reasonable prices."

MacManus, an Australian, came to Cambodia with extensive retail experience and the benefit of having lived in the Kingdom during tougher times.

"I decided to start my own business here because I know Cambodia very well - I lived here in 1993 during UNTAC's time. At that time I worked in a company supplying food to UNTAC," he said.

MacManus opened his first retail outlet in June 2008 as the effects of the global economic crisis were sweeping the globe.

But his extensive regional retail experience - he has worked in Indonesia, Hong Kong, China, Singapore, East Timor and Australia - meant he was confident of success.

"Cambodia is a good place to do business because we know the financial crisis will improve over time and we know Cambodia has big opportunities to grow its economy," he said.

So what caused him to think Smile mini-marts would succeed? Extensive research showed customers were largely unsatisfied with their shopping experience.

With that as a starting point, MacManus set out to offer customers what they told him they wanted: excellent customer service, friendly staff, a clean and comfortable shopping experience, and a wide range of products.

"We hope to achieve this with every customer, every time they visit one of our stores," he said.

MacManus said the retail trade in Cambodia is changing fast, as incomes increase and consumers want to try new products and shop in modern stores.

"This shift in spending is typical in developing markets - it reminds me of the shifts from traditional trading to modern trading that occurred in Indonesia 15 years ago," he said.

MacManus is not the first to notice the demand, and a number of operators have sprung up to tap this market recently.

Two years ago, he said, you could find convenience stores at petrol stations but not elsewhere. Now several are opening each month.

McManus said many people think it is a way to make easy money and end up learning the hard way that it is anything but.

Many stores have shut down in the past year because they were unable to cover their operating expenses, he said.

He expects that in three years' time there will be a number of recognised brands as the winners dominate the market and many of the smaller outlets close.

Breaking even and beyond
He said his stores should be profitable after two years, and despite the slip in sales late last year, which he blamed on the economic crisis, he is bullish.

"We are investing with a long-term strategy, so even though we aren't making money now, we know that in the future when the economy improves we will earn profits," he said.

Most of the products his outlets sell are sourced locally from more than 100 distributors who bring in stock from countries such as Australia, Thailand, Vietnam, the United States and France.

"We would prefer to buy products manufactured in Cambodia, but other than beverages there are not many made here," he said.

What's different, then, about doing business in the Kingdom?

MacManus said that Cambodia brings its own cultural twist to the convenience store industry: In most countries convenience outlets are small, and people buy quickly and leave.

Not so here. His customers - mainly school students and young families - also use the occasion to socialise and relax with friends.

That means larger stores and seating are needed. Just as well the property boom is over, then.