CP All Plc, operator of the 7-Eleven convenience store chain in Thailand, may accelerate its expansion if it wins more licences to operate the stores in Myanmar, Laos, Cambodia and Vietnam to cash in on the huge business opportunity when Asean becomes a single market in 2016.
Managing director Piyawat Titasattavorakul said the company will ask Southland Corporation, the Texas-based owner of the chain, to allow it to operate 7-Eleven stores in the four neighbouring countries after it obtains approval to open the convenience stores in China by year-end or early next year.
"We believe we'll have good news from Southland to operate 7-Eleven stores in one city near Shanghai by the end of this year after waiting several years," he said.
CP All will receive approval to do business in China because its Thai stores are doing well.
Even with the regional plans, the company continued to open 450-500 stores in Thailand last year.
Sales from the existing stores also grew by 10.9%.
The rate was the highest compared with the world's top two largest 7-Eleven chains in Japan and the US, which saw same-store sales growth of 2.2% and 3.3%, respectively.
Moreover, 1,234 Thai customers visits 7-Eleven stores each day compared with 1,052 customers in Japan and 920 in the US.
Mr Piyawat said while the China plans are not yet available, the market opportunity there is two times that of Thailand.
Southland has awarded five licences for Beijing, Guangzhou, Shanghai, Shenzhen and Tianjin, with another six pending approval by local authorities.
Apart from the international expansion, CP All will also speed up its expansion locally by investing between 6 billion and 6.5 billion baht this year.
Of that total, 3 billion baht will be used to open 500-550 new branches and renovate its 600-700 existing stores.
The new stores will bring the total number to 7,360 nationwide this year, up from 6,822 last year.
As of Dec 31, there were 12,440 convenience stores in Thailand, of which 6,822 were 7-Eleven, 1,059 Tesco-Lotus Express, 929 V-Shop, 765 FamilyMart, 123 Tops Daily and the rest of them others including CP Food Market, CP Fresh Mart, Big C Market and 108 Shop.
About 1.5 billion baht each will be spent on new distribution centres for magazines, newspapers and other products and IT investment.
Additionally, the company will launch 7-Eleven concept stores providing parking for customers as well as adding services to allow customers to pay fees for car licence plate registration.
Mr Piyawat remains optimistic about the convenience store business even though some stores have been hurt by the nationwide wage hike and lower spending power stemming from the first-time car buyer scheme.
The middle class will increase to 30% of the total population in 2020, which will be a boon for convenience stores.
Ayudhya Securities Plc forecasts CP All will book revenue of 214 billion baht this year, a rise from an estimated 188 billion at the end of last year.
Mr Piyawat expects sales in 2013 to grow by 13-15%.
Shares of CPALL closed yesterday on the SET at 47.25 baht, down 75 satang, in heavy trade worth 1.89 billion baht.
About the author
- Writer: Pitsinee Jitpleecheep
Position: Business Reporter