The Parenthood (Fundraising on Crowdo)

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The Parenthood

The Parenthood is Malaysia’s first one-stop parenting concept based on a London Street-themed indoor family park that offers a comprehensive range of products and services catering to both the needs of parents and children alike. Visit their official website at http://theparenthood.com.my/ and their Facebook Page at https://www.facebook.com/The-Parenthood-983915141672761/
Funding Update: According to Leroy’s Facebook post, The Parenthood had raised RM2.5 million from a group of investors and transferring to Crowdo. Adding the RM0.21 million which recorded on Crowdo campaign page, The Parenthood had raised a total of RM2.71 million as at 22nd March 2016, which still require RM0.29 million to reach RM3 million target.

 

Pitch: The Parenthood Equity Crowdfunding Campaign Video

 

The beauty of the business idea

 

#1

According to government statistics, there were 511,865 live births in 2014 alone. Let’s multiply it by 5 years, that gives us 2 million babies and children who need to be fed, educated and to play. Every day, there’s an average of 1,400 babies born. That’s an evergreen business which The Parenthood is tapping into.

 

#2

Parents want their kids to be happy, want to have fun with them, socialize with them. Hence, a children’s playground is a no-brainer idea to attract parents to getting into The Parenthood outlets.

 

#3

The parents will be there as long as the kids want to stay there. The longer they stay, the more money they will spend, more time to do shopping. That’s great, more revenue for The Parenthood!

 

#4

The Parenthood will always acquire a megastore retail space and subpartition it to 20-50 mini stores within the mega stores. The Parenthood welcomes the merchants’ consignment of their product in there, just like the way Parkson and Aeon are doing it. Some merchants would rent the space to promote their newly-launched products as well.

 

#5

There’s one more great reason why parents should bring their kids to The Parenthood. Education! Parents want their kids to have talents that they can show others, want their kids to know better stuff. The Parenthood would organize weekly weekend classes like drawing, DIY, creation, language classes, cooking, role playing, and science etc. The usual talent classes outside require at least 4-8 weeks fees commitment, while The Parenthood could do the walk-in style where parents choose to go when they are free over the weekend. The more activities happening at the outlet, the more money will be spent there. So, more classes, more visits, more chances to get parents to buy kids’ products! It’s like gym classes—the instructor arranges many types of classes and any patron can choose which to join. Aha! The Parenthood could charge a membership fee on the classes and I would call it “Genius Pass”: pay a whole year’s membership fee of RM299 to join unlimited classes in The Parenthood. The walk-in price would be RM19. The idea is to encourage parents to bring their kids to the outlet at least twelve times a year, educating their kids while shopping at the same time. In future direction, The Parenthood would have 10% of the group revenue contribution from the school sector.

 

About Leroy

Ever wonder whether an identity as parents makes a good entrepreneur and CEO of The Parenthood? You would need more than that! The experience of ventures is what is required to make a good CEO of The Parenthood. Prior to The Parenthood venture, Leroy had been running baby-product-related businesses such as baby product sales fairs and baby product retail shops. 2009 was the first attempt; Leroy and Lilian set up a baby product retail shop in Jaya One and relocated to Kuchai Entrepreneur Park in 2010 while setting up their online shop – happybaby.com.my which also focuses on baby products. They once set up a booth at the infamous Parenthood Expo 2009 & 2010 in Mid Valley. I assume this was the first Ah-Ha! moment for Leroy to get into baby product sales fairs. Back then, happybaby.com.my had organised a couple of workshops and classes for parents on several parenthood-related topics. In 2011, the shop was relocated to a 4,000 sqft retail space at Pearl Point Shopping Mall. You can see their venture is getting larger and larger every year! In 2013, Leroy’s second attempt was the Malaysian International Parenthood Fair, the sales fair which aggregates multiple brands in one place for a week and moves from mall to mall. In 2014, Leroy’s third attempt was upgrading their retail shop size to a 15,000 sqft megastore – Malaysian International Parenthood Superstore at The School, Jaya One. The one-stop shop was just like The Parenthood now, but back then it was just pure retail. In 2015, the Parenthood Superstore was expanded to The Shore Mall, Melaka and Klang Parade which gives them three outlets running at the same time! In 2014, Leroy even considered expanding the idea into Malaysian International Parenthood Education (MIPE). All of us shall see The Parenthood idea didn’t happen overnight. Leroy had taken a long journey to accumulate his experiences.

