Shopping Centers Today International

JAN 2016

Shopping Centers Today is the news magazine of the International Council of Shopping Centers (ICSC)

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on Western medicine to treat their ailments will back that up with TCM. In all, Chinese TCM expenditures jumped from $6 billion in 2006 to $13 billion in 2011. Eu Yan Sang makes products for the entire family: children, new moth- ers, the elderly and anyone seeking to regulate health with the gentle ap- proach of TCM. In the late 1990s, men and women age 35 or younger constituted a mere 10 percent of the chain's customers. Now those people comprise about 30 percent. To help broaden the base, many of Eu Yan Sang's products come in capsule form, and such competitors as GNC have followed suit. GNC operates nearly 700 stores across the region, including China, South Korea, Thailand and Vietnam. Founder Eu Kong left his na- tive China in the 1870s for Malaya, where he applied his forefathers' TCM methods to the treatment of opium-addicted miners. He opened his first shop in 1879, basing the business on the principles of yan (be- nevolence) and sang (life). Within a gen- eration, the Eus were reportedly among the 10 wealthiest Chinese families in the world. Forbes estimates the family's cur- rent net worth at about $160 million. More recently, Eu Yan Sang has reaped the benefits of China's cham- pagne years, now operating nearly 250 company-run outlets and about 20 fran- chises across its current regional mar- kets. These units range from street-level spaces of less than 200 square feet to much larger outlets measuring ten times that, in major shopping malls. The com- pany also operates nearly 40 TCM clin- ics, which offer such services as acupunc- ture and traditional physical therapies, plus some high-end lifestyle stores. The company is reticent about dis- cussing its store-opening plans for the coming year and beyond with this maga- zine, citing the trading blackout. But ca- sual observation seems to indicate that the store numbers are stable for now, particularly in Hong Kong, and that the company seeks cheaper spaces to rent, most especially in zones where multiple outlets operate within minutes of each other. Some relocations have already taken place, in fact. In any case, the chain's clinics are keeping quite busy. "We started TCM clinic services through our wholly owned subsidiary, Eu Yan Sang Integrative Health, in 2001 as an effort to provide holistic care to our customers, beyond products at our retail outlets," said Cecilia Soh, senior man- ager of brand management and commu- nications. "Our team of 67 experienced TCM practitioners [comprises people] meticulously selected by our medical board and licensed by local regulatory bodies. All herbal medication prescribed adheres to strict rules and regulations set by local authorities in Singapore, Malay- sia and Hong Kong." The company has also grown through acquisition, having bought Australia's Healthy Life chain in 2012. Meanwhile, Nestlé has teamed up with the company to produce a line of easy- to-prepare herbal soups. To be sure, Eu Yan Sang has en- countered a few headwinds. Overall sales for this year have dropped. The re- tailer's full-year profit for the period to June 30 is reported to have been about $4.6 million, a 70 percent dive from the year-ago $15.03 million. Factors contributing to this decline include the introduction of a 6 percent goods-and- services tax in Malaysia as well as the decrease of mainland Chinese visitors to Hong Kong. Aside from slow sales, troubles surround one of Eu Yan Sang's most popular Asia products: the Bo Ying Compound. This product entered the U.S. last year, and then the Food and Drug Administration issued warnings that it carried a lead-poisoning risk, even though the supplement was cleared by health authorities in Hong Kong. All of this is still under investigation. On the bright side, Eu Yan Sang says the dip in Hong Kong sales "has encouraged sales of prod- ucts at online sales platforms and at cross-border, tax-free outlets." The company launched its eStore online global operation in September and of- fers free shipping to Chinese communi- ties in Australia, Switzerland, the U.S. and elsewhere. In Singapore net sales for 2014 were up by 4 percent, and the company says it hopes the introduction of new products and marketing cam- paigns will continue to boost local sales and soften the blows to the Hong Kong and Malaysia outlets. Other trends may be on the com- pany's side too: Research by McKin- sey China indicates that China's next big innovation could be in health care. And surely it will not hurt that Tu Youyou, a Chinese medical re- searcher who used TCM to fight ma- laria, earned a Nobel prize this year for his work. SCT 22 S C T / J a n u a r y 2 0 1 6 r e T a i l i n g T o d a y O l d r e m e d i e s i n n e w b O x e s

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