Business Times - 04 Aug 2009
After 50 years in the fashion retailing business and having undergone a few economic downturns, FJ Benjamin has learnt what it takes to survive, reports ARTHUR SIM
CHANGES in the business environment are inevitable. The ability to adapt to these changes quickly, however, will determine if a business has staying power.
And FJ Benjamin (FJB) is a Singapore company that has been around a while.
'After 50 years, we've learnt to take business cycles in our stride. We put in place policies and practices that will keep us nimble so that we can adjust swiftly to changes in our external environment. This principle of staying fleet-footed and fit for all cycles applies to all functions across our business,' says Nash Benjamin, CEO of FJB.
In some ways, this is a lesson that FJB has had to learn through experience gleaned since the very early days when it was just a small start-up to the lean years after the fashion retailer was listed on the Singapore stock exchange.
One early experience with downturns in business cycles occurred not in Singapore but in Los Angeles, where FJB ventured in the 1980s.
By this time, its Lanvin boutique in Singapore had been open for about seven years and proved to be successful. When FJB was invited to open a Lanvin store in Beverly Hills, it jumped at the opportunity to become a global player.
But the opening of the store was badly timed with the US entering a recession. Mr Benjamin remembers the US retail market as being 'all about mark-downs, cost-cutting and discounting'. After about three years, having 'lost a lot of money', FJB cut its losses and closed the store.
In Singapore, business was also affected by the recession of the mid-1980s. Sensing the severity of the slowdown, FJB founder Frank Benjamin quickly cut back on stocks and told buyers to cut back their purchases by about 20-25 per cent. Some lines had to be suspended when manufacturers refused to lower import prices and in other instances, there was no option but to lower prices in order to stay competitive.
While this took a toll on company profits, FJB survived - but only to face an even more severe recession.
For Mr Benjamin, the 1997 Asian financial crisis was marked by 'simultaneous occurrence of situations that hit us like the perfect storm'.
Having decided to expand regionally, he remembers how the devaluation of regional currencies caused FJB debts to soar overnight, 'driving up our already high gearing while sales were falling as consumers across Asia cut back on spending'.
'I remember that during that period, all of us worked like we'd never worked before. We spent most of our time managing banks and keeping lines of credit open - it was a battle for survival. We were looking for the light at the end of a very long tunnel and it was indeed a harrowing experience that I don't wish upon any entrepreneur,' he adds.
During its bleakest moments, Mr Benjamin thought FJB may even fold. 'We thought we were looking into the abyss,' he recalls. Much of his time was spent travelling to many territories to close operations while at the same time managing the business and bankers.
Learning experience
But the 1997 Asian financial crisis was a learning experience too. 'We learnt lessons they don't teach you at Harvard Business School,' says Mr Benjamin.
'The crisis taught us never to put our business in a position where sudden, unexpected external events can threaten our future. We learnt to be conservative and to pay more attention to risk management. We learnt to be prudent in our capital management and to keep our gearing low, not to rely inordinately on short-term credit or to be overly invested in assets that we do not need for our core business.'
As a result of the crisis, FJB sold its headquarters at Orange Grove Road and started to build up its business in low-cost countries and scale back on high cost markets such as Australia, Taiwan and Hong Kong.
In some ways, the 1997 Asia financial crisis has prepared FJB for the current economic downturn. 'Having gone into this recession with low gearing has made a big difference, in that we can focus on managing the business rather than managing our bankers. This naturally gives us an edge and our battle now is really one of market share and not survival,' adds Mr Benjamin.
Expansion is still fundamental to the growth of any business.
'In our retail business, scale has many advantages, among which is the greater purchasing power we enjoy from our principals and the improved leverage we have over landlords. We believe the recession will throw up opportunities that may help to create synergies for our existing portfolio and ultimately value for our shareholders,' reveals Mr Benjamin.
But asked if a business has to be big to survive today, Mr Benjamin says: 'No, a business does not have to be big to survive the recession. It has to be well managed.'
'We need to understand our consumers' needs and be able to deliver what they are looking for, This means having strong leadership and key management who have their fingers on the pulse,' he explains.
How FJB will adapt to a change of management will also ultimately have to be tested if the company is to be around for another 50 years.
And the task is likely to fall on the shoulders of the next generation of Benjamins.
Already, Douglas Benjamin, the son of the FJB founder, has charted new frontiers for growth with the creation of Raoul, a new fashion brand.
With Douglas Benjamin as its creative director, FJB hopes to develop the Raoul brand and intellectual property rights and take it global with the company currently in the process of opening a showroom in New York.
Of course, with these expansion plans is the implicit understanding that the retail industry is itself changing and the distribution rights of any brand - including those currently held by FJB such as Guess, Gap and Celine - belong to no one but the principals (a lesson learnt when FJB lost its lucrative Gucci licence in the 1990s).
Change, however, is inevitable and as Mr Benjamin knows, sometimes capricious too.
'It is not easy to create (Raoul) from scratch but if your concept is well thought out and you continue building without departing from your core values, with a bit of luck you can be successful,' he says.
