759 Store: The story of Hong Kong's unlikely snack-food empire

Coils Lam Wai Chun (林偉駿), chairman and MD of 759 Store (759阿信屋) ran an electrical cable and coil factory for 30 years—hence his unusual self-chosen English name. Today, he presides over one of Hong Kong's fastest-growing independent retail empires, including 198 locations of his 759 Store (which specializes in Japanese snack foods), 12 frozen-food stores, seven cosmetics stores (759 Kawaiiland), six mini supermarkets and one homewares store.

Lam, who plans to open two baby-products stores this summer, is well aware of his unlikely success. "I consider myself odd, doing a factory business for so long and now venturing into the retail business."

At his office in Hong Kong's Kwung Tong factory district, 56-year-old Lam, looking knackered and in need of caffeine, candidly reviewed his success, which has little to do with advertising but everything to do with carving out a niche and building business through word-of-mouth.

Asked about advertising strategy, Lam gave a one-word reply: "Nothing!"

The brand puts product information and new-store announcements on its Facebook page, and offers an iPhone app to help people find branches and learn about discounts.

“We just provide information," he said. "We are not playing any marketing gimmicks like other brands do.” It's not that he disapproves of advertising; he believes it helps brands get their messages more quickly into customer minds.

“This is not arguable, but it requires money," he said. "And that amount of money is equal to time. If you shorten the time, you have to pay for it. For us, instead of shortening the time to get my brand name across, we sell our products cheaper to customers, to speed up the viral effect for our brand among customers.”

The company turns word-of-mouth into loyalty with a discount card. Between 1 and 2 million people have the cards, which offer a 10 per cent discount on purchases above HK$150 (US$19).

Lam said his customers mainly range from teenagers to people in their 40s, and the store is particularly popular among female office workers during lunch hours, he said.

It may appear that Lam brilliantly spotted a desire for Japanese convenience foods and jumped to exploit it, but at least as he tells the story, he fell into the niche out of necessity.

Flash back to the summer of 2010, and the store, which Lam founded after his factory business took a hit in the financial crisis, was called 759 Snacks House (759零食屋). Lam had worked hard to get stock from local wholesalers, but suddenly one of the largest stopped supplying him, "without any explanation, even if I called their sales people directly”, he claimed.

Lam noted that the big guys in Hong Kong's retail business (including Wellcome, ParknShop, Watsons, Mannings and 711) all fall under two large companies, A.S. Watson Group and Dairy Farm Holdings. Rather than fight such mighty competitors, Lam went to Tokyo and bought stock directly.

“Initially we went to the supermarkets in Japan and bought the food products and put them on a 40-foot container outside the supermarket and shipped it back to Hong Kong," he said. "Buying direct from supermarkets in Japan was even cheaper than buying from the wholesalers in Hong Kong."

It took time for Lam to make contacts with Japan wholesalers. "We were totally new to this retail industry, so we have little knowledge and connection," he said.

Eventually Lam found Japanese corporations willing to do business. Then, noticing that those wholesalers offered a wider range of goods beyond snacks, he changed his brand-name to reflect a broader product range.

"We rebranded ourselves to cater more to people in a local neighbourhood, like in Japan," he said. "And we thought of 阿信的故事 [Osin, a Japanese TV drama popular in Hong Kong in the 1980s], so we changed the name to 759阿信屋 [759 Store]. (Note for non-Chinese speakers: The names of the TV show and the new store name share the same two initial characters. -Ed.)

Later Lam again ran up against resistance in Hong Kong, he claimed, when Coca-Cola refused to take his orders unless he raised prices for the company's products, which he was selling for less than nearby convenience stores. "The industry is very small, so they may not like newcomers like us, especially they think we are a listed company, we must be trying to scramble for concessions," he said. "I am not stealing their market share, I am just trying to get a job."

Lam explained the choice to stop stocking Coke as something of a philosophical one. "After I got my stocks from Japan, if my purchasing cost is cheaper, I will also lower the retail price," he said. He did not want to raise his selling price for Coke and thereby give customers the impression that he would increase prices if business was good.

Today, Lam claimed, he does not want 759 to compete with Wellcome and ParknShop, nor does he compete with convenience stores. "Their selling point is literally convenient, around-the-corner location," he said. "You buy a drink when you are thirsty, or buy cigarettes. They deal with the quick buy.”

Despite its success, don't expect to see the 759 chain expanding beyond Hong Kong either, added Lam, who continues to run his factory business as well as the 759 chain. He gave a decisive "no" to the idea of expansion, even if only to Macau or China. "I am an outsider in the retail sector, with my current business scale, and still alive," he said. "I am fortunate already, to tell you the truth.”

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Why '759'?

The '759' in 759 Store derives from the company's randomly assigned number on Hong Kong stock exchange. A no-nonsense sort of person, Lam claims the decision to use that number as the brand name was "economical", by which he seems to mean he did not need to waste time or money devising a better name.

The store's logo, a little hut on a snowy field, has more thought behind it.

More than 10 years ago, Lam's cable and coil factory had Nokia as a client. "I went to Nokia’s headquarters in Helsinki several times, and stayed at one of those small holiday hotels which are like small huts," Lam said. "I asked my design colleague to draw our logo based on them, which depicts the loneliness of a small hut in a wild winter forest."

Explaining that such huts are places for people to take refuge from the snow and cold while awaiting rescue, Lam drew a parallel to the financial crisis and its impact on his factory. In 2009, he had to pare his staff of 10,000 down to 4,000. “It was so bad, the crisis was very lethal," he said. "Would opening this retail snack store be like a ‘life rescue hut’ for me?"