Al-Ikhsan – In A League of Their Own
Al-Ikhsan is a local Malaysian company that is still managing to compete with international names.
Al-Ikhsan Sports is the number one multi-brand, multi-category sports retailer in Malaysia, with 128 stores, and that number expected to grow to 140 by the end of this year. The company was founded by an enterprising first-generation entrepreneur when he was just in his early twenties, Mr Ali Hassan bin Mohammed Hassan. The founder saw the local population’s need for sports brands like Nike and Adidas and decided to start with a 150 square foot shop at a small shopping mall in the city of Johor Bahru.
From a singular concept of Al-Ikhsan Sports, we now have four clearly differentiated concepts built around the same core philosophy which will allow us to seamlessly straddle different consumer segments without any conflict or confusion. We focus on curating our brands in line with the consumers’ expectations,” explains Vach Pillutla, CEO of Al-Ikhsan Sports. “To me, business, like war, is won on the basis of a clear strategy and positioning and it is always better to go into that war with multiple weapons in your arsenal.”
He points out, “We have Al-Ikhsan sports Stores, which carry good-to-better products- This helps us serve entry to mid-market sports lovers in tier one and tier two malls and cities. Next, we have the Al-Ikhsan Sports warehouse which is an entry-level retail concept which allows us to even target a catchment of 50,000 residents or tier three malls and cities. Malaysia is a country which loves its football and where EPL is passionately followed. To serve the fans and players of this beautiful sport, we created the Football Republic and took it to six different locations across Malaysia. We then saw a clear opportunity at the affordable athleisure space for which we created a concept called Sneaker street. We believe we can have at least 200 stores across the various retail concepts which we have now successfully rolled out and this will allow us to completely dominate Malaysian Sports retail.”
Another key element of the strategy was to drive a private label and licensed business – Al-Ikhsan signed up the license for Umbro in early 2017 and took this to all the 128 doors in a phased manner. Today Malaysia is amongst Brand Umbro’s fastest-growing markets globally.
2019 was an important year for the company not just because this was their best year financially but because this was also the year that they signed the iconic Liverpool Football Club license.
Vach says, “We signed the license on April 11th 2019 at Anfield at just the right time – LFC’s fortunes took off around the time we signed the license and we made sure that we capitalised on the opportunity by opening 30 SISs in less than a month. The fans in Malaysia were ecstatic with the speed of our execution since previously the fans could only get this merchandise from one location within the whole of Malaysia. We are not going to stop here- we intend to bring licenses of as many EPL clubs as possible.
Fitness for Everyone
Ultimately, however, Al-Ikhsan’s mission is not just about sport, but about fitness.
“Our unique selling point is our core commitment to keeping Malaysia fit and active by making sports affordable for everyone,” Pillutla says. “When my founder Ali Hassan began the journey, brands like Nike, Adidas and puma were seen as extremely premium and unaffordable. However, over the years, we have made these global brands affordable for ordinary people. We ensure that we work with various global brands to bring in Sports at a good-to-better level for over 30 million consumers in Malaysia. By doing so consumers can still buy their favourite Adidas or Nike but at lower prices, than they expect.”
It also involves commissioning the manufacture of Al-Ikhsan’s own product lines that can match the biggest brands for quality without the attached premium that comes with a name.
As Pillutla says, “We have our own private label sports performance and lifestyle brand, AL Sport, under which we design, source and merchandise products that have the same quality as global brands but retail at 50% of their MSRP. Our objective is to use the AL Sports brand to build deeper engagement with sports lovers by collaborating with state football clubs, sports associations, local artistes, well known Malay animation characters and provide them with a platform to showcase their talent. Today AL Sports is clearly the fastest growing local sports brand. My vision with AL Sports is to build this as a multicategory sports performance and lifestyle brand and take this to a regional and even global stage at some point in the future”
Responding to a Pandemic
This attitude is clear to see in the company’s response to the recent Covid-19 pandemic.
“I think we were amongst the first few companies that recognized the rapid spread of COVID -19 virus as a potentially serious threat. We practically pivoted from a purely offline retailer who also did a bit of online sales to a total e-commerce company. We relaunched a completely refurbished website and moved our entire marketing investment to e-commerce. All our social media posts focused on driving customers to our e-commerce website. In order to keep our front-line staff motivated, we started an affiliate program where the staff would get a commission on sales to drive consumers to our e-commerce website. As a result of that, our daily transactions grew nine-fold during the 48 days of Covid-19 lock-down. The management team used technology extensively to stay connected daily, while the operations team connected weekly to discuss the business situation. The company then embarked on a 3 scenario business plan for 2020: pessimistic, realistic and optimistic. The first goal for any company during this difficult period is to ensure that we survive the storm and protect our cash reserves. This means we need to practice what is known as a “zero-based budgeting” – this requires a tremendous amount of discipline and a hawk-like focus on every single line-item within our P&L, balance sheet and cash flow – something that I have learnt from the best in business. I think all businesses need to build in a way where, given a reasonable runway, we should be able to take-off no matter what the weather. I see a lot of business leaders using Covid-19 as a reason, almost an excuse to justify the “inefficiencies and incompetencies” within their respective organizations.
I, on the other hand, take a view that as a business leader I cannot control the outside weather- today its Covid-19, tomorrow it could be something else! Therefore we have tried to use this Covid-19 situation as a pit-stop, a break in our journey to brainstorm and come up with more efficient processes and work on some of our process gaps so that when we started, we were able to get on to a track of recovery as soon as possible”
Vach Pillutla signs off by saying” Al-Ikhsan sports has always been part of Malaysian sports lover’s everyday life but I think because of Covid-19, we have got even closer to our consumers than ever before”