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Report Summary
PARKnSHOP is Hong Kong's biggest food retailer, with a chain of over 186 stores, of which 29 are Superstores.

For most of its 27-year history PARKnSHOP had been the second-largest supermarket chain in Hong Kong, behind the long-time market leader.
Determined to change this position, however, PARKnSHOP set out on a journey of fundamental change in the mid 1990s which has seen it expand
the nature and scope of its business, become a truly quality-driven organization, achieve market leadership and begin to change the very nature of food shopping in Hong Kong.

The external signs of this change have been many: the development of PARKnSHOP Superstores offering a full range of Wet Market food as well as extensive supermarket ranges; the Fresh Check campaign which is bringing world-class standards of food hygiene and safety to Hong Kong for the first time ever; the PriceWatch value campaign which has transformed PARKnSHOP's value perception; and ever-increasing standards of Customer Service.

But behind these visible external signs there has been a parallel change in the PARKnSHOP organization, turning a traditional retailer into a customer-focussed business with clear organizational Goals and Strategies and a quality-driven approach to process management which has achieved outstanding results.

Leadership and Strategic Planning

Back in the mid-1990s PARKnSHOP recognized the need for greater clarity in the business` direction and in the corporate strategies it would employ to get there.

In a series of internal workshops, the senior management team at PARKnSHOP hammered out a new Mission for the business. "To Be The Family's First Choice For Food Shopping" and translated this into a set of clear functional Goals for different parts of the organization.

In tandem with this development, the management team also mapped out a new process for development, implementation and monitoring of its corporate strategies.

Recognizing the need for corporate strategies to be 'owned' by the whole organization, this process involves an annual review of business results by different work groups, and an 'upwards cascade' of learnings and suggested refinements to the existing strategic approach.

These learnings are then debated in a series of Workshops which in turn produce a set of refined strategies (these are called Critical Success Factors) for the year ahead.

Each Critical Success Factor (CSF) is 'owned' by one member of the senior management 'Strategy Group', and this person is responsible for pulling together cross-functional teams to 'cascade' the CSF back down the organization and to establish and implement the plans necessary to execute it effectively.

As the year progresses, CSF Teams report regularly to the Strategy Group, thus ensuring a continuous 2-way dialogue up and down the organization on each Critical Success Factor. Often these reviews will involve cross-functional teams involving relatively junior people, but helping to cement ownership of the CSFs right across the PARKnSHOP organization.

Each year since the mid-1990s this process is repeated. Each year, following organization input, some CSFs are refined, and some dropped, to be replaced by new ones as the business situation changes. But this focus on the key strategic priorities, and the cross-organizational ownership that the process brings, has played a huge role in changing the nature of its organization and in delivering the success PARKnSHOP has achieved.

A diagrammatic summary of this process is :

Customer and Market Focus

Alongside the change to the process of Strategic Planning outlined above, the company has also step-changed its understanding of, and focus on, its customers.

Like many retailers, PARKnSHOP had historically had an imperfect understanding of its customers, their needs and desires as far as food shopping was concerned, and theirviews of PARKnSHOP and its competitors.

This began to change in the mid-1990s as it developed a more sophisticated understanding of the segmented nature of the market in Hong Kong. With this came a+n acknowledgement that it had only a sketchy insight into the different needs of the customer segments it had identified, and with this acknowledgement came a determination to improve in this area.

Working with external research agencies PARKnSHOP has now built up an outstanding understanding of its customers, its competitors, the market-place and its performance within it, and have put in place relatively sophisticated systems to track each of these regularly.

More importantly, it has established new systems of sharing this information internally such that individual managers have the relevant information to enable them to make data-based, customer-focussed decisions on a day-to- day basis.

Typical outputs of this increasingly sophisticated understanding are seen in the development of the company's Superstores, where it is able to effectively segment its offer for international customers (Stanley Plaza), affluent local customers (Festival
Walk) a mix of affluent, budget and business customers (Hopewell Centre) or a typical budget housing estate customer base (Hau Tak Estate).

This customer-focussed, data-driven approach is now pervasive across PARKnSHOP's business and, as Information Technology develops exponentially, provides both one of its biggest opportunities and biggest challenges for the future.

Information and Analysis

Providing up-to-date and relevant information to decision-makers across the business has been at the core of PARKnSHOP's drive for Quality.

