HK's Joyce Unveils Hybrid Retail Plan

HONG KONG (04/28/2000) - Joyce Boutique Holdings, a Hong Kong publicly listed fashion company, is gearing up to launch its online store this summer.

With HK$236 million (US$30.3 million) in venture capital from Strategic Capital Group (SCG), the fashion group intends to create a brand-new online operation and integrate it in to its existing retail business.

"It's easier to implement radical change in your business [when you're] starting from scratch," said Philip Moody, management consulting services director at PriceWaterhouseCoopers (PWC), Joyce's technology partner in the online retail project.

From a technologist's point of view, Moody said that setting up afresh has its advantages, because existing back-end applications were not created to take advantage of the online environment. Consequently, there were problems finding applications that would integrate with Joyce's legacy systems, he added.

SCG officials said that the Web-based venture would leverage the Joyce brand name, which has already been extended to include Joyce Beauty, Joyce Café and Joyce Flowers.

"Especially with the current market volatility, we are very happy that we've put our money behind a business that has real net assets," said Eric Solberg, SCG's managing director. The established brand name, he said, will give the online store a platform to build upon.

"(The Joyce) scenario will have what we term as hybrid channel transactions, where customers can order online at work, and pick up from (a) store on their way home," explained PWC's Moody.

Pure Internet retailers lack this extra service, which customers could use to their advantage, he said.

"Many companies are transitioning to a clicks-and-bricks model (of e-commerce).

Even Amazon is putting in warehouses and physical stores," Moody added.

According to PWC officials, both Joyce's online and bricks-and-mortar businesses will be operating in real time, with the capability for constant inventory synchronization, minimizing the risks associated with running out of stock.

Using technology to offer consistent customer service and real-time tracking are also goals that Joyce plans to meet, PWC's Moody said.

SCG predicted that the new venture would be profitable by the end of 2000.

Fashion, according to Solberg, "is the second-biggest category of any type of product by revenue worldwide," with growth of more than 200 percent from 1998 to 1999.

Solberg plans to extend Joyce's Internet plans to include Joyce Beauty, the cosmetics division of the group.

"Cosmetics (we believe), is something that will work very well over the Internet," Solberg said. "It's light, it's small, the price point is low, but compared to (its) size, it's fairly expensive. But that means delivery and fulfillment of the percentage of total cost will be reasonable."

Joyce's Internet plans were developed after surveys and focus group discussions carried out in Hong Kong and Taiwan. It also researched established "clicks-and-bricks" models before coming up with Joyce's hybrid strategy, said Solberg.

"There are a number of companies that we are looking to around the world, especially in the United States," Solberg said. "But in terms of a specialty, high-end retailer like Joyce, there isn't anything in the West specifically that we've copied."

Solberg pointed out that online fashion outlet store, although hugely popular, has a different business model, with its focus turned toward inventory and discounts. The Web site, meanwhile, adopts a department-store mold.

"We are trying to learn lessons from all of these people," Solberg said. "But Joyce is unique in that the model is specifically tailored for Asia."

Although the group has its eye on Hong Kong and Taiwan, where there are physical stores, it also plans to extend its reach to the Mainland, Japan and Korea, according to SCG officials.

Joyce plans to officially launch its site by July 2000, with multilingual capabilities available by the end of September. According to SCG, will be fully functional in time for Christmas, the busiest retail period of the year.

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