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| Retail War: Revenge of Department Stores |
| UPDATE : 9 March 2010 |
The boom of multinational superstores in Thailand is at the expense of Thai sellers. This time, however, Central Retail Corporation, Thailand’s leading operator of department store chain and specialty stores, has come up with a counterattack and the keyword is ‘compact’.
Central Retail Corporation has announced its five-year retail strategy with a main focus on setting up smaller branches in various provinces instead of large scale spacious locations of more than 100,000 square meters that Central is known for. CRC operates three main department store brands; Central, Robinson and Zen – one supermarket chain named Tops, and five specialty stores – Power Buy, Super Sports, B2S, HomeWorks and Office Depot.
The pilot compact store will be opened in Trang province under the ‘Robinson’ brand in November. Trang Robinson will be a three-storey building with a commercial area of 20,000 square meters, significantly smaller than an average store of CRC.
Central Retail Corporation Chief Executive Officer Tos Chirathivat revealed initially his company plans to use its Robinson brand to spearhead a campaign to embark on the provincial market while Central brand focuses on the Bangkok market. Under this new business strategy, Robinson brand will become the pioneer and prototype of compact provincial stores for CRC. If succeeded, It will become a trailblazer for other brands under CRC to follow.
Tos added that downsizing of store is considered to be the best strategy for CRC to expand its retail market in certain provinces especially the medium-sized ones where consumer purchasing power grows by leaps and bounds as economic growth trickles down and enriches these provinces.
In medium-term, CRC aims to increase sales share generated by provincial branches to be on the same par with sales share from branches in Bangkok. Reaching out to provincial shoppers under either Central or Robinson brand will contribute to this goal.
It seems CRC five-year plan is an operation designed to get back those lost market share that discount stores have snatched up from CRC. But, it won’t be an easy task.
Tesco-Lotus owns in total 500 stores in different formats across the nation. However, some branches have been subjected to heavy scrutiny and criticisms by the locals. They fear discount stores like Tesco-Lotus will destroy the livelihood of traditional vendors.
Senior Vice President Darmp Sukontasap of Ek-Chai Distribution System, operator of Tesco-Lotus, said major retailers' expansion into local markets brings an equilibrium to the retail business.
According to Darmp, given how competitive the retail market is, competition in the business is a positive force and the consumers stand to benefit from the competition. Darmp said they will have more choices and enjoy inexpensive products as retailers struggle to compete, while manufacturers would be urged to keep their costs as low as possible.
Somchai Pornratanacharoen, president of Thailand’s Wholesale and Retail Trade Association, said the future of the retail business will be a clash of titans in a capitalist economy. After major retailers have expanded to the point of saturation in their old domains they will branch out to new smaller markets with formats of store designed to suit the buying power of consumers in the new markets.
What is sure to follow is that the major retailers will gain more power in negotiation with the manufacturers and speed up the extinction of local grocery stores. As the standoff between titans goes on, small fish would die out.
CRC may use its unique position as a homegrown retailer to expand their business and appeal to local communities through its downsized stores. The move may very well send a shock wave to the multinational retailers.
Taken from first page of Post Today Section B, March 8, 2010
Rewritten by Pornchai Sereemongkonpol
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