Crisis Communication and Management Action Plan for

New Yaohan - Part I

Group 3
April, Wen Yahui, SB923243
Eve, Jinjutha Liangwatthanakol, SC022222
Hu Yi, SC225083
Joey, XIE JIAHUI, SB921828
Colin, Mai ChengMan, SB920013
Part I Risk/Vulnerability Audit

Section I Industry/Organization/Service Review

Our client organization, New Yaohan, is the largest and most famous department store
in Macau, with a high profile and a large number of customers all over the world. Although
there hasn't been any major crisis in NewYaohan, in this era of crisis, it is also of great
importance for New Yaohan to conduct proactive crisis management to anticipate potential
crises and work to prevent them or prepare for them. Initially, it is necessary to get a general
understanding of the retail industry and the organization itself.

1. A discussion of the retail industry

(1) Retail industry

Retailing is an industry that focuses on the provision of desired goods and

accompanying services to end consumers, including individuals and social groups.1 In China,
according to Classification of Retail Formats issued and implemented by AQSIQ and the
National Standards Committee in 2004, the retail industry is divided into 17 types of
business. These include store-based retail formats — grocery stores, convenience stores,
discount stores, supermarkets, hypermarkets, warehouse membership stores, department
stores, professional stores, specialty stores, home building materials stores, shopping centers,
factory outlets centers, and store-free retail formats — television shopping, mail order,
online stores, vending machine, telephone shopping and 17 other retail formats.

The strict zero-COVID policy benefited the Chinese economy in the first two years of
the pandemic. While the rest of the world was caught in the post-COVID recession, in 2021,
China’s retail revenue recorded its most robust growth since 2014. Data from the
National Bureau of Statistics shows China’s total retail sales of consumer goods (which
include the retail sales of physical goods and catering ！services) jumped 12.5% year-on-
year to 44.08 trillion yuan in 2021.2 However, as the world enters the third year of the
COVID-19 pandemic, it has become bitter-sweet for many Chinese business owners,
especially those who engaged in the retail industry. April 2022 saw a full lockdown in

1 “零售业.” 首页. Accessed December 11, 2022. https://wiki.mbalib.com/wiki/%E9%9B%B6%E5%94%AE

%E4%B8%9A.

2 “China’s Department Stores Report 2021-2022.” fbicgroup, April 2022. https://www.fbicgroup.com/internal-

site/wp-content/uploads/documents/DEPT2022_eng.pdf.
Shanghai, resulting in China’s consumer goods retail sales revenue dropping by more than 11
percent month-over-month, the most significant decline in two years. With the
unemployment rate and inflation both seeing an upward trend that month, consumer
confidence in China experienced a drastic plunge, hitting the lowest point since the 90s.3
Under the circumstances, China's retail industry has shown three clear development
trends: Digitalization, localization and consumption upgrade.
In 2021, China’s online retail of physical goods grew significantly. E-commerce has
become increasingly crucial in China’s retail industry, with new trends like live commerce
and quick commerce prevailing amid the pandemic. An increasing number of offline retailers
started to develop an omnichannel retail strategy. A survey in June 2022 revealed that nearly
50 percent of Chinese consumers increased their online shopping usage in the last year.
On the other hand, patriotic consumption was on the rise. Domestic brands and
products with Chinese characteristics became the new favorite of many Chinese consumers.
According to a report released by AliResearch – the research arm of Alibaba Group, the
market share of domestic brands in online channels surpassed 70% in 2020. Furthermore,
according to a survey conducted by Aurora Mobile in September 2021, 70% of post-90s
consumers and nearly 80% of post-00s consumers mainly buy domestic brands in their daily
lives.
Data also shows that demand for consumption upgrade has continued to rise. In 2021,
the retail sales of cultural and office appliances, cosmetics, gold, silver and jewellery, and
communication appliances increased significantly higher than that of the total retail sales of goods.
Moreover, according to a report released by Bain & Company, the Chinese mainland’s share
of the global personal luxury goods market nearly doubled from 11% in 2019 to 20% in
2020, and the share grew further to 21% in 2021. China is on track to become the world’s
largest personal luxury goods market by 2025. As the overall retail market has been
recovering, the consumption structure will continue to optimize and upgrade.

(2) Department Store

A department store is one of the more traditional and long-established types of

retailing that offers a wide range of consumer goods in different areas of the store, each area
("department") specializing in a product category. Departments often include clothing,
cosmetics, DIY, furniture, gardening, hardware, home appliances, houseware, paint, sporting

3 Ma, Yihan. “Topic: Retail Industry in China.” Statista. Accessed December 11, 2022.
https://www.statista.com/topics/1839/retail-in-china/#topicOverview.
goods, toiletries, and toys. In certain cases, additional product categories are also featured,
such as those for food, book, jewelry, electronics, stationery, photography equipment, baby
products, and products for pets. Customers generally check out near the front of the store in
discount department stores, while high-end traditional department stores include sales
counters within each department. Some stores are one of many within a larger retail chain,
while others are independent retailers. Since the 1980s, they have come under heavy pressure
from discounters, and have come under even heavier pressure from e-commerce sites since
the 2000s.4 In addition, the COVID-19 pandemic of 2019 put department store retailers in a
tough spot.

