The newsstand king

-A +A

For as long as he can recall, Dang Tai Luk has wanted a business of his own. The fourth of nine siblings, Dang watched his father support a growing family through the iron-works foundry he started in his hometown of Air Tawar, Perak.

“My father, Dang Kai Ee, was a rubber tapper and he built his ironworks business by working very hard and being very thrifty. He managed to support seven of us through further education at the University of Manitoba, Canada,” Dang tells [email protected] in an interview in January at the myNEWS.com outlet in Bangsar Shopping Centre in Kuala Lumpur. A week later, Dang launched a second outlet there — it was the 137th myNEWS.com outlet in the country.

The Canadian connection explains why the holding company for myNEWS.com is named Bison Stores. The bison is the University of Manitoba’s mascot.

“At last count, about 10 of us (Dang family members of different generations) have studied there!” chuckles Dang, who graduated with a degree in computer science in 1985 and earned a master’s in the same subject in 1992, also from the University of Manitoba. “Computer science was a popular subject when I attended university and it is a beautiful discipline. But I could never shake off the need to be in business for myself,” says Dang.

“My first two business ventures are a sad story though,” says Dang with an expression of mock tragedy. On returning to Malaysia, Dang worked full time for a financial institution. But almost immediately, he went into partnership with two friends — distributing a magnetic mosquito net developed in the US. The business failed after a few months, partly due to the partners’ inexperience.

Several years later, Dang tried again, this time as a minority shareholder in a much larger business venture.

“We were manufacturing sound systems for a large US-based firm. Unfortunately, this venture also fell apart due to personal greed and mismanagement by certain parties involved,” says Dang.

While still determined to build a business empire of his own, Dang resolved to start small the next time, and ensure that he would wholly own the business. So when an opportunity to run a newsstand in the newly-opened 1 Utama shopping mall in Selangor arose, he took a deep breath and jumped right in.

“We were given only 24 hours to make a decision as they had several offers on the space. After talking things over with my wife, who has always been amazingly supportive, we took the plunge.”

That first store, opened in 1996, was called Mag Bits (for magazines and titbits) and still exists on the lower ground floor of 1 Utama’s old wing. “We kept the original name because we were asked to by the management. But recently (at the start of this year), we got the go-ahead to turn it into a myNEWS.com outlet,” says Dang.

Mag Bits led to a chain of 139 news outlets which last year generated revenue of over RM100 million.

Those early days were difficult ones for Dang and his wife, Ling Chao.

“I had to continue working full-time to finance the rent of the store as no bank was going to loan money to a newsstand, so Ling Chao had to run the stand. She was game though and did a great job. However, problems with the way the business was run cropped up early on,” says Dang.

From the moment he set foot in the original newsstand outlet, Dang knew things could be done better. “The traditional newsstand has not been updated, ever. It’s messy, cluttered and closed-off. With Mag Bits we tried to make it bright, cheerful and inviting, but I knew more could be done.” Even more disturbing was the “unprofessional” manner in which newspaper and magazine distribution was handled in Malaysia, notes Dang.

“As a small store owner, you had to take whatever was allocated to you. For example, you ordered 100 copies of magazine A and 50 copies of magazine B. If the distributors decided to send you 50 of magazine A and 100 of magazine B, there was absolutely nothing you, as a single stall owner, could do. I began to see why someone prominent within the industry jokingly warned me that it was  ‘mafia’ business,” he says.

Dang launched a second Mag Bits outlet in Sungai Buloh but when a spot for a newsstand opened up in Mid Valley Megamall in 1997, he decided to take a different route. “I felt Mag Bits as a name and concept was limiting. So, with the idea of launching an online as well as brick-and-mortar business, we named the new outlet myNEWS.com. The online business idea has never quite come to fruition, but it’s still on the cards.”

Looks matterThe new name was accompanied by a new outlet concept and look.

“My youngest brother, Tai Wen, had just graduated from the University of Manitoba as an architect and we enlisted his help to design the look and feel of myNEWS.com,” says Dang.

Together with his father Kai Ee and Tai Wen, Dang put together their ideal newsstand. “My father Kai Ee even helped design the magazine racks to ensure the magazines were on display but would not fall over. The key was the shelf angle, which had to lean back but still be at a 90° angle. My father created the prototype in his foundry which we sent for manufacturing,” says Dang.

Dang’s father passed away three years ago at age 76.  The recollection of those days still causes Dang to be emotional. “It stirs up memories,” he admits. “The key lessons of entrepreneurship that we’ve all heard — hard work and perseverance — I learnt from working side-by-side with him. He never stopped working, he persevered and did not give up easily, and he had the vision to break away from a family background of rubber-tapping and strike out on his own.”

