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The Peak Interview: How Chairman Patrick Chong Keeps Luxasia Ahead of the Competition

The boss of retail giant Luxasia, which Escentials belongs to, talks growing despite tough times and of succession plans.

If a book can be a key to unknown chambers within the castle of one’s self, then the apps on the first page of a smartphone is probably telling of its owner’s personality too. As one would expect of a chief executive’s device, there are the usual app suspects of news agencies, e-mail, calendar and the stock exchange on Patrick Chong’s iPhone 6. But a closer inspection discloses a deep appetite for connectivity.

There are six messaging apps, including Wechat, Skype, Line and Tango (Whatsapp has its special place in the bottom dock). Whereas most business leaders stay away from social media citing privacy concerns, the head honcho of Luxasia has Twitter, Facebook, Instagram and Linkedin.

Since he’s in the retail business, apps like Aveda (which Luxasia distributes), courier service Zyllem and code scanner QR Reader help to keep him in the know. Apps are also categorised in folders, which are titled with emoticons such as the newspaper for news apps, a telephone for messaging apps and an aeroplane for travel apps. His daughter, Sabrina, says: “He’s always the one who goes, why are you not using this app or that? Check out this new thing I have on my phone.”

Chong tells The Peak: “I’m not a digital native. I’m curious and I want to know as much about technology as I can.” He has no qualms letting on that he downloaded a popular dating app “just to see what the fuss was about”. The day before this interview, he was tinkering with Golfshot, which would supposedly help him with his handicap of 23.

“He’s the early adopter, in tech terms,” son Alwyn, who prefers to wait for updated versions, chimes in. Chong was the one who introduced traffic and navigation app Waze to his children. Chong says: “I’m a big fan of tech and what it can do. Technology is an enabler. It can make life so much more fun and efficient.”

The Chong tripartite reminisces about juggling projects.

Clearly, this baby boomer is no technophobe resistant to change. Because if that stereotype held true, the founder and now chairman of Luxasia Group, who fell into the beauty business “accidentally”, wouldn’t have stayed on top of his game for the last 30 years. Just as beauty junkies seek the latest colours and skincare formulas, Chong is a proponent of modernising his business in the face of an evolving marketplace.

Besides overhauling its computer and data systems six years ago,  Luxasia is tackling the volatile retail climate head on. While others have shuttered or downsized operations, Luxasia expanded its brick and mortar multi-label skincare and fragrances store Escentials, which is headed by Alwyn, last December.

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From 1,500 sq ft, the Paragon store now covers 2,300 sq ft to include a vanity zone where shoppers can try on the latest makeup in front of large mirrors. To keep the intrigue, it will introduce new brands every month, such as Damselfly candles from Australia, Stockholm labels Byredo and Verso, and the French perfume house Dear Rose, in addition to the current stable of exclusive premium cult skincare and fragrance brands such as Eve Lom, Diptyque, Serge Lutens and Annick Goutal.

Concurrently, the Escentials website is being revamped to become an e-commerce site that will feature an e-magazine with beauty and lifestyle content – a la luxury fashion and lifestyle online purveyor Net-a-porter. “The only way forward is to have a relationship where consumers trust the retailer for recommendations,” says Chong. “Education is important for the consumer so he can make informed choices. I think he will be more grateful with the information provided for him to make that informed choice.”

Luxasia distributes 120 brands in 11 territories including Indonesia, Thailand, the Philippines, Taiwan, Hong Kong, China, India, Vietnam and Myanmar. It rang in RM772 million (S$258 million) in sales in 2013, reported Malaysian newspaper The Star. Expansion to Japan, South Korea and Australia is in the pipeline.

“The constant question is, how do you promote products? That’s what’s most exciting about the business and that’s what has kept me in the business. Doing more of the same is not an option.

“With digitalisation, there is less brand loyalty. But customer experience is still very important. We are very strong in our offline business – that is our competitive edge, and we should leverage on that. Nothing beats trying out the real thing for yourself. But we also need to build the virtual business – that’s where we need the right talent so the consumer can be served both offline and online.”

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Which is why Luxasia co-invested $2 million in home-grown beauty appointment-booking app Vanitee in July last year. “It’s a concierge business that’s related to ours. We don’t run it; we encourage our business partners (like LVMH, Coty, Elizabeth Arden and Yves Rocher) to use Vanitee,” says Alwyn, who, together with sister Sabrina, brought the start-up to Chong’s attention.

Sixteen-month-old Vanitee has a network of over 550 verified independent beauty artists, who have since served over 4,700 customers.

NOT JUST A PRETTY FACE

But more than being a complementary service, what impressed Chong most about Vanitee was its founders and their “can-do” attitude. “They are constantly innovating and opening new markets. “I’ve learnt lots from the new generation, including my children. It’s through my interaction with them that I realise we need to reposition the company. The future is not what I may be comfortable and familiar with. Then I begin to see – I have to embrace change. There is no other way about it.”

While Asian parents are said to be less open-minded and slow to praise their off spring, it’s not the case with Chong. While filming a video segment for The Peak, he sought his children’s opinion on answering questions posed, instead of making the executive decision.

