SAUL: IMPORTED YANKEE INGENUITY

DAVID MERREFIELD

KUALA LUMPUR, Malaysia -- How did Lawson Saul, an American supermarket executive, find his way to Malaysia a few years ago, and what has he been up to here?

What he has done is help move a unit of Lion Group, a multinational operating and holding company here, from a point in 1987 when it had no food retailing presence at all into the dominant position in Malaysian retailing. Lion Group operates most of its retailing through its Parkson Corp. unit. Parkson now operates 31 full-line supermarkets and 22 convenience stores in the nation, all of which generally follow design and merchandising methods introduced by Saul. The retailing sector of Lion Group's activities contribute sales volume of about $250 million (U.S.), according to an estimate derived from the 1992 annual report, the most recent public document available. That estimate includes all the retailing forms under the Parkson aegis. That's how it is now, but it was really in the mid-1980s when it all started simply enough for Saul: "An acquaintance in Columbia, S.C., an attorney who did international work, suggested I write William Cheng because he heard he wanted to enter food retailing," he said.

Tan Sri William Cheng is Lion Group's chairman.

Saul had ample background and reason to write Cheng. During his food-retailing career in the United States, he filled executive slots at A&P, Allied Supermarkets, Food Lion and Bi-Lo, the last a unit of the Dutch-American retailer Ahold.

Saul took early retirement from Bi-Lo, Mauldin, S.C., in 1985, at which time he was president and chief executive officer of the company, with a view toward working outside the United States: "I retired early because I decided my primary interest was in doing consulting work in foreign countries."

He had a little luck in that direction doing consulting stints in Kuwait, Guatemala and Panama. But by 1987, he was back the United States thinking about writing to Lion Group's William Cheng. "I did write to William Cheng and he had me come over to Malaysia for 10 days. After that time I made a report to the executive committee and the directors of the Lion Group with my ideas on how the company could get into food retailing."

One thing led to another: "William then said, 'Would you stay with us? Would you go back to your hotel and write out a contract?' So I did, initially agreeing to stay for six months. With various renewals, that same contract is in effect today." From 1987 on, Saul has been the de facto managing director of Parkson's fledgling food-retailing effort. He was the sole American associated with the food-retailing start-up.

Saul's period of greatest activity ended early this year, although he remains under contract to Parkson on a nonexclusive basis and is currently in Asia. He also maintains a domicile in Cleveland, S.C.

In the years Saul worked actively with Parkson, the operation went from no retailing at all to become one of the country's leading food and nonfood retailers. The first Parkson store opened two month's after Saul's arrival here, such speed being possible because a second-use space was available.

Parkson's powerhouse retailing vehicle is its Parkson Grand combination department store and supermarket operation, of which it has six. Parkson Grand stores are in multilevel spaces of up to 170,000 square feet, of which 25,000 square feet is typically devoted to a supermarket operation. The supermarket is always on the lowest level, either at street level or below. The practice of combining a department store and a supermarket in the same building follows the Japanese model of retailing. And for good reason: Most of the buildings that now house Parkson stores were bought from Japanese retailers who opened stores in the early 1980s, then pulled out of Malaysia when a recession hit a couple of years later.

Joining the Parkson Grand stores -- the format mainly used in urban areas -- is the smaller Parkson Ria format, of which there are 25 in smaller population centers.

The Ria stores are about half the size of the Parkson Grand stores, but also follow the model of offering a general merchandise and supermarket in a single multilevel building. Supermarkets in the Ria stores are of 14,000 square feet or less, depending on space.

Additionally, Parkson operates 22 convenience stores under the Hop-In banner.

Rounding out Parkson and Lion Group retailing endeavors are a Parkson Duty-Free Shop, Ozly Shoe stores and Microsystem OA Centres, where computers and office equipment are sold. As for the supermarket floors in the Parkson stores, they were designed by Saul to follow the American model quite closely.

"I pretty much followed what I had been accustomed to in the U.S.," Saul said. "I always put produce first in the shopping pattern so it could become the real highlight of the store. Produce represents 20% of store sales." Stores have a full complement of other departments, too, including dry grocery, bakery, meat and the others associated with American supermarkets. Virtually all products scan at the front end.

"The Parkson stores were successful from the very first because we brought a modern store, a clean store, variety, new techniques, new marketing. "We also became dominant in Chinese products as a way to establish a speciality. The supermarkets in Malaysia earlier were Japanese-operated, and the Japanese didn't have the cultural background for that," he said.

More than 30% of Malaysia's population is of Chinese heritage.

Parkson operations are still growing, both here and internationally. "Five more stores will be added in Malaysia in the next 18 months, all under the Parkson Grand banner," said Saul. "At that point, it looks like Parkson will saturate the country with a store in every major area and that may be as far as Parkson can go in Malaysia."

The other big project at Parkson involves opening stores in China. The first store opened in February in a 100,000-square-foot space.

The store, called Parkson, is largely centered on general merchandise, with a food operation consisting of dry grocery and a small produce presentation. No meat or other perishable products are offered. Four additional sites in China have been selected. All the Parksons in China are to be joint ventures with different Chinese companies. How big will the China opening get? "I don't know what the ultimate plans for store numbers in China might be," Saul said. "But obviously no one would go into China with the idea of opening just five stores. I would think Parkson's plans must involve hundreds of stores in China, but for now I think the idea is to get these five opened before any further plans are announced." The notion of opening hundreds of stores in China might seem like a daunting task for Lion Group, but the company is a multinational conglomerate that is used to big and far-flung ventures.

Lion Group's sales volume is about $1.2 billion (U.S.), and the company employs some 17,700 workers, according to its annual report. Lion Group is an investment partner in some 150 diverse companies worldwide. A brief sampling of its major investments worldwide includes Total

Lubricants, France; Avon Tyres, United Kingdom; Hitachi, Japan; Chupa Chips, Spain; Hugo Fritschi, Switzerland, and Champion Spark Plugs, United States.

The core of Lion Group's direct operations is Amalgamated Steel Mills, which William Cheng founded in the late 1950s at age 22. Cheng had no steel-making experience, save for a family business in Singapore that made woks, Saul said. Other direct Lion Group operations include computer, rubber and food manufacturing together with financial services, plantation operations, real estate and retailing.