PADINI HOLDING BERHAD
1.0 COMPANY PROFILE
1.1 Background of the company
Padini is a Malaysian-domiciled investment-holding company headquartered in
HicomGlenmarie Industrial Park, Shah Alam. Incorporated in 1971 as proprietorship under
the trade name Hwayo Garments Manufacturers Company, Padini was initially engaged in the
manufacture and wholesale of ladies wear. The company subsequently added men’s and
children’s lines to its offerings when it established its first three brands from 1975 – 1987. In
1988, Padini discarded its role as wholesaler to take up the role of consignor. Thereafter, the
first single-brand store distributing Seed was opened in 1992 in Sungei Wang Plaza, Kuala
Lumpur.
The company has nine labels in its family of brands and retail in 330 freestanding stores,
franchised outlets and consignment counters in Malaysia and around the world. The
company’s subsidiaries include Vincci Ladies’ Specialties Centre Sdn. Bhd., which is
engaged in dealing of ladies’ shoes and accessories; Padini Corporation Sdn Bhd., Seed
Corporation Sdn. Bhd., Yee Fong Hung (Malaysia) SendirianBerhad (Yee Fong Hung) and
Padini International Limited, which is engaged in dealing of garments and ancillary products;
Padini Dot Com Sdn. Bhd. (Padini Dot Com), which is engaged in provision of management
services, and Mikihouse Children’s Wear Sdn. Bhd. (Mikihouse), which is engaged in dealing
of children’s garments, maternity wear and accessories.
Tizio was introduced to the public with the opening of its first outlet in Mid Valley Megamall
in Nov 2012 and subsequently in Paradigm Mall on 23 May 2013. Like almost all of the
Group’s Brands, Tizio was developed in-house by, and is registered to the group. Anticipate
more presence from Tizio in the coming years as the brand has been slated to become an
addition to the group’s portfolio of core brands.
On 5 March 1998, the group was listed on the Second Board of Bursa Malaysia Securities
Berhad (Bursa) and thereafter, transferred to the Main Board on 4 August 2004. The Main and
Second Boards merged on 3 August 2009. Major shareholders of the group as at 8 July 2013
are Pang Chaun Yong with 44% and Skim Amanah Saham Bumiputera with 5.0%.
1.2 organizational charts
(Organisation chart been done by our group)
1.3 company structure
HAJI SAHID BIN MOHAMED
YASIN
(CHAIRMAN)
YONG PANG CHAUN
(MANAGINGDIRECTOR)
FOO KEE FATT
(DIRECTOR) CHEONG
CHUNG YET
(DIRECTOR)
CHAN KWAI
HENG
(DIRECTOR)
CHONG CHIN
LIN
(DIRECTOR)
YONG LAI
WAH
(DIRECTOR)
YEAP TIEN
CHING
(DIRECTOR)
2.0 GENERAL ENVIRONMENT ANALYSIS
2.1 Political factor
In order to improve consumers spending in the clothing industry, "Mega Carnival Sale" has
been implemented by the Malaysian government is to be held 3 times a year. Its main purpose
is to promote Malaysia as a "value for money shopping destination". This aggressive
approach attracts the tourist to shop at the local apparel outlets, which in turn would increase
foreign tourist spending and increases our country's foreign exchange earnings. This would
also encourage the Malaysians to shop locally, which would benefit Padini Holdings Bhd in
terms of their sales. This has created an opportunity for the domestic companies. However the
side effect of such activities would stimulate the domestic economy and increases the number
of competitors in the domestic market. Nevertheless, Padini Holdings would still stand out as
market leader.
Through ETP projects and initiatives, the Malaysian Government plans to boost Malaysians‟
income level. Padini should be able to realize on the growing of Malaysian affluent as many
can afford to purchase higher priced items besides the value products that the group offers.
The incremental of wealthy and thriving consumer base has allowed brands such as Padini,
Padini Authentic and Seed to obtain higher revenue. The group can take this advantage to
strengthen its single brand stores into multi- brand concept stores, where consumers gain
access to all of Padini‟s in - house brand collections
2.2 Economic factor
Malaysia's economic growth is to be has been unstable fluctuating from -1.5 to -2.6 from
2008 to 2010. The highest growth was during the period of March to September 2009 which
increases from –7, 8 to 5.7. The economic growth is expected to be due to the domestic
market with growth in the private sector. The private sector makes up the majority of the
Malaysian economy, with private consumption accounting for nearly 44% of GDP. "Love
Malaysia, Buy Malaysia" campaign was launched to by the government to get Malaysians to
support domestic market and take holidays in local tourist sites. The government also
subsequently launched a national campaign on wise spending, with the aim to educate
consumers on the importance of domestic demand on the GDP growth and economic recovery
as a whole.
