CMG: Selling shoes, clothes in connected PH

FASHION. A sample of some of CMG's wares. All merchandise images from CMG website.

MANILA, Philippines – The Internet is going to destroy a lot of businesses, said Chan Kok Bin, the chairman and CEO of the famous shoe house CMG Retail Incorporated.

In a panel at the Franchise Asia Philippines 2015 in Manila on Thursday, June 11, Chan shared data and spoke about shifting to digital, a trend that traditional retailers are slow to embrace, considering their scale and timing.

Of e-commerce Chan said, “We understand that in China and the US, the total online business is around 13% of total retail sales.”

In the Philippines, it is still less than 1% of total retail sales, or $1 billion (P 45.3 billion) as of 2014. It can grow to 10% in 10 years, he added.

Increasing online presence

CMG is banking on the reach and expertise of top e-commerce site Zalora, which has tapped a latent demand for fashion items outside Metro Manila.

In an interview with Forbes Philippines magazine in May, Co-founder and CEO Paulo Campos said that second- and third-tier cities nationwide accounted for 60% of the online business’ total orders.

Since using Zalora’s platform last year, CMG has been able to market shoes and clothes under its flagship brand CLN to areas where it does not have physical stores. The company also distributes international labels such as BCBG, Oro Nero, and Staccato in boutiques and department stores.

The company’s biggest breakthrough in recent years, however, would be its partnership with ABS-CBN. Featuring designer shoes called the Memorata Collection in a 2013 primetime series opened doors for the line to be sold on Zalora and leading online marketplace Lazada.

But Chan said that the group is going to expand its social media grasp to be able to connect directly with its customers. It has started talks with companies and consultants to help it take advantage of better platforms.

Understanding consumer intelligence

As a brick-and-mortar business, CMG faces the challenge of social media integration down to its band of franchisees.

“We have to do our homework, train our people, and change their mindset. They must understand the consumer’s intelligence,” Chan said. “Consumers nowadays are becoming more intelligent because of [the presence of] platforms like Google.”

As smartphone and Internet penetration increases across the islands, Filipinos are not only searching for products, but also purchasing them on mobile. There are 50 million smartphones in the Philippines today, going on 80 million in 3 years.

The current figure corresponds to one in two Filipinos owning a smartphone. But what actual consumers are using to purchase goods is only secondary to who are using it.

With consumers averaging 24 years old, “our people are very young. We have to know how to understand the preference of our consumers” and target the demographics that have embraced shopping online like it is part of their second nature, said Chan.

RISE. Chan Kok Bin (3rd from left) of CMG sharing his thoughts on social media and the rise of e-commerce locally and globally. Photo by Shadz Loresco / Rappler

Welcoming ASEAN integration

As borders across Southeast Asian nations become more porous this year, the game is going to be more challenging for traditional businesses.

Alibaba, the $214 billion (P 9.6 trillion) business that Jack Ma built, has already set up shop in Malaysia and Thailand, Chan mentioned, adding that “the oil business, for example, is much more secure because you cannot use e-commerce yet to deliver gasoline; the most vulnerable will be apparel and shoes and handbags.”

Yet, CMG is looking forward to the opportunities to be gained from the regional integration.

Asian middle class will be accounting for 60% of class spending, rising from 25% in 2009.

“So the emerging middle class in Asia, and also in the Philippines will see a lot of working forces, getting better jobs and higher salary,” Chan said.

Lumping consumption with remittances and government spending – with Public-Private Partnership projects hitting around $1 trillion – his forecast is 6-7% economic growth in the coming years.

For CMG to do its part, it has to grow its brand on social media, which can make or break traditional retailers.

But if it does succeed, and is able to maximize the e-commerce platform to boost its sales, then it will take its expertise outside and aim for regional fame.

“We need to study and learn, and understand what are the possible changes attending our global economy,” Chan said.

This is how CMG will know “where to go and where to invest.” – Rappler.com

$ 1 = P45.30