Hardware company aims to raise recognition for its Gere brand

2013-07-04

Most of us who grew up in urban areas would have heard our parents say “lock the doors” whenever they leave the house or when we were left in the car while they stepped out for a quick errand.

There is a sense of security in knowing that our possessions and loved ones are safe.

Locks and bolts are the most basic security devices used by consumers and it is no surprise that more and more lock and lockset makers are eyeing growth in the market.

While consumers may be more familiar with established brands such as Yale, local lock and hardware manufacturer High Reserve Marketing Sdn Bhd (HRM) is aiming to be among the more recognisable brands in the market.

While competition is keen, HRM founder and executive director B.H. Yeo said there are still potential areas in the market that have not been fully expanded into.

Yeo’s initiation into the world of locks and locksets started at a young age as his father used to operate a hardware store in SS2, Petaling Jaya.

After some years in the retail industry, Yeo and his brother started HRM in 1995 to distribute the padlocks, security products and ornamental door handles of other manufacturers.

“But we saw a lot of potential in the export market. We wanted to go into export, and the only way to secure enough stock to support an export market was to manufacture our own products,” said Yeo.

Thus, Yeo started looking around for suitable partners to venture upstream into the production of locks and locksets as well as other related products.

In 2000, HRM signed a joint-venture agreement to establish a manufacturing facility in China. The products are marketed under its brand, Gere, a tribute to Hollywood actor Richard Gere.

The plant in China has served the group well as HRM started exporting its products to south America soon after.

“We started with south America because the brass padlocks we produced were in demand there. But it is a very saturated market and margins are low, about 3% to 4%,” said Yeo.

HRM’s padlocks received certification from the British Standards Institution in 2006 and from Sirim three years later.

With the Sirim approval, HRM expanded its export market closer to home in the Asean region. According to Yeo, the local market is very competitive given the large number of players in the field. He estimates that GERE holds about 25% share in the local lock and lockset market.

Nonetheless, project director Gan Eng Tien said there are still pockets of growth that show promising potential.

“There are areas like the east coast where we are not well represented at the moment. So by increasing our presence there, we can tap into the opportunities in these areas,” said Gan.

HRM is aggressively promoting its Gere brand in the region. The group has even set aside some RM5mil for advertising and promotional efforts over the next five years.

Last year, HRM engaged Datuk Lee Chong Wei as its brand ambassador to help position Gere as a premium brand.

Yeo noted that Lee’s association with GERE has helped increase its brand awareness among consumers in the region.

The group recorded modest turnover of RM30mil last year with average annual growth of 8% to 10%. Currently, the export segment contributes only 10% to 15% to group revenue.

“Exports make up a very small portion of our group revenue. That is why we want to push our export market. There is so much potential there,” Yeo said.

But raising its presence in Asean is not as easy as signing up a brand ambassador.

Gan said there is a need to differentiate Gere’s products from the multitude of brands available in the market.

“We need to educate consumers and let them know that while every lockset may look the same, they need to know the quality associated with a brand.

“To stand out from the rest, we need to make sure our quality and service is top of the range. And we have the price advantage because our cost is low,” Gan said.

Another segment that HRM hopes to grow is in its projects segment.

HRM has been trying to expand its direct-supply business over the last few years. Gan said there are good prospects in supplying directly to property developers given the booming property market in Malaysia.

HRM started taking its special projects segment seriously after securing a contract to be the sole supplier of locks and locksets to national utility company Tenaga Nasional Bhd in 2008.

Gan is particularly interested in supplying its products to high-end developers.

The group signed a few agreements last year to distribute premium lock brands from the United States and Europe, including Schlage and CISA, as a stepping stone to enhance developers’ perceptions of its own brand.

“Developers are increasingly getting the services of foreign architects to develop their properties. And naturally, they would recommend foreign brands. We did not want to lose out on the opportunity to be in the high-end market,” Gan said.

HRM has also embarked on the development of a new showroom in Glenmarie, Shah Alam, which will be ready in two years, to support its growth in the development projects market.

Prior to securing contracts, Yeo said HRM’s channels of distribution were limited to traditional options which were through locksmiths, hypermarkets and retail outlets such as hardware stores.
Source: The Star 3/7/2013

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