Nevertheless, the department store retail industry in China showed robust

growth in 2021. Among the 41 A-share listed companies that mainly operate department
stores, 34 companies achieved year-on-year growth in operating income throughout the first
three quarters of 2021, while 32 companies achieved year-on-year growth in net profit.
Among companies that have released their forecasts for annual results, most expect solid
revenue growth and substantial increases in net profit. This solid growth in 2021 can be
attributed to the following factors: First, quality consumption increases, with sales of
cosmetics and jewelry performing well. High-end department stores have benefited from
the rise in domestic luxury consumption, as Chinese consumers have to put overseas
shopping on hold and turned to domestic shopping due to travel restrictions. Secondly, the
economic recovery and strong demand in the first three quarters of 2021 has led to
improvement in the operations of department stores, allowing them to restore profitability.
Third, digitization process has further accelerated. Over the past two years, the department
store industry has entered the next phase of digitization, developing new digitalization
strategies such as omni-channel construction and operation, middle- and back-end platform
construction, etc. Department store operators are also constantly introducing new
technologies that fit their needs5.

(3) Retail Industry in Macau

4 “Department Store.” Wikipedia. Wikimedia Foundation, December 5, 2022.

https://en.wikipedia.org/wiki/Department_store.

5 “China’s Department Stores Report 2021-2022.” fbicgroup, April 2022. https://www.fbicgroup.com/internal-

site/wp-content/uploads/documents/DEPT2022_eng.pdf.
 Although Macau is a small market, it is the world's leading gaming city, with 40
million visitors every year, which especially attracts some top international brands to set up
stores in Macau. However, under the impact of the epidemic, the global shutdown, staff
mobility freeze, many large brand retailers shrink or even close down bankruptcy. Some
small and medium-sized retail brands in Macau have also announced to reduce their scale or
quietly exit the market. The impact of the epidemic is a global one, affecting many
department store and retail brands operating in Macau.6

However, with the pandemic easing, Gross Surplus of Retail Trade in Macau jumped
by 698.4% year-on-year in 2021, back to the level in 2019, According to the Wholesale and
retail survey 2021 issued by Government of Macao Special Administrative Region - Statistics
and Census Service(DSEC). Receipts of Retail Trade swelled by 53.5% year-on-year, with
those from Retail Sale of Watches, Clocks & Jewellery and Leather Articles both recording
an upsurge of over 100%. Receipts from Retail Sale of Goods in Department Stores
expanded by 64.6% while receipts of Supermarkets dipped by 1.9% 7.

According to the Macau Government Tourist Office, as of November 2022, there are
currently 10 major shopping malls in Macau, namely One Central Macau, Wynn Esplanade,
Shoppes at Venetian,Shoppes at Four Seasons, Shoppes at Londoner, The Boulevard at City

6 “疫後百貨零售業經營策略建議: 澳門日報: 今日時事: Cyberctm 澳門 no.1 人氣社區.” 今日時事 | CyberC

TM 澳門 No.1 人氣社區, n.d. https://www.cyberctm.com/zh_TW/news/detail/2605773#.Y3-c8exBzdo.

7 統計暨普查局文件暨資料傳播中心. “批發及零售業調查.” dsec.gov, 2021. https://www.dsec.gov.mo/ge

tAttachment/67d300c4-5575-4977-ab5f-711e7283bb54/C_ICGR_PUB_2021_Y.aspx.
of Dreams, The Boulevard at Studio City, The Promenade Shops at Galaxy Macau™, New
Yaohan Department Store, and Macau Fisherman's Wharf.8 Overall, it is still mainly
dependent on the development of the gaming industry, with high-end luxury businesses
attached to casino hotels. The consumer base is mainly composed of foreign tourists.

(4) Typical Crisis in retail Industry

● Natural disasters (e. g. typhoons)

● Accidents (e. g. fires; customer falls, bruises, etc).
For example, In 2021, a fire broke out in Hong Kong's Causeway Bay World Trade
Center, causing hundreds of customers to be trapped and some to suffer discomfort
or injury.
● Consumer events (e. g. prices of goods, shady goods, sale of counterfeit goods, etc.)
● Social events (e. g. the occurrence of violence)
For example, In 2018, there was an unexpected situation in a Beijing Joy City where
a man was armed with a weapon and caused the death of a female customer.
● Public Health Events (e. g. The outbreak of COVID-19)
This is one that we are all familiar with and it can seriously affect consumer
shopping intentions, behavior and economic conditions in the retail industry.

2. A discussion of the client organization - New Yaohan(Macau)

(1) History

New Yaohan was originally the Macau branch of Japan Yaohan, located at Avenida
da Amizade, which opened on December 22, 1992 and became the only department store in
Macau. After the head office of Japan Yaohan filed for bankruptcy in Japan on September 18,
1997, the Macau branch was taken over by a subsidiary company of Sociedade de Turismo e
Diversões de Macau (STDM), and renamed as "New Yaohan" to continue its business. A new
buying team was formed to introduce multi-brand luxury fashion for men and women.9

In 2008, in line with SJM's Oceanus (later developed into the Oceanus Casino and the
new Hui Li Hotel) project, The New Yaohan store was relocated to the present location in

