Year: 2021

3 Aug | Future CFO Editor

In 2018 brick and mortar retailer Phoon Huat opened its doors to the online world. Eventually, the company solidified its commitment to online commerce with the launch of RedManShop.com in early 2020 in a bid to make baking supplies more accessible to customers during the lockdown.

At the time, the existing platform provided mostly basic functionality for e-commerce like creating accounts and making orders.

Lee Shing Lam, Head of eCommerce at Phoon Huat, noted that customers commented that the search function and the limitation in merchandising functions made it very difficult for them to find products that they want.

The challenge(s)

Lee noted that one challenge was how to manage the product range the company was carrying online.

“This led us to look for a scalable and sustainable platform to support its expansion. At the same time, we also sought to improve the services and customer experience on its online store,” he added.

With MuleSoft integrating with Phoon Huat’s core ERP solution – SAP, it allows products and product information to flow seamlessly into Salesforce Commerce Cloud. The process empowers its employees to integrate data and innovate at scale.

“It allows us a high degree of freedom to perform merchandising through sorting rule, search refinement and categorisation. In addition, we utilised Search Dictionary and Bucket Values to maximise the searchability of our products,” added Lee.

A better way to engage customers

To maintain customer trust and satisfaction, Phoon Huat selected Salesforce Service Cloud to help its customer service team with a new, digitised omnichannel approach to engage with its customers as it expands the business across the SEA region.

Phoon Huat used MuleSoft to create a seamless experience across its eCommerce platform. With MuleSoft, Phoon Huat can easily integrate and unify data across its entire eCommerce experience, including RedManShop customers, while empowering its employees to integrate data and innovate at scale.

Phoon Huat CEO Shuichi Sato reiterated the company’s commitment to delivering a better online shopping experience for its customers. In addition to investing in a new software platform, the company has expanded its digital transformation team, improved warehouse layout and procedures, and invested in its logistics fleet.

For Phoon Huat these enhancements include:

• A search engine that allows customers to search for products faster & easier
• Mobile-friendly user interface
• Personalised shopping experiences, enabled with machine learning capabilities
• Delivery tracking through email and order status updates via the website.

Cecily Ng, AVP and GM of Salesforce Singapore, says companies like Phoon Huat are using the pandemic as an opportunity to reinvent themselves and capture more customers.

Link to Article: https://futurecio.tech/singapores-phoon-huat-ups-its-ecommerce-gameplay/

27 July | DigiconAsia Editors

With many locked-down families turning to bakery, this traditional bricks-and-mortar firm jumped to the Cloud to ensure supply lines remained intact.

How does a regional supplier and retailer of cookery supplies weather a global pandemic when its bricks-and-mortar sales have been its main mode of business?

The well-known answer is of course: digital transformation. This is what Phoon Huat, a baking ingredients and equipment supplier in South-east Asia, did in early 2020.

Amid the pandemic, the firm accelerated the launch of its online shop in order to allow customers to continue to access baking and cookery supplies during the numerous stages of lockdown.

With an offering of more than 7,500 products ranging from bakery supplies to international gourmet brands, the firm pivoted to e-commerce with an aim to differentiate itself with affordable pricing and its own exclusive house brand RedMan. Its earlier website, built in 2018, was not geared for the scale of the pivot, so some digital transformation was in order.

Selling in the Cloud

Recognizing the need for a scalable and sustainable platform to support its pivoting and expansion, the firm chose to work with Salesforce to relaunch its RedManShop e-commerce website.

By doing so, the firm has empowered its employees to deliver an end-to-end digital customer journey across sales and customer support. Cookery enthusiasts of all levels of skill can now expect a one-stop solution for not only merchandise, but also a menu of related content such as recipes, training courses and an improved shopping experience that includes:

• A search engine that to scour the large product range and content faster and easier
• A mobile friendly user interface
• Personalized shopping experience powered by machine learning
• Item delivery tracking through email and order-status updates via the website

With a wider outreach due to its enhanced e-commerce presence in the region, the firm also used Salesforce to create a digital omni-channel approach to boost customer engagement. To improve data connectivity across its disparate branch offices and applications, MuleSoft was engaged to create a seamless experience across its e-commerce platform and empowering employees to integrate data and innovate at scale.

