Thailand critical to Tesco

Thailand critical to Tesco

Chief executive Dave Lewis talks about increasing opportunities in the market by helping local operators and boosting Thai exports. By Chiratas Nivatpumin

Mr Lewis says Brexit's impact on British retailers remains unclear. Pornprom Satrabhaya
Mr Lewis says Brexit's impact on British retailers remains unclear. Pornprom Satrabhaya

British retailer Tesco plans to increase its investment in Thailand over the next several years, including initiatives to help local farmers and small businesses.

Dave Lewis, chief executive of Tesco Group, said the company sees increasing opportunities in the Thai market.

"What you will see over the next 3-5 years is continued investment," Mr Lewis told the Bangkok Post. "If anything, we have an opportunity to invest more now than in the past."

Tesco Lotus, Thailand's largest retailer, is Tesco's biggest business outside of Britain, with 1,800 stores nationwide and annual investment in the past two years of about 10 billion baht.

Mr Lewis said Thailand will play a critical role in the company's future. He categorically denied that the chain could be up for sale.

"I want to be very clear -- our commitment to Southeast Asia, our commitment to Thailand is absolute and not changing," he said. "The business is not for sale. I'm here to look at the expansion plans."

Mr Lewis, who joined Tesco two years ago from Unilever, said the company's business has stabilised, with growth seen in all 11 markets. More than a third of Tesco's revenue comes from operations outside of Britain.

Earlier this year, Tesco divested itself of operations in Turkey. In 2015, the group sold off its South Korean arm as part of a plan to reduce debt.

Mr Lewis said his focus was now on consolidation and reinvesting in Tesco's existing businesses, starting with Tesco Lotus in Thailand.

He said the company would look to expand its store formats to serve as marketplaces for small businesses and communities.

"If you look at the history of Tesco, this is how we built our business in the UK," Mr Lewis said. "Our relationships with suppliers go back 50, 60, 70 years. They have grown as we have grown. So one of the things that we think we can do well is incubate and grow businesses."

The government's push to improve the country's digital literacy and infrastructure would help support future growth.

Mr Lewis said technology has played a significant role in improving efficiency in Tesco's global supply chain, particularly with suppliers in Europe.

"For instance, we link farms with purchasing, in order to make sure that the harvesting of the crop is done optimally and on time in order to increase the freshness of the product which is offered to the customer," he said.

The challenge, however, is enabling suppliers to scale with quality, in a reliable, dependable fashion.

"By working very closely with local farmers on crop planning and using a market-led approach, we hope to be able to generate a secure income stream for farmers," Mr Lewis said.

At the same time, improved efficiencies in logistics will help reduce wastage and operational costs while also improving quality for consumers.

Tesco Lotus currently purchases over 150,000 tonnes of fruits and vegetables from local farmers each year.

Technology also helps Tesco better understand changes in consumer behaviour and needs.

Mr Lewis noted that Tesco's operations in Thailand have evolved over the years, in keeping with changing market trends, demographics and consumer habits.

"Our business is all about getting closer and closer and closer to our customers, and then asking ourselves, what is it that we can do," he said.

Mr Lewis, who met this week with Deputy Prime Minister Somkid Jatusripitak, said Tesco would also look to see how the company could increase Thai exports of products such as rice through its global operations.

On Brexit, Mr Lewis said it remains to be seen what the true impact of Britain's departure from the European Union will be on British retailers, as this will depend on the outcome of future talks regarding trade and the movement of labour.

The more immediate impact, he said, has been the depreciation of the British pound and prospects of higher inflation in Britain.

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