8 “Macao Government Tourism Office.” Shopping Malls - Macao Government Tourism Office. Accessed
December 11, 2022. https://www.macaotourism.gov.mo/en/shopping/shopping-malls.
9 “New Yaohan.” Wikipedia. Wikimedia Foundation, December 1, 2022.
https://en.wikipedia.org/wiki/New_Yaohan.
Macau CBD. On March 22, 2010, New Yaohan Department Store invested 30 million patacas
for the outlet store known as New Yaohan Outlet on the third floor of the Outer Harbour
Ferry Terminal. New Yaohan also manages several different brands as outlet stores in The
Venetian Macao, Four Seasons Hotel Macao, Studio City, Parisian Macau and One Central.
In 2021, The first self-developed "New Yaohan Beauty" store was launched at the Nova
Mall. In the same year, The NY8 New Yaohan was opened at Grand Lisboa Palace Resort. 10

(2) Business Operation

New Yaohan is an 11-stories department store that carries a unique selection of goods
and unparalleled customer service, offering Cosmetics and Skin Care Products, Men's and
Ladies' Fashion, Sports and Casual Wear, Babies and Children's Wear, Toys, Household
Supplies, Electrical Appliances, Supermarket, Food Arcade and more.

(3) Mission and vision:

New Yaohan is the only and well-loved all-in-one department store in Macau.
Growing with Macau, their mission is to serve the local residents and visitors. They strive
and thrive to become the premier in retail industry, as well as a trustworthy and sustainable
business to their employees, partners, customers and the community11.

(4) Financial performances

Annual Revenue12: $42.1M

(5) Management Personnel13

Management Leve
Name Job Title Department
l

10 “About New Yaohan: 新八佰伴 New Yaohan.” About New Yaohan | 新八佰伴 New Yaohan. Accessed December 11,
2022. https://www.newyaohan.com/en/about-new-yaohan.

11 “About New Yaohan: 新八佰伴 New Yaohan.” About New Yaohan | 新八佰伴 New Yaohan. Accessed December 11,
2022. https://www.newyaohan.com/en/about-new-yaohan.

12 “ZoomInfo for Sales.” ZoomInfo. Accessed December 11, 2022.

https://app.zoominfo.com/#/apps/profile/company/358971019/overview.
13 “New Yaohan Company Profile: Management and Employees List.” Datanyze. Accessed December 11, 2022.
https://www.datanyze.com/companies/new-yaohan/358971019.
Simon Chow General Manager, Store Operations C-Level Operations

Samson Wat Assistant General Manager C-Level Operations

Polly Yeung Operation Director, Retail Director Operations

Jonathan Lam Head of Finance, Retail Operations, Stdm Director Finance

Edith Kong Department Assistant Director, Sales & Marketing Director Marketing

Winnie Pang Director of Cosmetic Department Director Cosmetic　

Carmela Leong Director, Ladies Fashion Department Director Ladies Fashion

Manager Administration

Rebecca Lei Manager, Administration, General Administration

 Department

Human Resource
David Cheung Manager, Human Resources Manager
s

Carmen Leng Merchandising Assistant & Manager Manager Marketing

Jessie Kwok Manager, Brand Development Manager Marketing

(6) Past and current public relations/advertising/marketing efforts

● Sales promotion: As a biannual and most famous event of New Yaohan, VIP days
are usually held in June and November every year, giving very low discounts to VIP
customers, to promote sales while increasing the number of member registrations.
● Co-marketing: Currently, New Yaohan is cooperating with ICBC to co-brand New
Yaohan Visa Credit Card. Once the customers spending at New Yaohan during a
specified period has accumulated to MOP2,000 or above, they may redeem for “New
Yaohan Cash Coupon”, and are able to enjoy a 12-month interest-free installment
plan upon purchase of MOP 2,000 or above on all electrical appliances and massage
products14.

14 “Credit Card: 新八佰伴 New Yaohan.” Credit Card | 新八佰伴 New Yaohan. Accessed December 11, 2022.
https://www.newyaohan.com/en/credit-card.
 ● Public relations: On December 13th 2018, New Yaohan Macau held a "New Yaohan
20th Anniversary Charity Sale" at MGM MACAU. The total proceeds from the
activities, amounted to $440,000, which were donated to SMART Nursery(澳門崇德
社) and Charity Fund From the Readers of Macao Daily News(澳門日報讀者公益基
金會), with the aim of adding resources to social welfare services in Macau,
benefiting the the local community15.
●
(7) Crisis that have ever occurred

On January 6, 2019, a ceiling collapse accident occurred in Macau New Yaohan,

resulting in three customers being injured, including a mother and daughter. However, such a
major public security accident was disclosed by netizens on social media platforms before it
became known to the outside world. Mrs. Lee, one of the injured in this incident, said that
New Yaohan did not explain the follow-up procedure and amount, and even asked the injured
person, "What kind of compensation do you want?" Friends even directly criticized the
company for being irresponsible and not sincere in solving the problem, and the
responsibility rested entirely with the insurance company. It turned the event into a public
relations crisis.
On January 10, 2019, New Yaohan issued a press release, saying that it was sorry for
accidentally injuring the three customers; it also mentioned that in order to help the injured to
tide over the difficulties, the company would provide special hospitalization arrangements
and compassionate funds for the injured; it would properly handle the Maintenance and
aftermath work, at the same time, additional staff will be sent to inspect the safety equipment
necessary for the project to avoid similar incidents from happening again16.