Said Shuichi Sato, CEO, Phoon Huat Pte Ltd: “We are committed to delivering a better online shopping experience for our customers. Besides investing in a new software platform, we have also expanded our digital transformation team, improved our warehouse layout and procedures, and invested in our logistics fleet.”

Cecily Ng, AVP and GM, Salesforce Singapore, said: “The pandemic has presented businesses such as Phoon Huat with the opportunity to reinvent themselves and capture more customers — a great example of technology’s transformational power, beyond helping businesses to cope with the challenges of the COVID-19 pandemic.”

Link to Article: https://digiconasia.net/news/how-the-red-man-heeded-the-green-light-to-dish-out-better-cx

ZaoBao | 9 Jul 2021

Bakery speciality Phoon Huat is striving to undergo digital transformation. The company will assess the skills of employees, gradually encourage them to receive appropriate training, strengthen their capabilities, and meet the needs of the company.

At the forum yesterday, Ms Gan discussed how to promote skills training with industry representatives such as Microsoft, Grab, and Phoon Huat.

Among them, James Wong, executive director of Phoon Huat, said that the pandemic has promoted the company’s acceleration of digitalization. The company is exploring how to fill the vacancies in the digitalization process by training the skills of employees, such as talents who are familiar with the company’s products and online marketing.

He believes that it is important to encourage older employees to receive training and communicate with them. It is necessary to understand the views of older employees so that they can embrace the training with a positive attitude and be willing to participate.

As for whether the employer is worried about employees leaving after training, James Wong said: “Although there will be concerns, we cannot be affected by these concerns and provide no training for our staff.  Training can increase productivity and allow them to do more, and the company should also give rewards and promotion opportunities.  When employees see opportunities to receive training and have a clear career plan, I believe they will be more inclined to stay with the company.”

Link to Article: Original Text in Mandarin

Business Times | 8 Jun 2021 | Lynette Tan

BAKING supplies retailer Phoon Huat has acquired a majority stake in Le Petit Depot, a Singapore-based online retailer that specialises in French food products.

Phoon Huat now holds 91.5 per cent interest – made up of ordinary and preference shares – in Le Petit Depot, according to corporate records. The remaining shares are held by Le Petit Depot’s founders, Frenchmen Yannick Guédon and Frédéric Douvillé, and a holding firm, Oper8.

However, Phoon Huat told The Business Times (BT) that the preference shares will be considered “quasi debt”, so its stake in Le Petit Depot is essentially 70 per cent.

“The idea is not to give the money to the founders, but to put it into growing the company,” said Phoon Huat chief executive Shuichi Sato. He added that Le Petit Depot’s management will stay unchanged, and that its founders remain “meaningful shareholders in the business”.

Le Petit Depot has paid-up capital totalling S$3.5 million, the records show. The company was started in 2012 and now retails more than 8,000 products, from meats to wine.

In a joint statement on Monday, both businesses said the deal will allow them to “leverage each other’s strengths to grow their online businesses and extend the product range in retail stores under Phoon Huat”. This is as Phoon Huat and Le Petit Depot aim to double their sales volumes in three years.

Both companies will also work on reducing supply chain costs and optimising IT infrastructure. “To achieve efficiency is critical especially in the current environment where all costs are on an increasing trend,” they said.

For instance, a “significant” portion of Phoon Huat’s goods come from France, Mr Sato noted. Consolidating logistics with Le Petit Depot will therefore lead to greater economies of scale.

Phoon Huat hit S$100 million in revenue last year, propped up by a home-baking frenzy amid the Covid-19 pandemic.

But the company had little idea how the year would turn out, as the pandemic situation was fluid, Mr Sato told BT in February.

