{"id":5540,"date":"2019-06-27T07:21:00","date_gmt":"2019-06-27T07:21:00","guid":{"rendered":"https:\/\/www.thirdeyesight.in\/?p=5540"},"modified":"2022-11-11T07:28:57","modified_gmt":"2022-11-11T07:28:57","slug":"retail-review-lots-to-learn-from-the-thai-model","status":"publish","type":"post","link":"https:\/\/myechoproject.com\/TES\/retail-review-lots-to-learn-from-the-thai-model\/","title":{"rendered":"Retail Review.\u00a0LOTS to learn from the Thai model"},"content":{"rendered":"\n

Thailand is a good bridge for modern retail in India, believes Tanit Chearavanont, MD of LOTS Wholesale Solutions<\/p>\n\n

Written By CHITRA NARAYANAN<\/p>\n\n

\n\n<\/div>\n
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Balloons and festoons greet shoppers at the three stores of LOTS Wholesale Solutions in the National Capital Region. There are lucky draws, discounts, and a host of exciting offers too.<\/p>\n\n

It is exactly one year since Thailand\u2019s Siam Makro, a part of the $50-billion Charoen Pokphand Group (CPG), launched its first cash and carry store LOTS in India.<\/p>\n\n

It has been a year of learnings for Tanit Chearavanont, the young managing director of LOTS, who was accidentally thrust into the job of leading the Thai group\u2019s charge into India. \u201cI was not the original project leader for LOTS,\u201d he confesses. That person quit and Chearavanont, who is a scion of the family that owns CPG, was made interim MD. Eventually the Hong Kong-schooled, Harvard-educated retailer was told to take charge.<\/p>\n\n\n

Chearavanont has been in India for over three years, right from the feasibility studies. An additional challenge was that Siam Makro, a well-known name in Asia, could not use its brand in India. The reason, explains Chearavanont, was that Siam Makro, the first modern retail store in Thailand, was formed in 1988 as a JV between CPG and Dutch trading group SHV Holdings. In 1997, when the Asian financial crisis struck, CPG sold its stake to SHV but bought it all back in 2013. However, when it bought it back, the licence to use the Makro name excluded India \u2014 it could use it in other parts of South-East Asia.<\/p>\n<\/div><\/div>\n

Brand and retail consultancy Fitch created the name LOTS which was crafted keeping India\u2019s young demographics in mind.<\/p>\n\n

Ask Chearavanont how an Asian retailer will compete against big western players like Metro and Walmart in India and he grins, \u201cDon\u2019t forget Makro has Dutch vibes in its DNA.\u201d<\/p>\n\n

More seriously, he believes that India\u2019s retail journey evolution is quite similar to Thailand\u2019s and this will help LOTS. He points out how, in OECD countries, modern formats are very pervasive, while in Thailand modern retail and kirana have a 50:50 ratio. \u201cIndia is evolving the same direction as Thailand except for the e-commerce piece, which is bigger here,\u201d he says. He feels the Indian consumer behaviour is also quite similar to Thailand, and trends are same. For instance, Siam Makro had to change its product assortment from apparel to food in Thailand. In just a year, Chearavanont points out how the assortment at the LOTS stores has similarly evolved. The target customers are small and medium-sized retailers, the food service industry, and self-employed professionals.<\/p>\n\n

The last six months, says Chearavanont, LOTS has intensified its focus on understanding its business customer. \u201cI have got our buying merchandising team to meet all our customers to understand what products and what price points are most important to them,\u201d he says. For instance, initially there were 100 sheets of branded paper napkins priced at \u20b920 but when that was perceived to be costly, the store started stocking unbranded napkins at lower price points as well.<\/p>\n\n

Despite India\u2019s strong tradition of kirana stores that need wholesale supplies, large-format cash and carry stores have not had an easy journey. Metro, which was the first to open in 2003, took over a decade to turn profitable.<\/p>\n\n