15 “新八佰伴義賣籌四十四萬.” cyberctm, December 13, 2018.

https://www.cyberctm.com/zh_TW/news/mobile/detail/2353973#.Y4uCCy2KH5g.
16 “傷者：完全無提及賠償.” 力報. Accessed December 11, 2022. https://www.exmoo.com/article/92393.html.
 (8) Service provided by New Yaohan

New Yaohan provides both offline purchase and online purchase and related
delivery services. With a total of eleven floors, the offline department store of New Yaohan
brings together high-end fashion brands from all over the world, offering customers a
variety of product categories in various formats (including cosmetics, men's and women's
fashion apparel, sports and casual wear, children's apparel, toys, household products,
electrical appliances, supermarkets and food courts), while at the same time providing
personalized customer service. For example, customers who purchase regular-priced clothing
products at New Yaohan can receive free alteration services. Moreover, New Yaohan is also
operating its official website, WeChat mini-application（小程序）and official app, giving
customers various channels to purchase products online. In addition, New Yaohan will
provide free delivery service under some specified circumstances (e.g. MOP200 for
purchases other than wet goods, fruits and vegetables at the supermarket on the 7th floor;
MOP300 for purchases of electrical appliances on the 8th or 9th floor; or MOP300 for
purchases of bedding on the 4th floor).
 What’s more, New Yaohan launched its unique VIP membership system at an
early stage. Today, it has over 330,000 members from all over the world, and has a series of
special offers for its members. For example, every time you shop at New Yaohan, you can
accumulate points with your VIP membership. For every MOP purchase, you can accumulate
one point unit, and after accumulating a certain number of points in a year, VIP members will
be notified by SMS to redeem designated rewards in the following year. Moreover, New
Yaohan usually holds VIP days in June and November. Once the VIP Day of the year is
confirmed, New Yaohan will inform their VIP members of the date and time of the event by
SMS.

Based on the analysis of its existing services and situation, we found that New
Yaohan, a large department store that combines shopping, rest and entertainment, has both
strengths and weaknesses.

On the side of strength, We believe that the most obvious feature of New Yaohan is
its "one-stop shopping" model, which means it has the advantage of covering a wide range
of products and brands, thus enabling New Yaohan to meet consumers' various needs. At
the same time, we also conducted some abbreviated web search on customer reviews in some
social media, and found that New Yaohan, as the only large retail department store in Macau,
has a high reputation among both locals and tourists because of its long history and
convenient transportation location. For example, some tourists would regard it as one of
the " internet-famous sites" in Macau, and post its pictures on their social media platforms
after going there.

Nevertheless, we also found some weaknesses about New Yaohan. For one thing,
even though the official website of New Yaohan posts that "passionate service and credibility
is one of the key values of New Yaohan", the poor service attitude of the sales staff at some
of New Yaohan's cosmetics counters is a point often mentioned in customer reviews on some
online social media.

For another thing, we found that although New Yaohan has made attempts in e-
shopping, it has not been very effective in spreading and operating it. On the one hand,
we found that it did not have many user installations of its app, and according to our offline
interviews with the relevant personnel, it only placed 2-3 orders per day for its relevant
WeChat mini-applications（小程序）. On the other hand, we learned that, except for the
after-sales service of individual purchases, its online shopping interface does not provide
other channels for customers to share feedback or comments with others. On top of that, we
found that some other retail companies in Macau are doing better in this area, such as
Temptation, which is a large duty-free department store in Macau. For example, its product
descriptions in the interface are more detailed, and customers can give feedback on each item.
So due to the shortcomings of the online shopping platform of New Yaohan, customers may
not choose it when they want to buy something online in Macau.

(9) Target stakeholders

Target stakeholders are groups of people or organizations who will get affected
(either positively or negatively) from the occurrence within New Yaohan. In order to fully
discuss who the target stakeholders are, stakeholders shall be divided into two groups –
internal stakeholder and external stakeholder. Internal stakeholder refers to those who
typically work or have a direct relationship with the company17. External stakeholders, on the
other hand, refers to the opposite of the aforementioned stakeholder as external stakeholders
have an indirect relationship with the company. The following discussions shall be the
identification and the analysis of each stakeholder.

The most noticeable internal stakeholder of New Yaohan is their employees.

According to Datanyze, New Yaohan currently has 156 employees18. One of the reasons why
employees are to be considered as one of the most important internal stakeholders is because
without employees, production of various services within the company would have been
impossible. Furthermore, employees care about the success of the company as they have
money and wages as the incentive to work hard and move the company forward19. In other
words, the success of the company relies on employees while the employees will want the
company to succeed for their own benefits. As such, if anything should happen to the
company which will affect the company’s, i.e., reputation, revenue, employees may get
affected in many ways, be it their motivations to keep working for the company or the
amount of wage they might receive.
17 “Internal Stakeholders | Who Are Internal Stakeholders?,” n.d. https://www.stakeholdermap.com/internal-
stakeholders.html.

18 “New Yaohan Company Profile: Management and Employees List.” Datanyze. Accessed December 11, 2022.
https://www.datanyze.com/companies/new-yaohan/358971019.