2.3 Social factor
Malaysian is classified as an upper middle-income country, and considered as one of the most
developed among the developing countries. Middle income households defined as those
earning between RM1, 500 and RM3, 500 per month, and has increased from 32.3% of total
household population in 1995 to 37% in 1999. The low-income group, categorized by
household income of up to RM1, 500 per month, spends a proportion of this amount on food.
Meanwhile, the high and middle income households spend most of their money at
hypermarkets. 3.4% of their income is spent on clothing and foot wear. Malaysia's consumers'
lifestyle has been changing for the better due to the rise in education levels. High profile
retailers as well as global mass media have shaped consumers’ buying behaviour, resulting in
the Malaysians being more westernized. The Malaysian's life leisure life revolves around
trendy shopping malls. Therefore Padini Holdings Bhd has to be more update with the latest
trends. They have to advertise and keep the consumers informed and reminded that they still
exist and provide the customers with quality and trendy clothes.
2.4 Technological factor
With the Internet and e-commerce, retailers can now sell their products online and deliver it to
customers on their door-step efficiently within a timely manner. It can make customers' life
more convenient as they do not need to get their house to go purchase a product in the
hypermarket and making the purchase at the comfort of their own home. Furthermore,
retailers can also sell their products to the overseas market without the need to open a physical
store in the foreign country. This helps Padini Holdings to earn more profit using online
intermediaries and cut costs by not establishing new stores in certain areas.
2.5 Environment factor
Environmental changes have a major impact on virtually all products, services, markets, and
customers. In Padini, environmental factors affect a lot in trends, which customer nowadays
up to date with fashions. In addition, new trends are creating a different type of consumer and,
consequently, need for a different products, services and strategies. So, Padini is in line
because they provide variety of products to satisfy the need of customer. Environment factor
such as weather also affected the Padini’s sales where generally fluctuate with seasonal
festivities such as Hari Raya, Christmas and the Chinese Lunar New Year. Nationwide sales
programs such as the Malaysian Mega-Sale and Merdeka Sale are also potent revenue drivers.
But, during quiter periods with no festivities (typically every 4Q of Padini’s FY or Apr-Jun
quarter), the group sees comparatively lower sales figures. However, this is a known
characteristic of the retail industry and is not expected to have substantial impact on Padini’s
overall financial performance.
2.6 Legal factor
Padini has a large product offering for its customers. It offers luxury and high fashion items
that cater to upmarket consumers (Seed, Padini, Vincci+),affordable, core value garments for
the lower to middle income earners (Brands Outlets, Vincci, Padini Authentics),and its own
children’s and maternity wear (Miki). It recently started to offer children’s wear under Seed
and Padini. Therefore, these brands has been credited by the Association of Accredited
Advertising Agencies of Malaysia (4 A’s) incollaboration with Interbrand – the world’s
leading brand consultant to be the Malaysia’s 30 most valuable brands.
3.0 TASK ENVIRONMENT ANALYSIS
3.1 Porter 5 Forces Analysis
1. Threat of new entrants – high.Malaysia is becoming an important expansion base for
Western retailers. Even as big retail brands and labels focus their attentions on the
emerging markets of China, India or even our ASEAN neighbours, they too have seen
it fit to establish a presence in Malaysia as well. Increasingly, Malaysia will see more
international retailers venturing into the market directly as opposed to via the
traditional gateways of Hong Kong and Singapore. In the past year itself, there has
been an influx of international brands, which compete on the same playing field as
Padini, the most recent being Japanese behemoth Uniqlo and Swedish fashion retailer
H&M, which have opened their flagship stores in the Golden Triangle. We believe
that given the growing size of the pot, the main barrier to entry would be with regards
to the prime retail space which is getting scarce.
2. Bargaining power of buyers – high. The rising income levels, better education and
greater access to a variety of brands and labels have resulted in a class of consumers
more sophisticated in their needs and preferences. Where customer loyalty is of the
utmost importance, retailers have strived to attain superior customer responsiveness by
employing various methods of advertisements and promotions, loyalty programmes, as
well as to increase customer’s perceived value of a brand. Brands catering to this
expanding group of consumers have become numerous but more often than not, these
brands pay more attention to the pricing strategies than to the perceived quality of the
products under their brands. As a result, many brands fail rather than thrive.
3. Bargaining power of suppliers – low. As with the trend in the fashion retail industry,
Padini designs its garments while outsourcing the manufacturing operations to OEM
manufacturers. Knitwear and graphic Ts are manufactured locally while the more
complex woven items are sourced from China and Sri Lanka. With the advent of the
global slowdown, the garment manufacturing industry in China has become saturated
and oversupply issues have more than mitigated the effects of minimum wage
rebasing. Thus far, bargaining power of suppliers has remained low, and as a result,
large scale Chinese manufacturers who had previously shunned the small to mid-sized
fashion retailers have reopened their doors to Padini.