“It was difficult to have any expectation or prediction (during this period). We worked to handle the changing needs of our customers that were affected by the evolving Covid-19 situation,” he had said.

Phoon Huat currently has 19 retail stores in Singapore and an online shopping site.

Link to article (for BT Subscribers): https://www.businesstimes.com.sg/sme/phoon-huat-buys-majority-stake-in-french-foods-retailer

Business Times | 8 Jun 2021 | Lynette Tan

PHOON Huat plans to open three more stores in Singapore this year, taking the tally to 22 stores, from 19 currently.

It is also on the lookout for opportunities to acquire, said Shuichi Sato, chief executive of the home-grown baking supplies retailer, in an interview with The Business Times on the back of Phoon Huat’s acquisition of a majority stake in French goods retailer Le Petit Depot.

But Mr Sato added that Phoon Huat remains a “small and humble” company: “We do not jump into big, fancy deals.”

“Regarding Le Petit Depot, it is a humble and stable, yet ambitious, company with whom we share chemistry,” he said.

Phoon Huat also intends to remain a speciality retailer. “We specialise in baking products, just like how Le Petit Depot specialises in French products. We will not try to become a big supermarket,” Mr Sato said.

The company has plans to expand overseas as well. This year, Phoon Huat resumed talks with potential partners about expanding into South-east Asian countries. The discussions had been put on hold due to the Covid-19 pandemic.

However, discussions are taking more time than expected, due to travel restrictions and some of the potential partners being focused on navigating the Covid-19 situation, Mr Sato said.

Overall, Phoon Huat is on track to hit US$100 million in revenue for its current financial year ending June. It crossed S$100 million in revenue in 2017.

Corporate records show Phoon Huat Pte Ltd has S$87.1 million in paid-up capital.

The 74-year-old company has come a long way since its beginnings as a shop along Middle Road by Hainanese entrepreneur Wong Tai Fuang. Its website states that the founder made deliveries himself on his bicycle in the early days.

Phoon Huat started out as a wholesale supplier of baking ingredients, but has also grown into a retail chain over the years.

In 2002, it started retailing in supermarkets, invited by NTUC FairPrice, according to its website. That year, the company also set up its headquarters at Pandan Loop.

Phoon Huat’s success later caught the attention of Standard Chartered Private Equity, which took a “significant stake” in the company in 2016, reportedly for US$112 million to US$150 million. Then, Phoon Huat had about a dozen retail outlets in Singapore.

Wong Chen Liong, a descendant of the founder and the then-managing director of Phoon Huat, had welcomed the investment, saying it boded well for the firm’s succession planning which had been in the works for the last five years.

Standard Chartered’s private equity unit has since been wound up.

Members of the Wong family that are involved in the business include James Wong, the founder’s grandson and an executive director at Phoon Huat, and Jean Wong, a business development director at the firm.

Mr Sato, who has worked at commodities firms Wilmar and Bunge, joined Phoon Huat in 2018 as chief executive.

Link to Article (for BT subscribers): https://www.businesstimes.com.sg/sme/phoon-huat-to-open-more-stores-this-year-on-the-lookout-for-deals

Business Times | 8 Jun 2021 | Lynette Tan

BAKING suppliers retailer Phoon Huat has acquired a majority stake in Le Petit Depot, a Singapore-based online retailer that specialises in French food products.

Phoon Huat now holds 91.5 per cent interest in Le Petit Deport, according to corporate records The remaining shares are help by Le Petit Depot’s founders, Frenchmen Yannick Guédon and Frédéric Douvillé and a holding firm, Oper8. Phoon Huat declined to comment on details of the deal.

Let Petit Depot has paid-up capital totalling S$3.5 million, the records show. The company was started in 2021 and now retails more than 8,000 products, from meats to wine.

In a join statement on Monday, both businesses said the deal will allow them to “leverage each other’s strengths to grow their online businesses and extend the product range in retail stores under Phoon Huat”. This is as Phoon Huat and Le Petit Depot aim to double their sales volumes in three years.