19 Wilson, Catherine. “How to Manage Difficult Employees: HR Blog.” HR Software. Accessed December 11,
2022. https://www.myhrtoolkit.com/blog/how-to-manage-difficult-employees.
 The second important internal stakeholder of New Yaohan is their parent company
(SJM). Parent company or holding company refers to companies which have a subsidiary and
interests in another company. Furthermore, a parent company may partially or wholly owned
their subsidiary business20. As such, from the amount of control they have and from the
amount of reliance subsidiary companies may have on them, parent companies like SJM will
want to see their subsidiary companies like New Yaohan succeed for their own benefits,
making parent company (SJM) extremely crucial to be considered as an important internal
stakeholder.

On the other hand, the first important external stakeholder appears to be the
customers of New Yaohan. Customers are an important external stakeholder as they will
support the company through their purchases as the company supplies them with supplies (as
according to customers’ demands21). Customers’ perceptions towards the company may be
very ambiguous and fickle and is very much dependent on many factors. Some examples of
the aforementioned factors are the company’s reputation, the services and the quality of the
services provided by the company, just to name a few. As such, it is very important for the
company to care about their customer services very much to keep their clients with a happy
attitude and feeling satisfied (in order to keep the customers coming back as well).

The second important external stakeholder is the company’s product suppliers.

Suppliers are important in order to fulfill the customers' demands for goods. Even though it
may seem like suppliers’ attitude may not impact the company, this is truly not the case.
Suppliers, like many other stakeholders, also care a lot about the reputation of the company
they supply their goods to as many do want to be associated with a good-standing company
and not otherwise. If the company is not in a good-standing due to whatever reason there is,
for example, it may be possible that suppliers may not supply the goods to the company
anymore or may hesitate to do so because the suppliers may not want to be associated with
such a company. As such, a good relationship with suppliers is a must, making suppliers one
of the most important external stakeholders.

Another important stakeholder is the general public. The general public refers to
people that may not be connected to New Yaohan or may have not even been to New

20 Wigmore, Ivy. “What Is Parent Company?: Definition from TechTarget.” WhatIs.com. TechTarget, March 28,
2013. https://www.techtarget.com/whatis/definition/parent-company.

21 Martin, Melanie J. “Role & Activities of Stakeholders.” Chron, January 11, 2019.
https://smallbusiness.chron.com/role-activities-stakeholders-31182.html.
Yaohan, just the public as a whole. But the reason for their importance stems from the fact
that the general public’s opinion towards the company counts as their opinions may build or
destroy the company’s reputation. Furthermore, the general public’s opinions are also usually
the reflection of the company’s current standing as well. If the reputation of the company
towards the general public is good, there may be benefits such as bringing in more frequent
customers (profit gain). On the other hand, if the reputation of the company is bad,
prospective customers may try to avoid New Yaohan (loss of profit). As such, the general
public’s attitude will usually be neutral until there are some events which will bring the
company’s reputation up or down.

Section II Identification and Definition of Risks and Vulnerabilities

After gaining a general understanding of the retail industry, and conducting online
research, field observations and staff interviews, five risks/vulnerabilities were identified,
namely Data Breach, Facility damage, Consumers’ Complaints, Food Poisoning and
Shoplifting.

(1) Data Breach

A retail data breach involves attackers stealing customer data. That can include credit
card numbers, names, addresses and so no. It can also involve attackers gaining access to
company data or accounts. There are several types of retail data breaches, like: Phishing,
Malware, Ransomware and so on.22 According to the Global State of Information Security
Survey released by PwC, the retail and consumer sector suffers an average of 4,000
information security threats every year, and the average cost of a data breach in retail is $3.28
million. This number jumped steeply from 2020, showing a 63% increase in these two years.
(According to the Cost of a Data Breach Report 2022 from IBM Security)
For example, The Target data breach was one of the biggest security breaches in
history. Target Corp is an American big box department store chain. During the holiday
season in 2013, The cybercriminals attacked the company’s database, stealing 40 million
credit and debit records and 70 million customer records. The company spent about $18.5
million to more than 41 million victims and was unable to settle the last suit until 2017. In
fact, it’s estimated the company’s direct financial losses from the breach had reached over
$200 million. In its annual financial report in 2016, the group disclosed at the time that
Moreover, it was reported that earnings fell 46% for Target following the attack, with far
fewer households shopping at Target after the breach.23
With over 330,000 VIP members, New Yaohan has a large amount of VIP
membership information in the company's database. Based on that situation, we assume that
it is possible for New Yaohan to face a crisis of data breach in the future. And once the
system or the database is attacked by Hackers, the customer’s ID number, phone number and
consumption records will be stolen, which may lead to various damages to our company and
our stakeholders.
For the customer：
- Different levels of property loss, suffering from accurate fraud and so on.
For New Yaohan:

22 “Cost of a Data Breach: Retail Costs, Risks and More to Know.” Security Intelligence, November 30, 2022.
https://securityintelligence.com/articles/cost-of-a-retail-data-breach/.

23 Jones, Corrin. “Warnings (& Lessons) of the 2013 Target Data Breach.” Red River | Technology Decisions
Aren't Black and White. Think Red., May 3, 2022. https://redriver.com/security/target-data-breach.
 - If this crisis happens, firstly the Company may receive collective lawsuits from the
customers whose private information was leaked. And A large amount of settlement
needs to pay to compensate all the victims, also need to spend money to fixing the
breach and preventing future breaches
- In addition, this kind of incident will definitely attract a lot of attention from the
media, and once this was reported by the media, the company's reputation will be
significantly damaged.
- Plus, there’s the high — and often unmeasurable — cost of lost consumer confidence
that can also damage our company’s reputation and result in lost sales.