4. Threat of substitute products – medium. Padini’s products cater to a wide range of
audiences, the more pronounced differences being the styles and pricing of the brands
they carry. The SEED and Padini brands are trendier while the PDI and Vincci brands
are more neutral. The brands outlet’s products, on the other hand, houses lesser-known
value-for-money labels, which include off-season and surplus branded items. We
believe that Padini’s differentiated products as well as its flexibility of varying its
merchandise mix provides the group with some degree of immunity, though it is note-
worthy that the Vincci accessories are not generally designed in-house, which means
these products no longer retain their unique qualities. In this situation, these ranges of
products runs the risk of attracting the interest of supplies eager to broaden their
distribution as well as competitive retailers anxious to boost their own sales.
5. Competitive rivalry within the industry – high. The garment retail industry is by
nature, one of the most competitive areas of commerce. Competition is particularly
apparent where there are numerous other brands, which operate at the same locations
as Padini. These brands compete not only for market share and floor space, but also
for front line retail staff, which is becoming increasingly scarce. The increased
demand for staff required to run retail operations extends beyond fashion retailing, and
the current rapid growth in retail outlets of all kinds has caused high turnover rates for
front line staff, which has in turn made recruitment costly, time-consuming and often
unproductive. Management has envisaged that the coming years will see the situation
deteriorate further if nothing is done to radically after the conditions of demand and
supply of labour in this industry.
4.0 SWOT
SWOT TABLE: PADINI HOLDINGS BERHAD
Internal: Strengths Internal: Weaknesses
S1
S2
S3
S4
S5
Leading brand in Malaysia
Many retail outlets
Market leadership
Promising quality
Product for all ages
W1
W2
Unstable profits
No online shopping
External: Opportunities External: Threats
O1
O2
O3
O4
Expands their business
Prioritize local companies
Open more branches
Earn more profit
T1
T2
T3
New to market
Increase competition
No celebrity endorsement
4.1.1 Strengths
1. Leading brand in Malaysia
PADINI is a leading brand in Malaysia. There are wide range in style and pricing of
the brands that PADINI carry. For examples, PADINI carries SEED, Vincci,
Mikihouse and etc. the products not only trendy but also neutral which is suitable for
all type of consumers.
2. Many retail outlets
There are in total of 330 retail outlets in Malaysia and around the world for Padini
Holding Berhad. With many retail outlets, PADINI is making sure that they are
unbeatable for their competitors.
3. Market leadership
PADINI is among the well-known brand established since 1971 in Malaysia. It
strategically located factories and warehouses ensure wide market coverage in
Malaysia.
4. Promising quality
PADINI ensure the quality of their product is in higher aspect for their brand and in-
house brands under them.
5. Products for all ages
With in-house brands under PADINI, they ensure that their product is suitable for all
ages of consumers.
4.1.2 Weaknesses
1. Unstable profits
In retailer business, the profit is unstable. The consumers are depending on the season.
In Malaysia, the profit will be at the highest peak when there is festiveseason. For
example: Chinese New Year.
2. No online shopping
Another weakness for PADINI is no online shopping. For customer, they can only buy
Padini’s product in stores which is not a very convenience for the customer. It is
because, not the entire customer is in the city and near to shopping complex.
3. Public perception (low quality)
In retailer business, the perception of public in term of fabric is in a low quality.
5.0 TOWS
TOWS TABLE: PADINI HOLDINGS BERHAD
INTERNAL FACTORS Strengths – S Weaknesses – W
EXTERNAL FACTORS
S1
S2
S3
S4
S5
Leading brand in
Malaysia
Many retail outlets
Market leadership
Promising quality
Product for all ages
W1
W2
Unstable profits
No online shopping
Opportunities – O SO Strategy WO Strategy
O1
O2
O3
O4
Expands their business
Prioritize local companies
Open more branches
Earn more profit
(s3 + o1)
Using the power as market
leadership to expand their
business (horizontal)
(w2 + o3)
Placing more branches to
cover loss of potential online
customer (market dev)
Threats – T ST Strategy WT Strategy
T1
T2
T3
New to market
Increase competition
No celebrity endorsement
(s1 + t3)
(w1 + t2)
STRATEGIC DIRECTION
5.1.1 SO Strategy: Using the power as market leadership to expand their business.
As a market leader in the retail business, PADINI has a huge power and
opportunity to expand their business to the next level. With this, PADINI has the
power to control over
5.1.2 WO Strategy: Placing more branches to cover loss of potential online customer.
PADINI is a well-known brand in retail business which is clothing, accessories,
shoes, children’s clothing and etc. within this areas of business, potential
customers is more interested in window shopping rather than online shopping. It is
a good strategy for PADINI to open more branches in order to attract potential
customer on self-satisfaction.
5.1.3 ST Strategy: