Indonesia's Lippo Group is using its core property business as a launch pad to make e-commerce its next growth engine. The group, which controls flagship Lippo Karawaci -- one of the country's largest real estate developers by market capitalization -- and more than 20 subsidiaries, will also use the might of the family business to expand further.
"While we think big, we have to act in our own local market first," James Riady, the group's chief executive, said in an interview on the sidelines of the forum.
The market Lippo is eyeing is its 120 million "unique" customers, out of some 1 billion visitors to its more than 600 retail outlets that include malls, department stores and supermarkets, as well as its hospitals and housing estates. Out of that figure, only about 50 million are registered customers. Lippo wants to lure the rest to its e-money accounts, used for purchases and financial services.
"To do that, we have to transform our thinking and go into the fourth industrial revolution," said Riady, referring to technological innovations in business, such as the internet of things.
For example, Lippo tracks each visitor to its outlets using programmed cameras to study consumer behavior patterns. The data will be used not only for product offerings but also for online communication with registered customers.
"We must have creative disruption towards ourselves, so that we [can] transform into [a] new area of growth, which is the digital economy," Riady said.
Global Ecommerce Indonesia, a unit of Lippo, launched the e-shopping platform MatahariMall in September 2015, in which Mitsui & Co. holds a stake. It also teamed up with the ride-hailing app Grab to develop mobile payments, which will be used across Lippo's retail outlets.
As more products come online over the next months, Riady is confident Lippo can attract "tens of millions" of new accounts in a year or two, before going to other markets such as Singapore and Hong Kong, where the group has listed companies.
Ultimately, Lippo wants to expand in the countries belonging to the Association of Southeast Asian Nations to take advantage of its more than 600 million potential customers. Cross-border investments will be made through joint ventures with local partners, similar to the health care business Lippo has entered into in Yangon. Its second hospital in Myanmar is due to open in Mandalay in March, and plans are in place for 10 more in the country.
Lippo, which literally means "robust fortune," was founded by the patriarch Mochtar Riady and has grown over the years into banking and real estate. As part of a group restructuring in the mid-2000s, the group sold Bank Lippo, now known as Bank CIMB Niaga, to focus on property development.
James Riady, Mochtar's second son, said being family-run gives the group an edge in making decisions and taking risks collectively with professional managers. To ensure that Lippo remains in the family, members of the family are encouraged to pursue their own talents and learn to be responsible before they are appointed to managerial positions.
"They must go through a process that is not automatic," James Riady said. He said family members, himself included, also have to work "extra hard" to defy the adage that wealth does not last more than three generations.
Riady described his role as a mere steward whose responsibility is to look after wealth for the next generation. "It is not so much about the money you give away, but what you do with the money that you don't give away," he explained.
His family is ranked ninth-richest in Indonesia by Forbes, but Riady appears humbled by years of experience -- which has included a run-in with political campaign laws in the U.S. "I've learned that money and power are both a blessing and a curse," he said.