In order to better assess the risk, a 0-5 scale is used to rank it in terms of likelihood
and severity, following this certain justification:
-For the probability to happen, since there are many cases in the retail industry, but
did not happen to similar organizations recently, we rank it at 3rd in terms of likelihood.
-In terms of severity, since New Yaohan is the biggest department store in Macau and
one of the most popular shopping sites for both local people and visitors, it would definitely
be a major media issue and affect both customers and communities’ trust towards the
company, leading to significant fall in sales and will take a long time for the company to
bounce back. So we rank it at 4th .

Probability to Happen

1 2 4 Somew
0 Impossi 3 Possibl 5 Highl
Nearly Imposs Remotely hat
ble e y Probable
ible possible probable

The crisis has Never Happened to Happened to Happened to Happened

basically no happened in very few in the some in the many similar frequently in
chance of any in the industry industry organizations both the
occurring industry in the industry industry and
 recently but did the client
not happen to organization /
our client’s warning signs
organization are evident.

Severity

0 There’s a superficial data breach, but does not affect anything of the company at all

There’s a superficial data breach, but only slightly affects the company (cost less than a
1
million dollars, but does not affect the customer and/or their trust towards the company).

There’s a data breach, cost the company less than a million dollars, does not affect the
2
customer’s safety but will attract the attention from media

There’s a data breach, cost the company more than a million dollars, directly affect the
3
customer’s safety and affect their trust towards the company (reported by media)

There’s a data breach, considerably affecting the customer’s safety and trust towards the
4 company, becoming a major media issue, leading to significant fall in sales and will take
a long time for the company to bounce back (i.e. a couple of years).
 There’s a data breach, significantly cost the company and significantly affect the
5 customer’s data/safety + affect their trust towards the company (company cannot
survive)

(2) Facility Damage

Facilities are public facilities or public construction, and include facilities and services
that enable economic operation. It is the general material condition for the existence and
development of architecture.

New Yaohan had a ceiling collapse several years ago, among which a mother and
daughter and a passer-by were injured. According to the news report, New Yaohan has
responded to the accident and will arrange for the injured to be hospitalized, and further
follow up with the insurance company and the injured's family members. However, according
to the injured, New Yaohan did not mention compensation at all. The security police revealed
to the media that there are about 80 ambulances cases on average every day, so ordinary
incidents will not be reported to the media, and only the media will be notified immediately
in case of very serious injuries. In this case, the public relations handling of the New Yaohan
can be said to be quite sloppy.

For customers, their safety has been greatly hit. Customers will think that the
infrastructure or construction process of the company is not properly arranged, which will
cause accidents. In this case, customers will consider their own safety issues when shopping
here.

For the media, as we just mentioned, only when a serious accident occurs, the security
police will notify the media to report the news. This event has been reported on many
channels, which means that such negative news has been noticed and reported by the media.
If there is any need for media to report in the future, this event will have a certain negative
impact.
 Now, you can still walk into the New Yaohan and check the second floor glass. The
boards in the escalator are fixed in a very simple way, which seems very insecure and will
fall down again at any time.

Such an event will not only seriously affect the safety of customers, but also bring
serious losses to our company. New Yaohan did not communicate with the injured
immediately and with a good attitude, instead, the injured felt that the company had no
sincerity to solve the problem. It also shows that the incident was not resolved in the golden
time, and finally became a negative event without perfect results after the fermentation of
public opinion.

Because of the covid-19, the number of customers is relatively small, so there are not
many people in the store. The glass is not obviously protected in New Yaohan, and the thin
glass is exposed, and there is no sign indicating that you should be careful with the glass or
that you are not allowed to rely on it. Our team members once tried to look around the glass
and were warned by the security guards to keep us away from the glass. But let's ask a very
simple question. If there is no extra place to rest or wait in heavy traffic, the customer's
preferred place is to lean on the glass.
 A similar incident occurred in a mall in Singapore. The glass on the second floor of
the shopping center somehow burst, causing debris to fall all over the place. There were no
customers sitting near the incident, and their tables were also separated from the glass.
Nobody touched it when it happened. Nobody know why the glass suddenly broke. That is to
say, if we do not control the situation immediately, if we do not protect and decorate the
infrastructure, there is a great chance that similar events will happen again. In addition to the
previous ceiling collapse incident, it will cause serious public opinion, and customers will
feel panic.

Probability to Happen

1 2 4 Somew
0 Impossi 3 Possibl 5 Highl
Nearly Imposs Remotely hat
ble e y Probable
ible possible probable

Happened to Happened
many similar frequently in
The crisis has Never organizations both the
Happened to Happened to
basically no happened in in the industry industry and
very few in the some in the
chance of any in the recently but did the client
industry industry
occurring industry not happen to organization /
our client’s warning signs
organization are evident.

Severity

0 There’s no damage. (Customers and companies)

1 There’s damage but not necessary, and there is no loss. (Customers and companies)
 2 There’s damage and losses to some extent. (Customers and companies)

There’s damage and losses (financial losses), but they are moderate.(Customers and
3
companies)

There’s damage and losses (financial losses), but they are high degree. (Customers and c
4
ompanies)

5 There’s the highest level of damage.(Customers and companies)

(3) Consumers' complaints

A customer complaint is a means for consumers to respond to a merchant's authorities

for various reasons, such as product quality problems and service attitude, to report the
problem and ask for appropriate compensation.