Market dynamics<\/b><\/p>\n

According to Devangshu Dutta, Chief Executive of Third Eyesight, the challenges for the B2B-focused cash and carry formats are to get the location right, get India\u2019s real estate reality (high land costs and rentals) and consumer reality right as well as learn to negotiate with strong local FMCG suppliers. Several cash and carry stores initially opened in far out locations as they needed the space for their big-box formats. But as Dutta points out, \u201cThere is a cost to transportation for the kirana store owner who is often the shopper too.\u201d Sourcing is quite disaggregated in India and products are door-delivered to kiranas.<\/p>\n\n

Chearavanont seems cognizant of these realities. He says LOTS took a conscious punt on location \u2014 choosing to put their stores in the heart of the city, close to customers, even if it has had an impact on cost. Plus, he says, store formats have been shrunk, averaging 30,000 sq ft.<\/p>\n\n

As for consumer reality, he has been doing the rounds of retailers and restaurateurs. \u201cAt many places we found that kirana stores are selling products below MRP,\u201d he exclaims. That set off thinking within the group as to how they could help the kiranas differentiate themselves. One solution was to give them interesting imported products \u2014 flavoured nuts and dried fruits, snacks and confectionery sourced from Thai or Japanese producers with a better value proposition.<\/p>\n\n

\u201cIf you want to make imported work, it has to be sold at democratised price,\u201d he says. Also, this would differentiate them from other western cash and carry stores. For example, when Indians think about nut snacks they think of Tong Garden \u2013 the premium Singapore brand. \u201cBut in Thailand we have a brand called Koh Kae. We could get that in,\u201d he says.<\/p>\n\n

Going forward, Chearavanont says there will be focus on imported food products and leveraging its own private labels. This could also reduce LOTS\u2019 dependence on local suppliers, who have a lot of bargaining power. \u201cWe want to be more food focused and the non food focused items will also be geared towards HORECA (hotel\/restaurant\/cafe) customers with a strong assortment of stationery items and disposables\u201d. Over 7,000 active HORECA members shop daily or weekly at the store and their numbers are rising by 10 per cent every month, he says. To get more footfalls, from 7 am to 10 am there are early morning discounts in the food category.<\/p>\n\n

\u201cIf a HORECA customer walks into my store, can she find 80 per cent of her basket in my store? If that is so, there is connect happening,\u201d he says, adding the full focus is on that. Right now present in NCR, the plan is 15 stores in three years in cities in UP, Punjab and Rajasthan. Investment of \u20b91,000 crore has been set aside for that.<\/p>\n\n

While lots is happening at LOTS, Dutta cautions that there is an over-expectation of modernisation in India. Also, one approach will not work in the whole of India. So, what may work for LOTS in the North may not work in the South or West, when it expands.<\/p>\n\n

Source: thehindubusinessline<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Thailand is a good bridge for modern retail in India, believes Tanit Chearavanont, MD of LOTS Wholesale Solutions Written By CHITRA NARAYANAN Balloons and festoons greet shoppers at the three stores of LOTS Wholesale Solutions in the National Capital Region. There are lucky draws, discounts, and a host of exciting offers too. It is exactly […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"content-type":"","footnotes":""},"categories":[3],"tags":[],"class_list":["post-5540","post","type-post","status-publish","format-standard","hentry","category-press-quotes"],"yoast_head":"\nRetail Review.\u00a0LOTS to learn from the Thai model - Third Eyesight<\/title>\n<meta name=\"robots\" content=\"index,follow\" \/>\n<link rel=\"canonical\" href=\"https:\/\/myechoproject.com\/TES\/retail-review-lots-to-learn-from-the-thai-model\/\" \/>\n<meta property=\"og:locale\" content=\"en_GB\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Retail Review.\u00a0LOTS to learn from the Thai model - Third Eyesight\" \/>\n<meta property=\"og:description\" content=\"Thailand is a good bridge for modern retail in India, believes Tanit Chearavanont, MD of LOTS Wholesale Solutions Written By CHITRA NARAYANAN Balloons and festoons greet shoppers at the three stores of LOTS Wholesale Solutions in the National Capital Region. 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