You also see the quiet pride in his eyes as he brings to attention Alwyn’s success with Escentials, a concept store that the latter developed 14 years ago when he joined Luxasia as a marketing executive, as well as having made inroads into the tough China market – he was based in Shanghai for six years.


“NOT SURE WHAT HE THOUGHT I COULD DO WITH IT.”

– ALWYN ON BEING PAID WITH A GOLD STICKER AS A CHILD.


 

And without Sabrina at the helm of the supporting functions in the group, “we wouldn’t have a business that would be sustainable in the long term”. And of course, the entrepreneurial spirit in this new generation of start-ups reminds him of himself.

PHOTOS: Escentials turned 14 on Aug 26 with a celebration at its Paragon outlet.

  • Alwyn Chong, Wolfgang Baier & Patrick Chong

He stumbled onto the beauty scene 40 years ago, after then-employer British company Inchcape posted him to its fragrances and cosmetics department, instead of the wines and spirits sector he had requested.

“I was apprehensive because I didn’t know if it was the right business for me,” recalls Chong, whose original aspiration was to be a pilot but changed his mind because the pay wasn’t attractive. “I can put my hand over my heart and say that I couldn’t have joined a better industry. Resources were limited and that forced me to be creative when it came to building partnerships.”

To address an infrastructure gap that Inchcape couldn’t plug then, Chong set up Luxasia in 1986 to serve the Singapore, Malaysia, Indonesia and Philippine markets. “When we go to new markets, we always try to hire locals because they know the markets better than us. But how do you attract the right person? Does he have the passion and is he up to challenges? To build and sustain the business, it has always been about attracting and retaining the right talent. People should stay or come to us because we offer a fair deal.” By that, he is referring to a conducive environment for creativity, allowing staff to run the business as their own, while remunerating them at market rate with appropriate recognition and incentives to inspire their best performance.

That includes finding his successor. Privately held Luxasia may be a family business, but Chong makes no bones about finding the best qualified person as the next leader. On Aug 17, the group announced the appointment of ex-SingPost CEO Wolfgang Baier as Luxasia’s group CEO. Bangkok-based Alwyn oversees Luxasia’s China, Thailand and Philippine markets, while former corporate lawyer Sabrina joined four years ago and is group head of corporate development. Chong’s younger daughter is a doctor.

AT FACE VALUE

“Wolfgang has proven leadership capabilities, vast knowledge and skills in areas such as CRM and omni-channel retail experiences, which will strengthen Luxasia’s future offerings. His track record in the logistics sector will also help strengthen Luxasia’s existing partnerships. Scale, speed and execution will be the key to Luxasia‘s success and future,” says Chong. The search for a CEO took over a year.

“It’s vital to separate ownership from management. We need to plan for succession. If the right talent happens to be from the family – great. But the family must be far-sighted and open to finding someone from outside.”

Of his new role, Baier said in a press statement: “At a company like Luxasia, I intend to be more entrepreneurial, hands-on and get involved in the full breadth of this exciting industry. At this point in my career, opportunities for entrepreneurship and ownership motivate me greatly, and I’m very focused on what we want to achieve to transform the business, given the mandate and full support of Patrick and his team.”

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Chong says: “(Alwyn and Sabrina) have indicated they are not ready to be in the driver’s seat, which is okay with me. But I ask myself if I will be working for the next five, 10 years; I would like to do different things and have a different pace of life, even though I love the business. In the meantime, we’re happy to find someone who can help us, not just to lead but to find new skills, new talent, new knowledge to help us get to the next level. Having a deep talent bench is always better for the long term. The point is building an enduring legacy that we can be proud of.”

For Alwyn and Sabrina, it has always been about how they can value add to the group. She says: “Making a personal mark is secondary. The focus has always been about building a sustainable business.” While the search continues, Chong already has plans post-Luxasia. He is toying with the idea of setting up an active living village in Desaru, Malaysia, for those above 50 who can take up short term leases for a holiday home.

(RELATED: Tai Sun’s 3 generations are still involved in the running of affairs.)

Then there’s his organic farm in Plentong, Malaysia. “I like nature very much. These projects must be borne out of passion; they are a labour of love, not for pure profit. These plans have been on the back-burner because, for now, the business comes first.”

3 Questions With The Chongs

WHAT IS YOUR MUST-HAVE BEAUTY ESSENTIAL?

PATRICK Fragrances. I like Hermes for the boardroom.
ALWYN Does it have to be just one? I carry six items daily in my bag – three fragrances, hand moisturiser, day moisturiser and sunscreen.
SABRINA I rarely wear makeup but sunscreen is a must.

WHAT ARE YOUR ONLINE SHOPPING HABITS?

PATRICK None. But I do a lot of shopping on board the plane or at the airport.
ALWYN I buy everything online, including groceries.
SABRINA It’s usually clothes for me, and I do this at night on the Internet when my child is asleep.

WHAT WAS YOUR FIRST BEAUTY PRODUCT?

PATRICK Drakkar.
ALWYN Drakkar Noir, which was the second edition after Drakkar.
SABRINA A miniature Calvin Klein fragrance that my dad gave me. I can’t remember which one it was.

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