PETALING JAYA: Amway (Malaysia) Holdings Bhd's strategy to open retail outlets is yielding satisfactory results. Thus, the direct-selling group has allocated a RM4.8 million budget, including setting up three new retail outlets and upgrading its IT infrastructure.

Amway Malaysia's executive director Paul Yee said the group started the retail store strategy two years ago. The performance of the existing eight stores was "very satisfying".

Considering the satisfactory sales achieved, he does not rule out the possibility of extending the retail store strategy. The three new outlets will be located in Mentakab, Taiping and Segamat.

According to Yee, the retail stores contributed about 10% of Amway's total sales in 2009, while sales via the Internet accounted for more than 60%.

Given that a significant portion of the group's sales was done over the Internet, Yee said it was essential for Amway Malaysia to upgrade its IT facilities.

Commenting on this year's earnings prospects, Yee said Amway Malaysia expected single-digit growth. "It is too premature to expect double-digit growth this year," he added.

Yee felt that consumers would continue to be cautious in their spending, as they observed global economic conditions carefully.

For the nine months ended Sept 30, 2009, the group achieved higher revenue of RM492 million compared with RM473.6 million previously despite the economic slowdown. Net profit, however, fell to RM56.16 million during the period compared with RM73.2 million a year ago. The group attributed the lower profit to the unfavourable foreign exchange rate.

He added it was vital to observe consumer spending in the weeks leading up to the Chinese New Year festivities, as their behaviour during this period would have important implications throughout the year.

Going forward, Yee said the company plans to add newer offerings to its product line-up via its in-house research and strategic alliances with local small-medium enterprises.

"In 2010, there will be seven new products with five revisions to existing products," he said.

The group's core line of products is divided into five categories, namely nutrition and wellness; skincare and cosmetics; personal care; home care; and home technology and home ware. The skincare and cosmetics line accounts for more than 50% of sales, said Yee.

To accommodate this growth, the group has moved to its new headquarters, which spans 4.5 acres, or three times the size of their previous base.

With a total built-up area of 202,500 sq ft, the building comprises an office block and warehouse block, which features the Digital Picking System (DPS), an advanced picking technology that maximises product delivery efficiency through increasing picking speed and volume while reducing labour costs and picking errors.

Costing more than RM1 million, the DPS is able to cater to more than 6,000 orders a day, up from 2,000 orders in the previous office. According to Amway Malaysia, it is the first direct-selling company in the country to use this technology.