Both companies will also work on reducing supply chain costs and optimising IT infrastructure. “To achieve efficiency is critical especially in the current environment where al costs are on an increasing trend,” they said.

Added Phoon Huat chief executive Shuichi Sato: “With the outstanding e-commerce and technology of Le Petit Depot and Phoon Huat’s strong foundation as a leading food products supplier, we will be in a unique position to capture strong growth in the market and better our service to our customers in the F&B (food and beverage) industry and baking enthusiasts.”

Phoon Huat hit S$100 million in revenue last year, popped up by a home-baking frenzy amid the Covid-19 pandemic.

But the company had little idea how the year would turn out, as the pandemic situation was fluid, Mr Sato told The Business Times in February.

“It was difficult to have any expectation or prediction (during this period). We worked to handle the changing needs of our customers that were affected by the evolving Covid-19 situation,” he had said.

Phoon Huat currently has 19 retail stores in Singapore and an online shopping site.

Link to article: https://www.phoonhuat.com/wp-content/uploads/2021/06/BT-8-Jun-2021.jpg

Business Times | 18 Jan 2021 | Lynette Tan; Additional reporting by Lelia Lai

ONGOING supply chain issues and unpredictable demand due to the coronavirus pandemic are making it hard for food manufacturers and suppliers in Singapore to do their usual roaring business during the peak festive seasons.

For some, the supply chain issues resulted in missed opportunities to capitalise on demand from locals un- able to travel over the holidays.

Seng Hua Hng Foodstuff, which produces nut snacks under the Camel brand, faced a shortage of some products as a result of delays in Its shipments of raw ingredients from various countries.

“There were incidences of port disruptions, large spikes in shipping costs from China, and also shipping delays due to suppliers unable to book shipping vessels,” said managing director Poh Ah Seng.

The company’s Christmas sales were still similar to that of the year before, as it was able to sell more of other products in its range. However, “it also means that we could have done much better, if we had received our raw materials on time, as this year many of our fellow Singaporeans are here on our sunny island, feasting on all kinds of local food,” said Mr Poh.

Similarly, Zoe Anastasis Trading, which supplies dried goods, had to import a smaller range of products this year. Instead, the company brought in larger quantities of products which were “more suitable to the majority of our customers,” said partner Wong Ze Lin.

“Of course, not all customers were happy with the fewer options we had,” said Mr Wong.

Huber’s Butchery, on the other hand, had to close its Christmas orders early due to overwhelming demand. “It was so difficult to predict demand for Christmas in 2020 as we had never experienced this situation before,” said Andre Huber, executive director of Huber’s Butchery. “We did not know if customers would dine out more or throw home parties as this was also dependent on the ruling governing gathering size and alcohol curfew,” Mr Huber added.

With Chinese New Year and Valentine’s Day now about a month away, supply disruptions also mean that some food manufacturers, like Seng Hua Hng, are incurring more costs as they ramp up production to make up for lost time.

These challenges appear to have prompted some food manufacturers to seek out more warehouse or cold storage spaces, to hold more stocks as a buffer.

Tan Boon Leong, executive director of capital markets for industrial at Knight Frank Singapore, said that the real estate consultancy has received “more supply chain-related enquiries” in recent months, especially from businesses covering the entire food production or distribution chain. The spaces are being used in a variety of ways, including as ingredient storage, central kitchens and distribution outlets.

However, warehouse space supply has been tight due to competing demand from the stockpiling of masks, sanitisers and essential food items, said Mr Tan, adding that rentals have been trending upwards by 10 to 15 per cent now since the start of last year.

Generally, food manufacturers and suppliers’ ability to stock up is also constrained by the shelf life of produce and sales performance, which is especially unpredictable during the pandemic.

