The company plans to open 300 outlets within five years, or 60 stores per year, with the first to be operational by end-2016. The location of the first outlet has not been decided.
In a filing with Bursa Malaysia today, QL Resources said its wholly-owned subsidiary Maxincome Resources Sdn Bhd earlier in the day signed the area franchise agreement for the development and operation of Japan-based FamilyMart convenience stores in Malaysia.
The 20-year agreement is renewable for subsequent periods of 20 years each at Maxincome’s option and becomes conditional once the company successfully registers as a franchisee with Ministry of Domestic Trade, Co-operatives and Consumerism, the filling said.
In a separate statement, QL Resources said the Japan-based FamilyMart provides a strategic downstream expansion of QL Resources’ existing food and manufacturing distribution businesses.
The convenience store chain is known for its wide range of quality, ready-to-eat food and beverage offerings besides convenience items.
“FamilyMart’s philosophy and values resonate with QL Resources’ mission of providing nourishing agro-based products for the benefit of all. Their emphasis of delivering quality food is also a value that QL Resources, as a food company, values and sees synergy in,” said QL Resources in the statement.
“In addition to this synergistic effect, this expansion is a long-term investment which also opens up bigger growth opportunities in the consumer market for the group. It fits into our strategy of strengthening and expanding integration of the group’s value chain,” it added.
QL Resources said that FamilyMart’s brand could be favoured as consumer lifestyle increasingly demands convenience with a comfortable and enjoyable experience.
“Among the factors weighing in their (FamilyMart) favour are the increasing urbanisation and per capita consumption, young population demographic, and a growing trend of proximity and convenience retail,” it said.
FamilyMart meanwhile said it has an exciting opportunity in Malaysia, where the economy is growing and consumer spending is on the increase.
“This expansion into Malaysia is in line with our growth strategy and in QL Resources, we have found a partner who has the capability and integrity to develop the brand with us in this country,” it added.
It said that this venture is one that will have a long gestation period, and thus, will not have a material financial effect for its financial year ending 31 March 2017 (FY17).
In October 2013, FamilyMart opened its 10,000th store in Japan. As of March this year, FamilyMart operates a total of 17,540 stores in Japan and across 6 other Asian countries including 2,952 stores in Taiwan and 1,306 stores in Mainland China.
Malaysia’s convenience store industry, which makes up just a fraction of the country’s grocery retail market, is still dominated by 7-Eleven Malaysia Holdings Bhd, where 82% of stores in the category were of the group’s as at March 2014.
On 18 June 2014, 7-Eleven opened its 1,600th store in Solaris Dutamas featuring a new concept look and feel. It has 1,944 stores in the country as of the end of December 2015 and it plans to open 200 stores per year.
Recently listed Bison Consolidated Bhd, the operator of 255 outlets comprising brands such as myNEWS.com, Newsplus, MagBit, The Front Page and WH Smith (in airports), is considered the second largest retail convenience network in Malaysia after 7-Eleven. It plans to open 115 new stores by end of 2017.
QL Resources shares closed four sen or 0.91% higher at RM4.44 apiece today, bringing its market capitalisation to RM5.57 billion. The counter had a trading volume of 824,400. Shares of 7-Eleven, however, closed flat at RM1.41 today, with a mere 36,600 shares changing hands.
Adapted from original news article entitled “QL Resources diversifies into convenience store business“, The Edge Markets, 11 April 2016.