“There are loads of opportunities out there in the rural area that we urban dwellers cannot imagine,” chief executive Boonyong Tansakul says as he discusses how Singer Thailand Plc (SINGER) is preparing to leap forward. Initially renowned for its sewing machines, the SET-listed Singer has successfully transformed itself into one of the most trusted brands in electrical appliances in Thailand. The company now has 211 outlets nationwide and offers one-stop services from trading, leasing, hire purchase and after-sales support.
How do you see your business in general?
We achieved excellent numbers in the first half of 2013 with a net profit equal to 87% of what we made for all of last year. However, we have to admit the second half of 2013 could be much more challenging. It is clear to us that people are delaying their purchasing decisions, especially lower-income earners. With the rising cost of living, they’ve become more cautious. So a decent harvest season in the fourth quarter is something we are looking forward to.
How do you cope with the slowing economy?
Thanks to the recent change in our business model two years ago, we no longer focus only on household appliances. With the success in leasing services, we have rebalanced our product portfolio to almost 50% households and 50% commercial from 80:20 previously. The benefits are three-fold. First, our sales grow given the higher value of commercial appliances. Second, our margins expand as commercial clients provide better credit quality. Third, our sales agents are happier, with more income from higher sales and fewer headaches from instalment collections.
It doesn’t look like you have a direct competitor, do you?
At this point, I think we have come so far that it has become too distant for anyone to follow. Our sales channel is unique. Instead of selling products in showrooms, we have more than 3,500 sales agents taking products on pickup trucks to show customers right on their doorstep. These same agents also take care of loan collections and after-sales services. Therefore, they will have opportunities to visit customers on a monthly basis. They can offer more products to existing clients while exploring new ones living nearby at the same time. Since these are rural areas with limited accessibility, we have great advantages over other trade channels and the bonds created between our agents and customers are often for a lifetime. We have 30% of our business coming from repeat customers, while our main focus is on the replacement market. We even accept exchanges.
Given the lower-end market, how do you manage your risks?
With the establishment of Singer Leasing (Thailand), our leasing process has become more systematic and concise. Our internal NPL target is 5%, but we have achieved an average of 4.5% in the past three years. We do credit checking and scoring. But most importantly, we have sales agents as our first credit screeners. They get to see the real economic circumstances of each customer, so they have a clear idea whether it’s a sensible loan. Having more commercial customers lifts the quality of our hire-purchase portfolio as well. For internal risk management, our customers, sales agents and branch managers are all required to have guarantors. On top of that, we are covered by fidelity insurance.
How do you compete against non-bank financial institutions?
I think we’re in different segments. Singer captures a much wider client base as opposed to non-bank financial institutions. We basically provide accessibility and convenience. We’re truly a one-stop service for those living in remote areas. Some of our customers may never have had a bank account, may not be able to provide any credit documents, but we can facilitate a hire-purchase service for them if they can provide a guarantor to us.
How do you plan to grow Singer?
We previously had a headcount control in place to minimise fixed costs. However, we now see so many opportunities that we simply can’t ignore. Hence, we’ll start hiring more sales agents and initiate a programme called “Our Customers Are Our Sales Agents”. Since our customers use our products and know them well, they are the best source to spread the word and influence into sales. The benefits are mutual. We get new orders, while they earn more income. In terms of store expansion, we plan to roll out 10 more outlets each year. So far in 2013, we’ve already opened six.
Could you tell us more about new opportunities?
We have a list of missions we want to complete. We want to replace public pay phones with our airtime vending machines. These are already a star product with 35,000 units but can definitely grow more. We also want to launch our own SIM cards. Our petrol vending machines are also aimed at replacing traditional hand-cranked fuel pumps in the market. Our washing machines are yet to enter the commercial market. Even CCTV is a big opportunity that we can offer to complement these vending machines.
Source: Bangkok Post