A HOMEGROWN electronics distributor is opening stores in Hong Kong International Airport next year in its maiden overseas retail venture.
Sprint Cass, which has been running travel retail stores in Changi Airport for the past two decades, specialises in electronics and tech lifestyle products.
The company is opening three stores in Hong Kong International Airport next year.
Chief executive and founder Lim Khoon Leng - better known as KL Lim - said that Sprint Cass is also eyeing opportunities in other airports across the region.
Sprint Cass was founded in 1983 by Mr Lim and two other co-founders who are no longer with the company.
The firm started out as a distributor of IT consumables selling mainly to dealers across the region.
In 1998, the company was offered the opportunity to open a travel retail store in Changi Airport selling computers, "so we took on the challenge", said Mr Lim.
Range of brands
Over the years, the company expanded its product range to include consumer electronics and other lifestyle products.
It now operates 10 duty-free retail stores in all four Changi Airport terminals, carrying a range of international brands as well as its in-house brand of travel accessories, called McGear.
"With the Hong Kong airport project, we will be in two of the largest travel retail airports in the world," noted Mr Lim.
The company has been making sales of about S$80 million annually. This is set to surge above S$100 million after its Hong Kong airport stores open next year, he added.
Sprint Cass is exploring opportunities to set up stores in airports across Asia, Mr Lim said, adding that the company's focus on "tech living" products stands it in good stead.
"It's tough to break into other airports - for example, Bangkok is still dominated by (Thai travel retail group) King Power, but in time to come they will likely open up.
"Compared with traditional travel retail products like perfume, cosmetics, liquor and chocolate, 'tech living' products are fast-moving and fast-changing, and prices are always dropping."
The company is eyeing the China market in particular but will wait for the right opportunity to move in, Mr Lim pointed out.
"We are cautious about China. It's a very tough and competitive market. Chinese companies are huge and the fighting spirit they have is double (that of) ours."
While the bulk of the company's revenue - about 80 per cent - now comes from travel retail, Mr Lim has plans to beef up the distribution business in the coming years.
Besides acting as a regional distributor for international brands, the company is also looking to develop more of its own products.
It already has an in-house brand of travel-related products - McGear - that is available regionally. There are plans to develop another brand targeted at the international market, according to Mr Lim.
The company has also signed licences with brand owners - consumer electronics firm Thomson and Japanese audio product maker Nakamichi - to design products under those brands for sale in this region.
The aim is to have distribution contribute 40 per cent of the company's business in three years, with the remainder still coming from travel retail, Mr Lim said.
He also noted that while the company is concerned about mounting competition from e-commerce, the challenges in travel retail are different compared with traditional bricks-and-mortar stores.
"When people travel they tend to be more willing to spend on impulse - for instance, they might buy gifts for friends and family. Most travel retail is also duty free, which is a plus compared with the local retail scene."
Changi Airport is taking steps to help its retailers counter online competition, Mr Lim noted. Its online shopping portal iShopChangi allows travellers to pay for duty-free products online and pick up their purchases at the airport.
"In the online business the key is driving traffic," said Mr Lim.
A better way of selling
"If we were to set up our own online sales platform, we would not be able to drive as much traffic to the site as the airport can.
"So we sell through the airport's online platform, which we think is a better way."
Venturing abroad can be tough for small and medium-sized enterprises (SMEs) like Sprint Cass, said Dr Wilson Chew, who leads the strategy team in the entrepreneurial and private clients practice of PwC Singapore.
This means companies have to be prepared and remain open to change.
PwC Singapore advised on Sprint Cass' regional growth strategy.
"The uncertain global economic condition manifests itself through market entry barriers, new competition with no protection, greater demand fluctuation, currency exchange risks, and cultural barriers," said Dr Chew.
"On a larger scale, technological disruptions to global supply chains have caused major shifts in how industries operate. This wave of change is being felt in many parts of Asia since the region, to a very large extent, remains one of the world's major producers.
"So SMEs cannot assume that it will be business as usual as they venture out," he added.