60-year-old retailer shakes up business model - Ammar’s makes $90m market share investment
Department store Ammar’s is forking out $90 million to give its three Corporate Area locations a facelift, while putting in a website as it plays catch-up to online shopping, which is fast becoming the main source for sales for a growing list of goods and services around the world.
Ammar’s sells mainly clothes, accessories and household goods at its locations in downtown Kingston, Village Mall in Half-Way Tree and Sovereign Centre in Liguanea.
Traditional brick and mortar businesses have, for some time now, been facing stiff competition from online merchants, with large ones like Amazon operating globally, aided by courier companies and e-payment outfits that have mushroomed in recent years. To keep up with the competition and reach customers, who have largely stayed away from stores during the coronavirus pandemic, more businesses have been making a big push to establish an online presence and add deliveries to their suit of services.
Retailers of clothes and home goods have felt the brunt of the migration online that has crept in over the years, and more so from the dramatic fall-off in foot traffic since the pandemic. Several top names in the business globally have filed for bankruptcy with some closing down. Bankruptcy filings this year have included Lucky Brand Jeans and Tailored Brands, the owners of Men’s Wearhouse and upscale retailer Jos. A. Bank. Department store JC Penney, which got a last-ditch reprieve from its mall-owning landlords, have kept its doors open despite bankruptcy, with others like home good retailer Pier 1 liquidating its operations.
Locally, Ammar’s is among the traditional storefront retailers who are investing in holding on to market share. The company, which has been operating in Jamaica for almost 60 years, is reporting that it slowly started changing its business model to suit customer demand back in December, when it rolled out what it termed its personal shopper system. That allows customers to make orders through messaging service WhatsApp with assistance from its in-store sales team, with the purchases collected using the kerbside pickup delivery method made popular by the pandemic.
“We found that it works pretty well, for especially men. They don’t want to go into the store and people outside of Kingston also utilise the option a lot,” Ammar’s’ director Michael Ammar Jr told the Financial Gleaner.
A bigger move into the e-commerce space for the retailer will come next month when Ammar’s will launch its website to target customers who prefer to shop from the comfort of their home. The business has also started making home deliveries with courier service Tara as delivery partner.
“We launched the website for ‘Cyber Monday’ to test it. We did get sales and I see the potential. We are now certain that everything functions properly; the payment system works as well as the delivery option, so next year we will be officially launching it,” according to Ammar.
Ammar’s was among many local businesses that saw sales plummet with the implementation of COVID-19 restrictions earlier this year. During that time, sales fell some 70 per cent at Ammar’s’ brick and mortar stores.
Despite the hit, Ammar said the company saw the downtime as an opportunity to implement changes that would fast-track the company’s growth post-pandemic.
The retailer is reporting that it has also upped promotions on both social and print media to boost year-end sales.
“We haven’t held back this year. We have renovated our stores completely and we are putting in some new programmes and it is paying off. Black Friday this year was the best one we’ve ever had. December so far has been good and the last five days have been excellent,” Ammar told the Financial Gleaner.
With Jamaica now, hopefully, past the worst of the lockdowns, some people are venturing into stores, which are also seeing an uptick for the Christmas season.
“People are shopping. We might not see the crowds that we are accustomed to, but those who are there are buying, and they are buying heavily. If back to school wasn’t cancelled, then we would have ended the year level with last year,” Ammar reported.
He says that while sales for the festive season are still on trend with last year’s performance, despite social-distancing protocols, there is a notable change in customers’ purchasing patterns in keeping with people spending more time at home.
Ammar explains: “Anybody that’s in the homeware, furniture or hardware business are doing phenomenally well. Sales from our houseware segment are way up. Our nightwear and underwear department is doing great because more people are at home. Anything in casual clothing, like dress pants and that kind of stuff, you can count what is sold on one hand, but polo shirt, T-shirts, people are buying a lot of those because even if they are going out, it will be at a family member’s home so there no need to dress up,” Ammar said.
The company has made adjustments to merchandise quantities to meet the new demands.