After 50 years in the fashion retailing business and having undergone a few economic downturns, FJ Benjamin has learnt what it takes to survive, reports ARTHUR SIM
CHANGES in the business environment are inevitable. The ability to adapt to these changes quickly, however, will determine if a business has staying power.
And FJ Benjamin (FJB) is a Singapore company that has been around a while.
'After 50 years, we've learnt to take business cycles in our stride. We put in place policies and practices that will keep us nimble so that we can adjust swiftly to changes in our external environment. This principle of staying fleet-footed and fit for all cycles applies to all functions across our business,' says Nash Benjamin, CEO of FJB.
In some ways, this is a lesson that FJB has had to learn through experience gleaned since the very early days when it was just a small start-up to the lean years after the fashion retailer was listed on the Singapore stock exchange.
One early experience with downturns in business cycles occurred not in Singapore but in Los Angeles, where FJB ventured in the 1980s.
By this time, its Lanvin boutique in Singapore had been open for about seven years and proved to be successful. When FJB was invited to open a Lanvin store in Beverly Hills, it jumped at the opportunity to become a global player.
But the opening of the store was badly timed with the US entering a recession. Mr Benjamin remembers the US retail market as being 'all about mark-downs, cost-cutting and discounting'. After about three years, having 'lost a lot of money', FJB cut its losses and closed the store.
In Singapore, business was also affected by the recession of the mid-1980s. Sensing the severity of the slowdown, FJB founder Frank Benjamin quickly cut back on stocks and told buyers to cut back their purchases by about 20-25 per cent. Some lines had to be suspended when manufacturers refused to lower import prices and in other instances, there was no option but to lower prices in order to stay competitive.
While this took a toll on company profits, FJB survived - but only to face an even more severe recession.
For Mr Benjamin, the 1997 Asian financial crisis was marked by 'simultaneous occurrence of situations that hit us like the perfect storm'.
Having decided to expand regionally, he remembers how the devaluation of regional currencies caused FJB debts to soar overnight, 'driving up our already high gearing while sales were falling as consumers across Asia cut back on spending'.
'I remember that during that period, all of us worked like we'd never worked before. We spent most of our time managing banks and keeping lines of credit open - it was a battle for survival. We were looking for the light at the end of a very long tunnel and it was indeed a harrowing experience that I don't wish upon any entrepreneur,' he adds.
During its bleakest moments, Mr Benjamin thought FJB may even fold. 'We thought we were looking into the abyss,' he recalls. Much of his time was spent travelling to many territories to close operations while at the same time managing the business and bankers.
Learning experience
But the 1997 Asian financial crisis was a learning experience too. 'We learnt lessons they don't teach you at Harvard Business School,' says Mr Benjamin.
'The crisis taught us never to put our business in a position where sudden, unexpected external events can threaten our future. We learnt to be conservative and to pay more attention to risk management. We learnt to be prudent in our capital management and to keep our gearing low, not to rely inordinately on short-term credit or to be overly invested in assets that we do not need for our core business.'
As a result of the crisis, FJB sold its headquarters at Orange Grove Road and started to build up its business in low-cost countries and scale back on high cost markets such as Australia, Taiwan and Hong Kong.
In some ways, the 1997 Asia financial crisis has prepared FJB for the current economic downturn. 'Having gone into this recession with low gearing has made a big difference, in that we can focus on managing the business rather than managing our bankers. This naturally gives us an edge and our battle now is really one of market share and not survival,' adds Mr Benjamin.
Expansion is still fundamental to the growth of any business.
'In our retail business, scale has many advantages, among which is the greater purchasing power we enjoy from our principals and the improved leverage we have over landlords. We believe the recession will throw up opportunities that may help to create synergies for our existing portfolio and ultimately value for our shareholders,' reveals Mr Benjamin.
But asked if a business has to be big to survive today, Mr Benjamin says: 'No, a business does not have to be big to survive the recession. It has to be well managed.'
'We need to understand our consumers' needs and be able to deliver what they are looking for, This means having strong leadership and key management who have their fingers on the pulse,' he explains.
How FJB will adapt to a change of management will also ultimately have to be tested if the company is to be around for another 50 years.
And the task is likely to fall on the shoulders of the next generation of Benjamins.
Already, Douglas Benjamin, the son of the FJB founder, has charted new frontiers for growth with the creation of Raoul, a new fashion brand.
With Douglas Benjamin as its creative director, FJB hopes to develop the Raoul brand and intellectual property rights and take it global with the company currently in the process of opening a showroom in New York.
Of course, with these expansion plans is the implicit understanding that the retail industry is itself changing and the distribution rights of any brand - including those currently held by FJB such as Guess, Gap and Celine - belong to no one but the principals (a lesson learnt when FJB lost its lucrative Gucci licence in the 1990s).
Change, however, is inevitable and as Mr Benjamin knows, sometimes capricious too.
'It is not easy to create (Raoul) from scratch but if your concept is well thought out and you continue building without departing from your core values, with a bit of luck you can be successful,' he says.
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