Take Sam's Club as an example. Since 2020, several stores have been exposed as
having poor attitudes which has caused public discontent. Until now, the problem of poor
service still exists, causing a large number of customers to apply for membership
cancellation, resulting in the loss of customers.

In the course of our research on New Yaohan, we found that there are many customer
complaints on various social platforms, like Weibo, Dianping, Facebook. These complaints
were mainly focused on the poor service of the New Yaohan. They are not only focused on
one of the brand counters, especially the most serious cosmetics brand counters. Throughout
these protracted and numerous complaints, New Yaohan did not respond to any of these
complaints, nor did it retrain the salesperson who was the object of the complaint. Until now,
the problem of poor service still exists, These complaints may cause a crisis.
 For customers, they will lose the desire to spend money in NewYaohan. And many
customers prefer to pay more for shopping at a more distant brand counter just because the
service is better than New Yaohan.

When a department store has too many negative reviews and they are not dealt with in
a timely manner, it is easy for other people who have not been to New Yaohan to have a
negative impression of New Yaohan, which not only reduces the support of long-term
customers but also discourages potential customers from choosing New Yaohan in the first
place.

And for the company, dissatisfied customers will not only stop buying the company's
products or services and turn to the company's competitors, but will also tell others about
their dissatisfaction, bringing very negative word-of-mouth communication to the company,
which indirectly affects product sales. The second point of customer complaints is a direct
expression of the customer, directly affecting the relationship between that customer and the
company, minor just complaints, serious may lead to returns, claims.

For the partners, choosing to cooperate with New Yaohan may damage the reputation
of their own brand, which will make them more cautious when choosing to cooperate with
New Yaohan. If fewer partners choose to work with New Yaohan, then this is also a financial
loss for New Yaohan.

So I think in either case, our first priority is to deal with these customer complaints so
that we can keep our customers' brand loyalty to New Yaohan.

In addition to the Sam's Clubs I mentioned, Wal-Mart, 7-11, and other companies
often get complaints from customers. So I think the possibility of customer complaints
occurring is 5.

Probability to Happen

1 2 4 Somew
0 Impossi 3 Possibl 5 Highl
Nearly Imposs Remotely hat
ble e y Probable
ible possible probable
 Happened to Happened
many similar frequently in
The crisis has Never organizations both the
Happened to Happened to
basically no happened in in the industry industry and
very few in the some in the
chance of any in the recently but did the client
industry industry
occurring industry not happen to organization /
our client’s warning signs
organization are evident.

Severity

There are one or two cases of customer complaints, but they do not have any impact on
0
the company.

There were a small number of customer complaints, but the impact on the company was
1
minimal.

2 A small number of customer complaints, resulting in some economic losses.

Customer complaints continue to increase, with loss of customer base and a moderate
3
amount of property damage.

Numerous customer complaints and customer churn, which attracted media attention.
4
Resulted in a decline in credibility of the company among the partners.

A large number of customer complaints affected the company's reputation, attracted

5 media attention, reduced the number of partners, and caused huge economic losses to the
company. (Company closed down)

(4) Food Poisoning

Food poisoning, also called foodborne illnesses, is usually caused by infectious or

toxic agents that enter the body through the ingestion of food.

According to the data released by the Food Safety Department of the Macau
Municipal Government in 202024, we can see that food poisoning is a frequent problem
every year, and many of them occur in public places of category 4-5 (i.e. food and beverage)
and category 1-3 (including hotels, restaurants, dance halls and bars).At the same time, it
concluded that one of the main characteristics of foodborne illness outbreaks is the lack of
thorough cooking of food due to improper temperature and time control, according to the data
set.

24 巿政署 食品安全廳. “ 本澳餐飲業食源性疾病個案概況 及風險預防工作.” FoodSafety.gov, June 7, 2021.

https://www.foodsafety.gov.mo/file?p=foodsafetyinfo/imgnews/637586778213949.pdf.
 Meanwhile, as we introduced earlier, the eighth floor of the new Yaohan is a food
court. According to some of the customer reviews we found online, many customers give
feedbacks mentioning that the food court of New Yaohan often has a large flow of people
during holidays and thus causing a sense of crowded, so we speculate that back kitchen may
also have insufficient cooking time or temperature control due to too many orders.
 Moreover, we found that there have been similar cases of food poisoning in some
shopping malls or public places, such as in 2017, there was a case of six Hong Kong tour
visitors vomiting and diarrhea after eating seafood desserts at Kwan Fong Restaurant in
Galaxy Macau Resort; in 2021, food poisoning occurred at Cruise Sky Restaurant and Bar on
23rd floor, West Wing of Hyatt Regency Hong Kong located in North Point, where 11 people
suffered from abdominal pain, eleven people suffered from abdominal pain, fever, nausea,
vomiting and diarrhea after eating oysters at the restaurant.
Based on that situation, we assume that it is possible for New Yaohan to face a crisis
of food poisoning in the future.
Therefore, based on our risk-ranking system, for the probability to happen, since there
are some cases in the related industry, but not so many happened to similar organizations
recently, we rank it at 2 in terms of likelihood.
In terms of severity, as is mentioned, due to the popularity and influence of New
Yaohan per se, the occurrence of food poisoning would undoubtedly become a major media
issue, and while actually causing physical harm to customers, hurt the trust of customers,
Macau locals and visitors to it, so we rank it at 4 .
 Probability to Happen

1 2 4 Somew
0 Impossi 3 Possibl 5 Highl
Nearly Imposs Remotely hat
ble e y Probable
ible possible probable

Happened to Happened
many similar frequently in
The crisis has Never organizations both the
Happened to Happened to
basically no happened in in the industry industry and
very few in the some in the
chance of any in the recently but did the client
industry industry
occurring industry not happen to organization /
our client’s warning signs
organization are evident.

