This article first appeared in The Edge Malaysia Weekly on October 10, 2022 - October 16, 2022

AT a time when retailers are facing challenges from inflation, staff shortages and supply chain issues, TFP Retail Sdn Bhd — which operates a chain of premium grocery stores including Village Grocer and Ben’s Independent Grocer (BIG) — is in an ­aggressive expansion mode.

TFP not only has 17 confirmed store openings between now and mid-2024, but it is also in talks with 30 landlords for openings in new locations. These new openings will increase its total store tally to 51. The group, which remains bullish about the grocery segment despite experiencing a contraction in the first, second and third quarters of fiscal 2022 compared with last year, is also evaluating the opening of smaller, street-level stores such as mini-markets.

As it expands, revenue is estimated to increase to between RM1.2 billion and RM1.26 billion in the financial year ending Oct 31, 2022, from RM1.15 billion in FY2021. Revenue in FY2023 is projected to be between RM1.45 billion and RM1.53 billion.

In an interview with The Edge, TFP’s group executive director Ivan Tan says, “We are upbeat on retail business improving next year as consumers return to more normal spending patterns [and] as consumer price increases, as a result of inflation, eases.”

He believes that with freedom of movement following the removal of Covid-19 lockdown restrictions, there will be pent-up demand that will continue into 2023.

Tan observes that while higher inflation may be a risk to overall spending, it could nevertheless benefit grocers due to households prioritising their spending on essential goods and opting to cook more at home. “As long as people need to eat, the grocery business will continue to grow,” he says. He is confident that TFP’s brand of grocery stores — which supply premium quality, fresh and healthy food and products — will thrive because the majority of its customers are families buying for their personal consumption.

Moreover, he opines that challenges such as staff shortages and supply chain issues resulting in product shortages are temporary and likely to be resolved soon.

Today, TFP, which is majority owned by private equity firm Navis Capital Partners, operates a total of 34 stores — Village Gro-cer (23), BIG (5), BSC Fine Foods (1), Leisure Grocer (1), The Food Merchant (1) and Pasaraya OTK (3).

TFP is wholly owned by The Food Purveyor Sdn Bhd. The shareholders of The Food Purveyor are Armani Wealth Sdn Bhd (23.25%), Foodshop Capstone Sdn Bhd (74.91%), Benjamin Yong Kwet Yue (0.62%), Geoffrey King (0.42%) and Khor Geik Mei (0.16%). Two other shareholders, Charles Tseng @ Charles Tseng Chia Chun and David Lee Tseng, hold 0.38% and 0.26% respectively. Navis owns the stake in TFP via Foodshop Capstone.

Five new stores are scheduled to be opened between October and December this year, including The Food Merchant grocery store at Pavilion Embassy on Oct 15 and also in Datum Jelatek on Nov 26. Meanwhile, The Food Merchant will open its doors at WCity OUG on Dec 1, and at Raintree Rain Era on Dec 15, while a Village Grocer will commence operations on Dec 27 at Megahrise Mall, Petaling Jaya. These new openings will increase TFP’s store count to 39 by year end.

It is worth noting that last May, The Edge reported that developer and mall operator Tan Sri Desmond Lim Siew Choon had partnered with The Food Purveyor on a 40-60 basis, via Global Food Merchant Holdings Sdn Bhd, to launch The Food Merchant supermarket brand. Two of the planned openings this year at Pavilion Embassy and WCity OUG are retail outfits linked to Lim. Tan is also the managing director of Global Food Merchant.

On the opening of new stores, Tan says the focus over the next three years will be in the Klang Valley, which is where all the upcoming openings will take place.

Elaborating on why TFP continues to expand even as some retail segments such as mini-markets are consolidating, he says, “This is simply because there is still a huge demand for our type of grocery concept.” He explains that given its 25 years of experience in curating grocery concepts and understanding its customers and their needs and expectations, TPF is able to specially curate grocery concepts for any neighbourhood, meet their needs and expectations, and thus ensure the success of its stores.

In fact, TFP is looking at expanding into the mini-market segment. “We are studying the mini-store format now and will roll them out once we have perfected the format and model,” he says, adding that its concept will likely offer imported products and be tweaked to fit the demographics of the location. A typical TFP supermarket has an average retail area of about 25,000 sq ft whereas TFP’s mini-market will occupy around three shoplots, or about 3,500 to 4,500 sq ft.

Moving forward, TFP is looking at expansion into second-tier cities such as  Ipoh, Alor Setar, Melaka, Seremban and Kuantan.

“We have more than 30 landlords who have contacted us offering their sites for us to open new stores,” he says. TFP is in the process of evaluating the suitability of the sites for its premium grocery concept.

In the financial year ended Oct 31, 2021, TFP posted a net profit of RM65.237 million on the back of RM1.15 billion in revenue. (See table) Revenue growth in FY2022 and FY2023 is expected to come from both same store growth and new store openings.

When asked about margins, Tan says, “Margin-wise, all our stores give us similarly good margins. Having said that, some stores in premium neighbourhoods have higher demand for imported goods, which gives us stronger sales with higher margins.”

As at Oct 31, 2021, the group had total liabilities of RM309.49 million, of which RM150.69 million were current. Total assets, meanwhile, amounted to RM375.52 million, while accumulated profits totalled RM51.98 million.

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