As a purveyor of quality chilled meats, Huber’s Butchery will have to shoulder the higher freight costs to secure space on flights for meats with shorter shelf lives, said Mr Huber. Chilled chicken meat, for example, can only be kept for up to a week.

Shuichi Sato, CEO at Phoon Huat, added that shelf-life management costs need to be considered. The company operates a warehouse of over 200,000 sq ft with seven different temperate zones to control product quality.

In addition, products with short shelf lives need to sell fast enough so that the company can import “commercially feasible” volumes, Mr Sato said.

Some food manufacturers and suppliers are thus finding it more practical to diversify their sources of supply or give more lead time to their suppliers instead.

Annabella Patisserie, which specialises in making macarons, has what it calls a +1 strategy-keeping on hand alternative suppliers for the same or next best ingredient-after facing a shortage of key baking ingredients, like flour, before Christmas.

Meanwhile, Colden Bridge Foods Manufacturing, which specialises in processed meats, is providing its suppliers with a 12-month forecast of its orders. “This allows our suppliers to plan and prepare beforehand if there is a sudden need to procure more supplies,” the company said.

 For the end-consumer, Mr Poh quipped, the good news is that Seng Hua Hng’s nuts in the market now are all from the latest crop, and freshly roasted from the oven.

Link to article: https://www.phoonhuat.com/wp-content/uploads/2021/01/210118-Business-Times-Not-so-festive-season-for-food-manufacturers-with-supply-crunch-missed-opportunities-high-costs.pdf

Channel News Asia | 22 Jan 2021 | Tang See Kit

SINGAPORE: Baking, according to the chief executive of baking ingredients supplier Phoon Huat, is an activity that brings “peace and happiness to the home”.

“The aroma of cakes is the best flavor to make everybody at home smile,” said Mr Shuichi Sato.

The 55-year-old is speaking very much from personal experience.

He bakes at least once a month and counts florentines with generous servings of hazelnut and walnut as his best item. While mostly self-taught, Mr Sato had opportunities to perfect his hobby by learning from professional bakers at his previous jobs – some of which were bakeries that he supplied ingredients to.

But more than satisfying taste buds, he finds baking an enjoyable family affair and one that never fails to bring back warm memories of time spent in the kitchen with his mother.

“I enjoy baking a lot,” he told CNA during an interview earlier this week.

And more people have been discovering the joy in mixing flour, butter, sugar and eggs, and turning them into decadent desserts with their home ovens in a year upended by a pandemic.

Last year, Phoon Huat saw demand from retail customers go through the roof, particularly during the “circuit breaker” period where people were cooped up at home.

“Out of the blue, many people started baking. Thanks to YouTube videos and easy-to-use pre-mixes, the barrier to entry is getting lower,” said Mr Sato, who took up the top job at the baking ingredients supplier in 2018.

Noticing the trend, Phoon Huat started offering online classes as an alternative after its baking studios were shut during the circuit breaker. These have received “decent positive responses”, and the company intends to keep at it to whet the appetite for recipes and baking advice among home bakers.

It is also looking at opening two new stores this year.

This will come on top of the four stores it opened last year, namely in Bukit Panjang, Jurong East, Yishun and Pasir Ris, which took its total number of stores to 18 across Singapore.

Demand from seasoned and new home bakers was a bright spot for Phoon Huat amid a pandemic-fuelled downturn, noted Mr Sato, and the company saw the need to expand its retail business in response to the shift.

The trend still has potential, he added. “Now that people have experienced how they can bake and produce a decent product, and the time for baking … brings about more family bonding, I think this will last.”

“BOTTLENECKS EVERYWHERE”

But 2020 was not all smooth sailing for the 74-year-old company. In particular, the two-month circuit breaker from April to June last year was “very challenging” as it raced to keep its retail stores operating under COVID-19 rules and grappled with a big hit on its business-to-business (B2B) segment.

On the retail front, it rolled out safe-distancing measures, stopped cross-deployment of employees across retail outlets and shortened opening hours in a bid to balance safety and manpower constraints.