While Kai Ee saw to the shelves, Tai Wen conceptualised the clean, open concept that is the hallmark of myNEWS.com outlets today.

“As we were targeting the ‘exit’ trade (people who would stop to make a last minute purchase before leaving), the overall layout of myNEWS.com needed to be open and to invite shoppers to drop by,” says Dang.

Tai Wen still recalls walking into the first newsstand, “It was lit by two fluorescent bulbs and the magazines were displayed with clips and rubber bands. It served its purpose, but having studied overseas, I had some insight into how mass retailers operate. So I created a design that focused on creating an attractive display of the merchandise and an ambiance that would allow customers to roam freely and browse comfortably.”

The distinctive look Tai Wen created for myNEWS.com has not only helped build brand recognition for the newsstand chain, it has helped win them strategic locations.

“Many malls are afraid to rent space out to newsstands. While they want a store of this nature, they feel sure that the newsstand will be unattractive, maintain erratic hours and not last longer than a few months,” explains Dang. One of the selling points of myNEWS.com, he adds, is that it’s open from 10am to 10pm every day of the year.

One shopping mall even insisted that the store should be located under an escalator because “newsstands belonged under the stairs”, says Dang. These days, malls are the ones contacting Dang and asking him to set up myNEWS.com outlets.

“Because we look good, bright and clean, maintain strict working hours and have customer-friendly policies which allow them to ‘browse freely’, both malls and their customers now look out for our outlets,” he says.

Doing it differentlyBy the time Dang launched his 10th outlet in 1999, it was clear to him that things had to be done differently if his business was to continue to grow.

Drawing on his background in computer science, Dang had developed an in-house database that enabled him to track magazine sales and staff performance.

“From the data we gathered, we were able to tell what magazines were selling best, where to place them and how many of each issue to stock. Overall, women’s magazines, both in English and Malay, are our bestsellers.”

The system used by myNEWS.com today which tracks monthly sales of 500,000 magazines from 2,000 titles, is based on Dang’s original system.

“However, as it is not our core business, we decided last year to outsource the system’s maintenance to a specialist IT firm,” he says.

While providing invaluable data, the software system also presented a new set of challenges.

“For the database to work, we relied on the barcodes provided by magazine publishers. Unfortunately, not all of them understand the system and why a barcode isn’t purely decorative. Some would print the barcodes smaller than regulation size, rendering them unreadable. Still others don’t understand that each magazine title needs its own barcode — especially if the prices are different. And some publishers, to this day, refuse to include the issue code which tells us, for example, if the magazine is from the January or February issue,” sighs Dang.

Magazine issue codes are particularly important when it comes to returning unsold issues or when special promotions are in play.

Dang contacted the magazine distributors, but to no avail. So, finally, he went straight to the publishers themselves. For the most part, he has managed to get the full cooperation of the larger magazine houses. “Some we still have to print and label by hand, it’s actually easier in the long run,” says Dang who has invested some RM90,000 in barcode printing and labelling machines for his central distribution centre in Kepong Industry Park in Kuala Lumpur.

Dang says he has had “no time” to look at success stories similar to his. But his story mirrors that of the UK’s largest newsagent, WHSmith, which began with a single newsstand in 1792 and is today a chain of over 1,000 stores. Faced with the challenge of building a large chain of newsagent outlets and no way of tracking sales, WHSmith developed a nine-digit code for uniquely referencing books which was named Standard Book Numbering or SBN. In 1994, that became ISBN (International Standard Book Number), a system that is used by publishers worldwide and on which today’s barcode system is also based.

Contacting publishers directly also had the positive effect of enabling myNEWS.com to obtain the titles and quantities it needed. “Now, when the magazines are delivered to the central distribution centre, we can count copies on the spot and issue receipts without disturbing customers.” In the past, says Dang, if 98 or 97 issues were delivered instead of 100, there was no way of counting the magazines on receipt at the outlets itself. When that happened, there was no way of proving the error later.

BluInc Group Sdn Bhd, which publishes 20 magazine titles including Female, Peak and NuYou, is one of the publishing houses which work directly with myNEWS.com.

“Before myNEWS.com grew into a large and organised chain, our magazines were distributed via a sole distributor who would then distribute issues to several agents. These agents would then deliver to newsstand outlets in the area — efficiency was poor and returns could not be tracked to the exact newsstand outlets. Today, magazines are distributed far more efficiently and returns are tracked precisely. Titles also enjoy greater visibility with point-of-sale tie-ups as myNEWS.com is a great platform for this,” says Mohd Faizal Abdul Hadi, BluInc’s general manager of publishing services.