Each week, the senior management group (the Strategy Group) review a 'dynamic scorecard' of key business data, which includes updates on consumer attitudes, pricing and promotions, customer service performance, and detailed sales and profit data 'sliced and diced' appropriately inline with the main internal business processes. Cost centre efficiency is also tracked and reported weekly to ensure the senior management team constantly has its 'finger on the pulse of the business'.

Further down the organization, processes have been designed to ensure decision-makers have the latest customer, market-place and cost data available to them in a form relevant to the decisions they make every day. These processes provide data that impacts every element of PARKnSHOP's business - from the product ranges in its stores, to the pricing and promotions it runs, to the service its staff provide, to the layout and design of its stores themselves.

Human Resource Focus

PARKnSHOP's approach to the development of its most valuable resource - its people - has been driven by a desire to involve them both in the development of the company's strategic thinking and in the implementation of the plans that flow from it.

PARKnSHOP's annual process of strategy development is an inclusive one, with involvement from work groups across the organization. The company's strategies for the year ahead are presented by the management team at its Annual Conference, and feedback from the whole organization is actively sought both through quantitative surveys, and via an Employee Forum discussion group.

PARKnSHOP's human resource needs, organizational structure, and corporate training programmes are reviewed each year against its corporate goals and the Critical Success Factors it has developed and, each year, changes are made to ensure PARKnSHOP has the people, the structure and the skill-base it needs to deliver its annual Goals.

Every individual employee has a personal development plan and a set of performance goals for the year ahead, and these are reviewed regularly. PARKnSHOP's objective is to have everyone understanding its corporate strategic direction, seeing and being enthused by their role in delivering it, and feeling able to advance in the organization as far as their abilities and desires allow.

Process Management

PARKnSHOP's approach to process management is both data-based and interactive, and is diagramatically represented as follows:

Keys to effective process management in its organization are:

(i) Ensuring real clarity about end-user needs for each key process in its business
(ii) Putting in place mechanisms to monitor process outputs and to feed this data back regularly to process managers to facilitate their evaluation and refining of the process on an on-going basis

The company talks internally about having a culture of Continuous Improvement and of always being prepared to analyze critically the quality of its work and look for ways to improve it. Constant focus on the customer, and the provision of quality data ensures that these attitudes work in a positive way to keep its business moving forward.

Business Results

Over the last two to three years PARKnSHOP has made huge progress in the market place, establishing clear market leadership for the first time in its history.

Customer satisfaction tracking data also show consistently improving levels of satisfaction in all the key areas of PARKnSHOP's business: quality and choice, value, store environment and customer service.

Most importantly the combination of Superstore expansion and its developments in the area of fresh food, in particular the hygiene and safety enhancements of its Fresh Check campaign have begun to change the way people shop for food in Hong Kong, with levels of customer loyalty to PARKnSHOP, and particularly to its Superstores, rising all the time.

Nowhere has the application of Quality Management processes had a bigger impact on its business than in the area of fresh food.

In 1996 when PARKnSHOP opened its first Superstore, it was a na ve new entrant in the centuries-old market for fresh food in Hong Kong. Today, with 29 Superstores, it is an increasingly important player and, thanks to a Quality approach to this area, it is bringing new standards of hygiene and safety to an area where Hong Kong has traditionally been extremely vulnerable.

In 1998, recognizing the consumer desire for safer fresh food, and the hygiene problems endemic in the traditional fresh food supply chain in Hong Kong, it launched its Fresh Check campaign, a Quality-Driven programme committed to "Providing Hong Kong's consumers with fresh food whose hygiene and safety match the standards of the very best in the world".

Today, its Fresh Check campaign has made huge strides towards achieving this Goal, including:

(i) establishment of a regular programme of hygiene auditing for all its fresh food suppliers;
(ii) establishment of Hong Kong retailing's first-ever dedicated Food Safety Laboratory testing over 1,000 samples a week for micro-biological and toxic chemical safety;
(iii) establishment of a Food Hygiene Academy for its staff - over 3,500 have successfully graduated to date;
(iv) development of Hygiene Improvement Plans for each of its fresh food suppliers, and the investment of its resources in training and equipping its staff to meet these standards;
(v) annual Food Hygiene Awards for its suppliers; and
(vi) development of new, more informative fresh food labelling, including nutritional content information.

Together these results provide compelling justification for the effort and resource it has put into turning PARKnSHOP into a truly Quality-Driven organization.
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