Many business are describing the current business climate in Papua New Guinea as ‘quiet’. How is the country’s largest retailer, CPL Group, faring? Business Advantage PNG talks to CEO, Ravi Singh, to find out.
Ravi Singh (RS): 2016 has been one of the tougher years for the business, but because we operate in core sectors of health, food, shelter and clothing, we have been somewhat resilient.
Our supermarket business in Port Moresby has declined on a like-for-like basis by about 15 per cent, but our health business City Pharmacy, has grown by about nine-to-10 per cent over the last year. The hardware business [Hardware Haus] has also grown when compared to last year.
Most of this growth, though, has come from out-stations; primarily the Highlands region, because of a strong coffee season.
BAPNG: Have there been any change to CPL’s business—acquisitions, sales, and so on—over the last 12 months?
RS: The major project has been the opening of Stop N Shop Harbour City and Stop N Shop Koki. Both are world-class stores, and we have ensured that the fitout is done to international standards, and from the feedback and comments that we are getting from the customers they are happy to have an international standard supermarket in Port Moresby.
BAPNG: What kind of things can you see in one of your stores that you wouldn’t be able to see in a normal store in PNG, or even in your competitors’ equivalent?
RS: Fixtures and fittings are what companies like Woolworths are using in Australia. We have ensured that the lighting is adequate and modern. We have also ensured that high standards of food safety and hygiene are maintained at all times.
We’re especially proud of our fruit and veg supply chain and the liaison with hundreds of farmers in the Highlands, as well as farmers in the Central region.
Four days a week, we’re running charter flights out of Mt Hagen and getting fresh produce into Port Moresby, and also five days a week we have farmers coming in and selling their fresh produce at our fresh produce depot in Waigani, plus we send our trucks out to the villages to collect fresh produce.
BAPNG: What are the challenges with supply?
RS: The biggest challenge is the infrastructure required in managing the supply chain, and that infrastructure starts right from the point when the crop is harvested, and the supply chain ends at the plate of the end consumer.
For example, the farmers have to be trained to bring the produce down to a certain temperature level. We have a strong partner in Mt Hagen, who has invested and set up a collection depot, and are ensuring that all the processes are followed to maintain the freshness and the quality of fresh produce.
Storage is dependent on the kind of fresh produce that we are using, and so oranges and capsicum, for example, have to be stored at different temperatures. The depot in Mt Hagen is ensuring that it’s done properly and thus allowing us to have a longer shelf life of the fresh produce.
BAPNG: Are you adding any more stores to the two you opened last year (Harbour City and Koki)?
RS: In second half of 2017, we’re looking at opening our refurbished Waigani Central store.
BAPNG: How’s the duty-free business going at the airport?
RS: It’s doing as expected. Our big prize in this business is access to international brands for our pharmacy and supermarket businesses. So the pharmacy business will have access to all the perfume, cosmetic and accessory brands, and the supermarket business will have access to confectionery and alcohol brands.
BAPNG: You’ve dabbled in fast food outlets and tried the pizza business, which didn’t work. Will you look at another fast food or family restaurant business?
RS: I think at this stage we’re going to work on this idea only in 2018. Fast food is a discretionary spend and we want to get the timing right.
BAPNG: Paradise Cinemas, with two outlets. How’s that travelling?
RS: I think it is very popular with the Port Moresby public. It’s a business that’s dependent on lower rentals, and that’s what drives the business and makes it profitable.
There are two things in it—lower rentals and bums on seats. And, although it is popular in Port Moresby, it’s still not taking off as we would have expected it to, but with the new line-up of upcoming movies, we are hopeful.
BAPNG: How is Hardware Haus faring?
RS: With the provincial governments getting allocations in this year’s national budget, we expect that schools and infrastructure in the provinces will be developed, and that’s where Hardware Haus stands to gain some business.
With more PNG citizens owning their own homes, consumer hardware is one of the sectors that we expect to grow.
BAPNG: A second Jack’s of PNG clothing and fashion store opened in late 2015. How is that business being received?
RS: Again, doing quite well. Jack’s is part of our core strategy and we intend to open more stores in 2018, so we will use 2017 to develop PNG designers.
We have recently launched a design created by a designer in Lae. The designer used traditional motifs and liaised with a Fiji-based manufacturing workshop, sat with the manufacturers and pattern cutters and worked with them, and then finally the garments were manufactured, and late in 2016, we launched them through a fashion show in our stores.
The idea is to develop more PNG designers and have their products selling in Jack’s in 2017, and then go out and expand into the regional markets.