With more efficient magazine distribution, myNEWS.com was able to expand rapidly once it reached a critical size of 40 outlets in 2004. Since then, more than 100 outlets have been launched at a steady pace and by the end of March, myNEWS.com will have 143 outlets, factoring in the ones that have been closed because of their unprofitable locations.

“There is no fixed number of stores, we’ll expand as much as we can. I am terribly proud of having built a Malaysian brand that’s a household name and intend to keep on going,” says Dang.

Staffing challengeThe single biggest factor holding back myNEWS.com’s growth today is the continuous struggle to hire sufficient manpower to run its outlets. “We have about 500 staff members and it’s been a challenge to ensure that as we grow, we have enough personnel to keep the shops open,” says Dang.

The retail chain offers a career path that allows a store assistant to rise to become an area manager and even higher. While that has helped it to retain some employees for 10 to 15 years, overall staff turnover remains high. “We have a lot of short-stint and part-time workers, but what we really need to grow are more permanent staff, and most qualified Malaysians simply aren’t interested in a career running a newsstand,” says Dang. Less than a fifth of his employees are foreign workers.

Because each employee is seen as a representative of myNEWS.com, Dang started a training centre in Bandar Utama late last year to train his staff.

“It was necessary to streamline our staff training procedures. Mostly, they are instructed on using the sales system and on procedural guidelines. But they also receive some soft-skills training as well,” he says. On average, each training class comprises 20 new members of staff and the number of sessions a year depends on the number of new hires. “The trainer used to work with an established chain of stores so we draw heavily on his experience,” adds Dang.

Each store manager is responsible for managing recruitment for the store and is rewarded for his outlet’s performance via an incentives scheme. “On top of the basic pay, our outlet and area managers benefit from the store’s performance. Also, they have the autonomy to hire without referring to HQ simply because it’s far more efficient and less likely to increase overtime costs,” says Dang.

Moving to a more professional business model has been one of Dang’s best decisions. “We have managed to do away with tight family involvement, with the exception of my brother Tai Wen who is our COO. I honestly didn’t want it to be a Dang family enterprise and my wife has more time with the children now that she is my ‘home minister’.”

A digital futureFifteen years later, Dang has not given up on the idea of launching an e-commerce model for myNEWS.com. But there are no plans in place yet for an online payment system. “Malaysians are still not that comfortable with online payments. For now, our immediate plans within the next quarter will be to launch a website centred around customer service,” says Dang.

Aimed at leveraging customer loyalty, the website would include services like placing reservations for magazines for in-store pickup later, discussion forums, and promotions for registered customers. “We also plan to implement a mobile alerts system which will let customers know when their magazines are in-store and if we are running special offers.”

Dang hopes to expand the online service to include online shopping, services like mobile and internet top-ups and magazine subscriptions. myNEWS.com has the potential to expand to East Malaysia and other markets, and to develop the myNEWScafé concept. But those plans remain on the far horizon.

“We currently have only two outlets in East Malaysia simply because it’s very hard to manage distribution and pricing away from the peninsula. For similar reasons, we have no immediate plans to leave Malaysian shores as for that, we would need great local partners,” says Dang.

myNEWScafé was a concept store launched in early-2000 in 1 Utama. So far, it remains the one and only outlet.

“The idea was to make a difference — to be a place where patrons could eat, drink and read a wide selection of current periodicals. Unfortunately, we lack the resources to expand into the food and beverage business at present so it’s stopped at just one outlet. But as we have begun selling coffee at some of our outlets, particularly those located in office buildings, food and beverage could be in our future,” says Dang with a grin.

For now, he is focused on building a legacy to leave his three children, the youngest of whom is nine.

“I married rather late in life and am conscious that I will have to work hard in order to provide for them. I want to build something of substance to leave to them,” says Dang.

Already, his two oldest children are active participants in the business. During the recent school holidays, his 16-year-old daughter took care of the cash register in a myNEWS.com outlet and his 14-year-old son handled administrative duties.

“My son was a great cashier at age 11. At first, they agreed because I persuaded them, but now they ask for it as a means of earning extra pocket money, and some of their friends tag along. The parents don’t mind because they know my children and they know me. Mostly though, I want them to understand work and to appreciate what it takes to build a business — just like my father taught me,” he says.
 
 
 
This article appeared in [email protected], the monthly management pullout of The Edge Malaysia, Issue 848, Mar 7-13, 2011