Giving Good Deals

Andrew TK Lim, Managing Director of KL SOGO

Andrew TK Lim, Managing Director of KL SOGO is a firm believer in walking the talk when giving incentives and rewarding performers, whether staff or suppliers. This management practice has helped him to retain high achievers and grow a highly competitive retail business.

Popular departmental store KL SOGO will be celebrating its 19th anniversary in January 2013. The single store was in a difficult transition stage in 2002 but has since grown by leaps and bounds to estimated sales revenue of RM600 million in FY2012/2013. What is surprising is that the CEO who turned the company around is a lawyer who had no prior experience in the retailing industry. Andrew TK Lim, Managing Director of SOGO (K.L.) Department Store Sdn. Bhd., reveals that he was not fearful of the challenges because Vistage Malaysia was there to help him make sound business decisions.

On hindsight, Andrew TK Lim says that the turnaround involved readjustment of merchandise and pricing. To understand this, he gives the background behind KL SOGO. It was inspired by former Prime Minister Tun Dr. Mahathir Mohamad who envisioned an iconic departmental store in Kuala Lumpur (like the ones he saw in Japan). The Japanese joint venture partners were pleased to transfer their know-how to Malaysia and they designed KL SOGO from scratch.

When KL SOGO opened in January 1994, it was a five-star, up-market retailer. The RM480m building was constructed with marble floors and luxurious fittings, and sold expensive high brand imported merchandise. Its Japanese partners brought in the finest not only in goods but also Japanese managers and retailing systems. KLites were in awe of the beautiful store and the luxurious goods on sale. But, “There was a big mismatch with the customer base,” explains Andrew TK Lim. The Malaysian customers’ needs and buying power for that location, at that time, did not fit into the high-end niche. Eventually, lethargic sales and a property bubble burst in Japan all took its toll. Andrew TK Lim came into the picture because he was the lawyer who drew up agreements for the Japanese partners and was from the beginning invited to sit on the Board of Directors. He organized a management buyout in 2002 to take over the business.

Andrew TK Lim notes that the takeover ‘was not that frightening’ because he had many friends in KL SOGO, namely the senior managers who had been running the show. At first, he thought he could pick up the tricks of the trade by managing the store himself but it was an uphill task. Thanks to the advice and help from his Vistage Chair, he decided to engage a Chief Operating Officer to do the job. “This is one of my best business decisions arising from the one-to-one meeting with my Vistage Chair,” he acknowledges.

To grow and sustain business, Andrew TK Lim says that people management is the key. He practices what he calls ‘incentive-based management’. This means clearly spelling out the ‘carrots’ and really giving it out when people perform. “You must believe in and really actualise the incentive system”, he adds.

Personally, he reveals that this was initially an inner struggle and “mental agony” because of his frugal mindset (attributed to the Penangite in him). It took time to reorientate his thinking. Now, high achievers at KL SOGO are amply rewarded not only in pay but also in incentives and overseas study trips. They go to famous shopping destinations such as Paris, London and New York to see the sights as well as inspect major department stores there like Harrods, Saks, Nordstrom and Bloomingdales.

Besides rewards, Andrew TK Lim develops human capital using the Vistage process. A Vistage member since 2003, Andrew TK Lim still continues his one-to-one session with his Chair and has extended the mentoring system to his subordinates. He has signed up four managers at KL SOGO as members of Vistage Malaysia, and was presented the Vistage Star Supporter Award on October 30, 2012.

Andrew TK Lim also rewards his hardworking suppliers aka business partners. KL SOGO’s long list of suppliers sell mainly Malaysian brand names, from shoes, clothes, bags to household items and food. He emphasizes that the store adopts a ‘strict retail discipline’ where rewards are tied to sales performance. Once linked to KL SOGO’s computerized system of sales, grading and assessment, suppliers can gauge their performance on a daily basis. The facts and figures speak for themselves.

“Give them a good deal, if they do well, give them prominence (in retail space). It is a proper monitoring system of allocation. Some will grumble but they still respect the system” he points out. Andrew TK Lim reinforces his appreciation to suppliers every year at a grand dinner. He applauds their achievements and implores them to reach higher peaks at an annual Business Partners Appreciation Banquet.

At KL SOGO, the well “incentivised” staff and suppliers get the store up and running with good bargains for shoppers all year round. Looking at the high turnover, it is without doubt that there is now a good match between customer profiles and the merchandise mix. Will Andrew TK Lim be duplicating the single store’s success? “We go where our customers are, like fish in water. Fish cannot survive without water,” is all this smart CEO divulges.