Leadership
• 5 minute read
Talking to CEO: Coils Lam
Coils Lam, owner of 759 Store, shares how he leads his team to survive in the competitive industry and his thoughts on young employees
Translated by Megan Li, PhD student, Department of Management, CUHK Business School
In this episode of the televised program Talking to CEO on Radio Television Hong Kong, hosted by Prof. Andrew Chi-fai Chan, Director of CUHK Business School’s Executive MBA Program, Coils Lam Wai-chun, Chairman and Managing Director of CEC International Holdings Limited, owner of snack food chain 759 Store, shares how he led his team to survive in the competitive industry and his thoughts on young employees.
The Origin of 759 Oshin
Prof. Chan: In the retail industry, rental is a challenging issue. Is there any difference in how you choose your site locations than the supermarkets?
Coils Lam: Not really. Actually most landlords would take the initiative to invite me to rent their stores. Usually I would accept these proposals if the rents do not significantly exceed my budget. I know that if you refuse them once, you will have no chance in future. Some customers once asked why some 759 stores are so close to each other. It is because we have no bargaining power and we don’t want to offend the landlords. This is the reality if you want to run a business in Hong Kong. It is beyond my capability to change that — only the government can change it. I never think about that because if I do, I would become a politician. I would rather focus on my own business account, making sure we don’t lose money.
Prof. Chan: When did 759 Store become a strong competitor to large supermarkets?
Coils Lam: It should be after the Coca Cola Incident .We received a lot of support from the public and the media during the period. Since then, we have learnt how to build a good relationship with the media and the public. Understanding what the public wants has helped us expand our stores rapidly. The annual salary of managers in large companies is over millions of dollars; their moves would attract a lot of attention. Hence, large companies are careful about their business moves. However, nobody cares about a small store like us as we are not a big threat in the market. So we leveraged our unique position to expand from 60 to 180 stores, and when those large companies haven’t even started their expansion.
At that time, I thought 180 stores would be the limit and we should stop expanding in the following three years. But when I realized that the competitors were beginning to fight back, I decided to open more stores to consolidate our purchasing power. However, the competitors even tried to get our products by working with our suppliers. Honestly, it is still unknown for us whether we could continue to survive in such competitive business environment.
Quality and Cost Control
Prof. Chan: What is your strategy to survive in this competitive market?
Coils Lam: To save money, large corporations prefer to outsource their logistics. But in fact, more intermediaries would divide their profits. Also, the outsourcing companies usually make a contract based on personal relationships, rather than on quality service. The same goes with the tendering process where the lowest price will get the bid, despite their quality of service.
On the contrary, I insist that we should take care of our own logistics and stocks by using our own trucks. Many people wonder why we have succeeded. It’s because we are able to concentrate on the small, yet important things. I think the key to doing business is to control what you can control and think of ways to cut down the cost.
Prof. Chan: 759 Store seldom relies on advertising. Why is that?
Coils Lam: I know advertising fee is a great expenditure for our rivals. But we don’t have money to do that. If we do not need to invest in advertising, we can make our products much cheaper. If we advertise as heavily as our rivals, we are not able to survive.
Prof. Chan: In recent years, you have diversified your business by selling not just snacks, but also toys, cart noodles and cosmetics? Why?
Coils Lam: Doing business requires creativity. When you cannot find new competitive tactics, you should find another way out. Some people criticized us of being over-diversified, but all our commodities are actually relevant to us. While it may seem chaotic in our business developments, we know that our products can complement each other in the long run.
Young People Helps Sustain Your Business
Prof. Chan: Many people may look down on post-80s and post-90s, but you are willing to cultivate them, and give them the opportunities to launch your stores. Why do you trust them?
Coils Lam: Actually it has nothing to do with trust — we have to pass the torch to next generation whether you like it or not. The people I hired in 2000 are now in their 30s, and the generation before that is now over 40. If we do not hire young people, our company won’t be sustainable. My priority is to make sure that the business can be long-lasting.
If you hire young people, you should trust them; otherwise, you shouldn’t hire them in the first place. I like being with young people – they make me feel younger, and listening to their ideas makes me think outside the box too.
Reference:
In early October 2011, Coca-Cola’s Hong Kong franchise holder Swire Group stated that 759 Stores were selling Coca-Cola below its suggested retail price, and demanded that the chain should raise its Coca-Cola retail price. 759 Store declined and then decided to stop selling Coca-Cola. This incident caused a stir and urged the establishment of the Competition Bill to protect the small businesses in Hong Kong. (Source: Wikipedia)
About Talking to CEO
Since 2002, CUHK EMBA has been running the Talking to CEO TV/radio program with Radio Television Hong Kong. Distinguished business leaders, academics and government officials have been invited to share their experiences and insights with CUHK alumni and students.