Severity

There’s a superficial food quality problem, but does not affect anything of the company
0
at all.
There’s a superficial food quality problem, but only slightly affects the company (cost
1 less than a million dollars, but does not affect the customer and/or their trust towards the
company).

There’s a food quality problem, cost the company less than a million dollars, does not
2
affect the customer’s safety but will attract the attention from media

There’s a food poisoning, cost the company more than a million dollars, directly affect
3
the customer’s safety and affect their trust towards the company, and reported by media

There's a food poisoning, considerably affecting the customer’s safety and trust towards
4 the company, becoming a major media issue, leading to significant fall in sales and will
take a long time for the company to bounce back (i.e. a couple of years).

There’s a food poisoning, significantly costs the company and significantly affects the
5 customer’s safety(i.e. death of customers) and affects their trust towards the company,
threatening the survival of the company.

(5) Shop Lifting

Shoplifting refers to the action of taking/stealing goods from the store and not paying
for them25. At least in the US, shoplifting is the most common crime with an estimate of
every 1 out of 11 Americans shoplifted 26. In China, on the other hand, shoplifting is also a

25 “Shoplifting.” Cambridge Dictionary. Accessed December 11, 2022.

https://dictionary.cambridge.org/dictionary/english/shoplifting.

26 “Shoplifting Statistics and Facts.” RecFaces, October 13, 2022. https://recfaces.com/articles/shoplifting-

statistics.
 very common crime. According to an 2011 survey by KPMG titled “2011 China Retail
Loss Prevention Survey”, 85% of retailers in China are affected by theft rings27.
Retail shrinkage (or simply shrinkage) is a term referring when the store have less
goods than what they recorded28. The loss from shrinkage can be a combination of many
factors such as shoplifting, employee theft, and administrative losses. In 2015, the losses
from these factors were 38 percent, 39 percent, and 7 percent, respectively, amounting to
1.23 percent in global sales or $123.4 billion29.
Within Yaohan, for example, even if there are some forms of security such as security
guards, these guards are only standing in front of the mall with fewer guards inside New
Yaohan itself. Furthermore, New Yaohan lacks security measures such as security scanners in
front of shops and the mall, just to name a few. As such, even though there are currently no
public reports of retail theft/shoplifting from New Yaohan, the crime of shoplifting has
already been happening so frequently and is ranked as the number 1 crime likely to be
committed (in addition to the lack of preventatives), it should be taken that shoplifting
somewhat probable to happen (but does not yet happened to New Yaohan).
Furthermore, if shoplifting shall consistently happen in New Yaohan, there will be a
some moderate damages and losses but are replaceable and it not will take time for the
company to jump back in business again (severity 3) because the even though the crime of
shoplifting can bring in a lot of damages, but as there are no reports of shoplifting ever
occurred in New Yaohan in addition to the low theft rate in Macau 30 – some missing items
from shoplifting can surely be replaceable.

Probability to Happen

1 2 4 Somew
0 Impossi 3 Possibl 5 Highl
Nearly Imposs Remotely hat
ble e y Probable
ible possible probable

27 “China Retail Loss Prevention - Assets.kpmg.” Accessed December 11, 2022.

https://assets.kpmg/content/dam/kpmg/pdf/2012/04/China-Retail-Loss-Prevention-201203.pdf.

28 Keenan, Michael. “What Is Retail Shrinkage? Tips and Strategies(2022).” Shopify, August 12, 2021.
https://www.shopify.com/in/retail/retail-shrinkage.

29 Walke, Hilary. “How Much Does Shoplifting Cost Luxury Retailers in China?” Jing Daily, November 17, 2017.
https://jingdaily.com/shoplifting-cost-retailers-china/.

30 “Crime in Macao.” NUMBEO, https://www.numbeo.com/crime/country_result.jsp?country=Macao .

 Happened to Happened
many similar frequently in
The crisis has Never organizations both the
Happened to Happened to
basically no happened in in the industry industry and
very few in the some in the
chance of any in the recently but did the client
industry industry
occurring industry not happen to organization /
our client’s warning signs
organization are evident.

Severity

0 There is no damage to the company/the retail store(s) involved.

There is some damage, but the loss is not serious to the company/retail store(s) involved
1
(e.g. the cost does not exceed 200 MOP).

There are some damages and losses to a certain extent to the company/retail store(s)
2
involved.

3 There are some moderate damages and losses but are replaceable.

There are high degrees of damages/losses, and it takes time for the company to jump
4
back in business again.

There are the highest degree of damages/losses and the company/retail store(s0 cannot
5
come back in business again.

Summary

In conclusion, the five risks/vulnerabilities that have been defined and assessed above
can be summarized in the chart below.
After rankings, we decide to plan for the crisis of Facility Damage, which ranked
high in both probability and damage.