It also implemented a system of odd or even-numbered days in which people were let into the store depending on the last digit of their identity card numbers, among others to manage queues.

But this did not stop long lines from forming in front of its stores. Customers also became frustrated when they could not get hold of baking staples such as flour and eggs.

Mr Sato acknowledged that some of these fast-selling items ran out at its stores for a few days, but stressed that it had stocks given its diversified supply chain spanning 900 suppliers worldwide.

The problem was in packing these ingredients that came in large quantities, such as flour in 25kg bags and cream cheese in nearly 20kg blocks, into smaller sizes for retail customers due to the smaller workforce allowed at its factory and warehouse.

Its suppliers overseas also had problems keeping up with demand.

“This home-baking trend is global, not just in Singapore, so even our supplier in Australia is being challenged because packing materials were not available,” he said.

“We want to open the store but from logistics, warehouse, production to retail, it was all under constraint,” Mr Sato recalled. “Bottlenecks everywhere.”

Meanwhile, construction work stopped at its new stores. This meant a pushback in rolling up the shutters, with the opening of the Bukit Panjang store delayed by almost three months.

Its B2B arm, which supplies to more than 4,000 hotels, restaurants and cafes in Singapore and forms the bulk of its business, took an even bigger hit.

“Three of our top 10 customers were almost closed during the circuit breaker, (which means) our sales became zero. The goods that we prepared were challenged and to shift that to retail is not that easy, because who will buy 20kg of cream cheese?”

Order cancellations flowed in and Phoon Huat had to write off some of the goods with a short shelf life. It also faced some “very limited” delays in payments.

“We accommodated all the cancellations and we also kind of close one eye (sic) for the payments,” Mr Sato said.

Since then, the situation among its business customers seems to have improved. While those in the hospitality sector remain nowhere near their heydays, bakeries and cafes that operate in residential areas “are now back to normal”, he added.

Asked how Phoon Huat fared in annual revenue last year, the chief executive officer said it remains comparable to the S$100-million milestone set in 2017.

“You may say, we managed to survive. The drop from B2B has been recovered by retail,” said Mr Sato.

FUTURE PLANS

Moving forward, Phoon Huat plans to roll out a new online shopping platform around June.

Its e-commerce site was launched last March after two years of preparation, but there can be room for improvements such as being more user-friendly.

So far, online sales “have been growing” but it is “not significant yet”, said Mr Sato.

Asked about the company’s pricing strategy, he noted that Phoon Huat will “always try to be the most affordable” in necessities such as flour, milk and sugar.

“We also have our customer relationship management scheme called the RedMan Rewards where people can gain points. I’m almost sure that for most of the items available at supermarkets, we are the lowest in price.”

It can do so given how it makes bulk purchases to ensure supplies to its B2B customers. The company also tries to stay lean and minimise waste in costs.

But its expansion in the retail space will surely add on to cost. To that, Mr Sato said: “We try to fill the space where we don’t have a presence… A lot of our customers write in to say ‘Please open a shop here’ and we listen and follow our customers, so we are quite confident.”

Affordable rent is also top on its mind. Amid the pandemic, landlords have been more open to negotiations over rent, he added.

“Our business model cannot afford to pay high rent. We are selling S$1.80 flour so how much can we make? Our margin is very, very slim therefore we try to find affordable rent places.”

The household brand in Singapore is hoping to venture abroad. It “almost concluded” an acquisition in a neighbouring market last January but that had to be put on hold due to the pandemic.

“We just resumed discussion with some companies for our growth in neighbouring countries,” Mr Sato told CNA. This will include expanding its B2B segment and setting up brick-and-mortar stores overseas.

Asked if that could happen this year, the chief executive officer replied: “We will try.”

Link to article: https://www.phoonhuat.com/wp-content/uploads/2021/01/210122-CNA-Amid-COVID-19-challenges-the-rise-of-home-baking-helps-Phoon-Huat-to-whisk-up-expansion-plans.pdf