How a tile shop stays open with nobody in it

A tile shop stays open with nobody in it because it needs very few customers a week, and each one arrives with a whole house to cover. That's my reading, not anyone's accounts. I couldn't find a Malaysian tile shop that publishes its books, so I've pieced this together from a Singapore cousin, one manager's interview and an old trade case.

Ten orders can be a month

The cousin is Hafary Holdings, listed in Singapore, which made most of its sales there in 2024. Its gross margin that year was about 40%, meaning that's what stayed once the goods were paid for.¹

Now say a small shop in Malaysia sells someone RM5,000 of tile for a terrace house. Keep that margin and every other number is my guess, including the bills.¹

One quiet month, my rough guess

That's two or three orders a week. Hafary sells a lot of premium European tile, so I'd shave its margin for a neighbourhood shop.¹ Even at thirty per cent you still only need about fourteen orders, and the rest of the week can look exactly as empty as it does.

So who does come in?

I expected the answer to be contractors. If homeowners turn up once a decade, surely the trade carries the place.

The best evidence I can find says otherwise, for one chain at least. A manager at Creative Lab, then at 40 outlets, told Daily Straits that over 80% of its customers were homeowners, with contractors and designers making up the rest.²

The same interview estimates that about 70% of all tile demand comes from housing projects sold to developers, and the rest mostly from renovations.² It puts the rest at 30% to 40%, so the sums don't quite close, but I don't think the two claims fight.

Most tile, I'd guess, leaves in truckloads and never sees a showroom. The shop is fighting over the smaller pile, and that pile is homeowners.

The same split in a filing

Hafary keeps its books on the same line. Its general side, showrooms and small orders, brought in about S$137 million in 2024. Its project side, developers and builders, brought in about S$79 million.¹

The general side also includes renovation firms buying small lots, and the filing doesn't separate them from the person off the street. So I can't tell you how much a real walk-in is worth, and the other reports I read don't give it either.

The room is the expensive bit

The project side made about 20 cents on each dollar it sold, by my sum, and the general side about 14.¹ The general side also carries more than four times the depreciation, along with showrooms full of what the report calls "mock ups of living spaces".¹

A developer doesn't need a pretend bathroom. A nervous homeowner does.

What actually keeps me up about this business

Stock, more than footfall. Hafary ended 2024 holding S$116 million of inventory against S$157 million of cost of sales, which is about nine months of goods by my sum.¹ Part of that is expansion in Malaysia, but the same sum for 2023 also comes to about nine months.¹

Its auditors picked out slow-moving stock as a key audit matter.¹ I'd guess a colour that stops selling is the real cost of this trade, far more than a slow Tuesday.

Suppliers and banks do carry some of the weight. The report puts its trade payables and bills at about 160 days of cost of sales.¹ I'd count that as the second reason a quiet shop survives.

Where the tile comes from

In 2020 the local makers asked the government to curb imports. On their numbers, imports had overtaken local production by 2018, and two of their members had stopped making tiles here.³

MITI's report found no continuous rise in imports and couldn't reconcile the local industry's figures, and the probe ended in January 2021.⁴

Tile imports, million square metres

The sellers were on the other side of that case. Importers and a distributors' association took part, and among the views put to MITI was that curbs would raise construction costs and property prices.³ The same list raises imports by the local industry itself.

I don't have a view on who deserved to win. For a shop, the lesson I'd take is that its shelf depends on decisions made in a ministry and a foreign factory, and it doesn't get a vote in either.

What I'd do with this

If I owned one, I'd stop looking at the door. I'd count how many quotes turned into orders, and I'd know the age of every box in the back.

If you're the customer, the tile is the easy half. The person laying it matters more, which is a separate worry.