 

Concerns

 

#1: Online purchase trends

There’s 2.5 million monthly Google searches made about baby products by Malaysia internet users. It gives a strong indication that parents are purchasing baby products online. No doubt more and more parents are making purchases online nowadays given its convenience of staying in the comfort of their own home while comparing product prices between sites. In the industry, there are a lot of mini-baby-product shops and also top e-malls like Lazada, 11street, Mudah, Lelong, Tesco online, Aeon’s Shoppu, Anakku’s online shop who also owns retails shops, and Chinese-language media group’s Logon.my who have a great exposure to their massive readership. According to research by eCommerceMILO, the average monthly web visits of the top 10 kids and baby stores in Malaysia is only 10,800. This is a small amount, but the report didn’t manage to include the statistics from the e-malls like Lazada, Tesco Online and 11street.

The Parenthood not only need to secure great merchants but also great discounts to drive in-store sales in the long marathon run against online shops.

 

#2: Price War

Just like Tesco, Aeon and Giant, The Parenthood would need to engage in a similar discount war to encourage parents to visit the stores to shop. The key to price war is to scale up tremendously with multiple outlets throughout the cities. It gives them the purchasing power on lower cost of purchase. If you could visit The Parenthood outlet now, most of the products can be bought at other places at a significantly cheaper price.

 

#3: Too many ideas at once

To give parents a reason to visit the The Parenthood, education could be one, leisure could be one, and play could be another one too. The Parenthood is focusing on too many sectors to begin with: Education, Play, Shopping, Relaxation, Leisure, Dining and probably more. There is too much hiring involved and too many resources needed to do one thing well at a time. You could imagine the initial setup capital is incredibly huge on making the one roof concept.

The core idea is to buy baby and kids’ goods at the store. The question is whether The Parenthood is able to give a compelling reason for parents to visit the outlet and spend money in the store. Clearly, the one hub idea is to generate a reason to visit. Another explanation to why The Parenthood focuses on many sectors at once is – Activities! Activities will drive foot traffic to the outlets.

 

#4: Outlet location

Prime location is an important factor for a huge amount of visitors and drives in-store revenue. The outlet also  needs to have huge store space, which means high overhead costs including staff salaries, utilities and shop rental.

But this is not a bad concern given that Leroy had managed a couple of megastores prior to The Parenthood.

 

There’s some strategy that has yet to be implemented:

A membership card to collect email and mailing address for maintaining customer relationships, sending a newsletter to invite the customer back into the store. This is an extremely important part of the team effort on maintaining every single customer relationship. Yes, they do have the newsletter form on the website. But did they offer the membership signup over the counter when the customer made their purchases?

 

Assumptions for successful business model

  • Prime location with huge floor space, location with high velocity of visitorship
  • High inventory turnover to maintain healthy promotion activity
  • A proven management team to manage multiple outlets

 

Financials

  • The initial capital investment of RM3 million was invested by Leroy, not taking any debts and other shareholders yet prior to this equity crowdfunding campaign on Crowdo.
  • Since the outlet launched in December, The Parenthood has a RM100k turnover each month which is impressive!
  • Retail is not their major revenue contributor in the future. The parenthood will have five evenly distributed revenue contributors: 35% from Playzone, 31% from Retail, 13% from Dining, 11% from Service and 10% from School.

 

Conclusion

Given Leroy’s journey since 2008 in turning a small retail shop lot into 4,000 sqft, 15,000 sqft and three mega outlets, and right now a 16,000 sqft megastore which houses 33 retail merchants, I would bet that Leroy is one of the few who could make The Parenthood a success story in the retail industry. When investing in the company, the founder is the key to everything and in this case Leroy has it. Regarding execution, The Parenthood is doing RM100k turnover a month as a start and in the middle of launching second outlet. On a higher level, baby business is an evergreen business and would survive an economic downturn too. Let’s invest in The Parenthood!

 

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