Siam Makro Plc, the operator of the Makro cash-and-carry store chain under Charoen Pokphand Group, announced on Wednesday that it will double its investment this year to 8 billion baht to expand its business amid the political instability and slowdown of retail business.
Tuk-tuk and taxi drivers wait for customers at Makro’s Charan Sanitwong branch in Bangkok. Despite the political impasse, Siam Makro yesterday announced big expansion plans for the cash-and-carry chain. Panumas Sanguanwong
"We are not worried about the cash-and-carry business. The evidence is clear that our business is still growing, with almost 12% growth in the first quarter," said chief executive Suchada Ithijarukul.
About 5 billion baht will be used to open 10 new Makro stores in all formats across the country, and the rest will be for upgrading its computer system and changing equipment at existing stores.
Mrs Suchada said most new stores will be located upcountry, where there is market demand and available land plots in provinces such as Khon Kaen. It is difficult to find big plots in Bangkok.
Since early this year, the company has opened new stores on Koh Phangan in Surat Thani and in Bung Kan province in the Northeast.
Siam Makro plans to open a store under the Makro Food Service format in Pattaya next month before opening a branch in Chiang Rai.
"This year is the 25th anniversary of Makro in Thailand. We have passed through many difficulties and tough times. I never see any crisis prolong for 10 years. For example, the financial crisis in 1997 took only two to three years to recover. We are still confident about Thailand's prospects," Mrs Suchada said.
She said the current economic and political problems had not shaken the country's strong fundamentals. Thailand can still be the hub of the Asean Economic Community.
The flow of Asean tourists to Thailand will boost food consumption and this will be good for Thai hospitality. Restaurant operators and hoteliers are major customers of Makro.
"It's a perfect time for us to invest and expand our retail business," Mrs Suchada said.
Beyond the domestic market, Siam Makro is conducting a feasibility study to expand its business into Cambodia, Laos, Myanmar and Vietnam. All markets are very attractive and have potential to do business.
The proper retail format for each country will be finalised by the year-end.
Meanwhile, CP All Plc ,the operator of 7-Eleven convenience stores, is looking at opening 20-30 more new stores on top of the 600 planned earlier to help push the company’s sales by 12% this year, said managing director Piyawat Titasattavorakul.
Another measure to drive CP All's sales and profit to meet the projection is a reduction of its operation costs and a cooperation with suppliers to reduce product damage and loss during transportation of goods.
The company will also expand its food business by doubling the expansion of its Ex-Tra shops to 1,000 to 1,200 stores by the end of this year.
Mr Piyawat said the retail business grew by only 2% in the first quarter, with expected growth of 2-3% in the second quarter.
The decline of consumer purchasing power amid high living costs has resulted in falling confidence and spending.
The popular 7-Eleven convenience store chain cannot avoid this situation. Its sales from existing stores in the first quarter grew by only 2-3%, against 4-5% during normal times.
"The convenience store business may grow by only 10% this year, compared with 16% last year," Mr Piyawat said.
Shares of CP All yesterday closed on the Stock Exchange of Thailand at 42 baht, down 75 satang, in trade worth 589.05 million baht.