City & Country: Gamuda Land ties up with TSI on wholesale malls

THE wholesale mall concept is not particularly new to the Malaysian market for there is Nilai 3 Wholesale Centre in Nilai and Kenanga Wholesale City in Kuala Lumpur. Plus, there is a multitude of them online.

Despite this, Gamuda Land Sdn Bhd is confident that building a wholesale mall is a good strategy. Its managing director Chow Chee Wah believes there is a lot of potential for such malls and that a developer does not need a mature township to sustain one.

“You don’t just depend on the maturity of a township to build a wholesale mall,” he says. “All you need is good connectivity and accessibility. We believe we have a lot of strategic landbank that can benefit from the addition of a wholesale centre.”

Gamuda Land’s maiden wholesale venture is the second phase of GM Klang in Bandar Botanic. The development is in partnership with TSI Holdings Sdn Bhd, a diversified company that has businesses in marketing and engineering and various property-related segments, among others.

Touted as the largest wholesale centre in Southeast Asia, GM Klang was first developed and managed by TSI Holdings. It comprises five phases with 1.35 million sq ft of retail space and 3,000 shops.

TSI’s managing director Datuk Lim Seng Kok accepted the strategic partnership with Gamuda Land after the success of its GM Kuala Lumpur in Lorong Haji Taib in Kuala Lumpur. This mall houses 280 wholesale lots and five levels of apartments in a nine-storey tower. It was completed in 2003 and is currently fully tenanted.

“We have successfully tenanted the whole complex and the shop operators are doing well. That was when we felt constrained because we couldn’t find additional land to expand,” says Lim.

He was convinced the site in Bandar Botanic would be perfect for a one-stop, comprehensive wholesale city in Southeast Asia and believes the partnership between TSI and Gamuda Land will be beneficial to both parties.

“We joined forces with Gamuda to enhance our landbank and further strengthen GM Klang.”

However, the tie-up did not come easy because Gamuda was initially sceptical about the proposal and scrutinised TSI’s management of GM Klang rigorously.

“People think that wholesale malls are targeted at the low to middle-income groups, but we stand by the fact that a wholesale complex doesn’t have to look cheap or cater to the low end of the market. It can actually be positioned for the middle to high-income demographic,” Lim remarks.

He adds that it is with this strategy in mind that Gamuda is considering a wholesale mall with 122,000 sq ft of net lettable area in its Robertson project, which will also comprise two blocks of serviced apartments and one commercial tower.

GM Robertson, which is expected to be completed in 2018, will be located in the transport hub near Plaza Rakyat with connections to Warisan Tower, which is close to the Bukit Bintang area. Both Lim and Chow are confident a lot of the people taking public transport will visit the wholesale mall.

According to Chow, GM Robertson will cater for the mid and mid-high market and focus on fashion with Gamuda and TSI putting together an appropriate tenant mix.

“South Korea and Japan have a lot of wholesale centres with strong emphasis on fashion. Our strategy is to bring in wholesale fashion items so that people don’t have to fly to South Korea or Japan, but come here instead.”

He says an unlimited variety of products can be sold under one roof. “It all depends on how many products you want. This is why Bandar Botanic has been earmarked as a regional wholesale city because it has adequate landbank to realise that vision.”

Thanks to the partnership, says Lim, GM Klang can be improved to sell more products, increasing its variety and enhancing its appeal to various segments of society.

“We don’t have to worry about the scarcity of development land. This is a once-in-a-lifetime opportunity to join forces and capture a growing market.”

Chow adds that the partnership is based on TSI’s extensive wholesaler network and Gamuda’s strong branding and financial support. “Our financial backing and TSI’s network will make people more confident of GM Klang.”

Management is key

Management of the mall is also important to make it a success, says Chow. “For the wholesale city to be successful, you will have to ensure its sustainability and also that all the operators in the mall have a wholesale business. If you are not careful, the wholesale mall can turn into a normal retail mall and then it won’t be a one-stop centre for wholesalers to source for their goods.”

TSI will do the monitoring and as the wholesale mall’s manager, it will also assist its tenants, says Lim. “The lots are not very big, so it will be affordable for wholesalers to participate and invest. We are also training people who want to be wholesalers, who can also be brought in.”

At the same time, Lim is consciously creating a lower threshold or entry level for young entrepreneurs to start their own wholesale trade. “We give them a hand when they need us to create opportunities for international contact. So, we organise trips to China, Vietnam and other countries to create business matching and become the first contact point between them and their potential customers.

“We also control the pricing of their products. We have people to go around and monitor the quotations our tenants are giving their customers and we educate them on how to do it properly.”

Having a sizeable net lettable area means that Gamuda and TSI can bring a lot of wholesalers, not just local, but also foreign, into their building. “We are targeting people from Pakistan, China and Japan. We want them to set up their business here, so that people don’t have to fly all the way to China or Pakistan to get what they want. Instead, they can just fly to KL,” says Lim.

Chow says they are getting a lot of interest from investors who run wholesale centres in Japan and other countries. “They believe this is the right place to set up a branch. They are even looking to take up three floors, so they can bring their tenants here.”

Adds Lim, “We are trying to inform people that GM Klang is an attractive location to promote their products to the rest of the world and to market Malaysian products to the rest of the country.”

He is encouraging foreign tenants to occupy Level Four of GM Klang as it has been earmarked a zone for international retailers.

As Gamuda plans to incorporate wholesale centres into its existing developments, Chow hints that there may be a wholesale mall in its Vietnam projects in the future. “Bandar Botanic and Robertson are just the start. We will explore other locations where our landbank will enable us to open wholesale malls to cater for different sub markets. We are even open to exploring the possibility in Vietnam.”

Lim concludes that they are both positive about the wholesale city concept. “We could have carried on with a conservative approach, but then we would have foregone a lot of opportunities.”

This article first appeared in The Edge Malaysia Weekly, on June 02 - June 09, 2014.