Tesco Lotus in mass expansion drive
Tesco Lotus remains committed to continuing investment in Thailand, with plans to raise spending by five times a year over the next three years to catch up with urbanisation.
According to Sompong Rungnirattisai, chief executive of Ek-Chai Distribution System Co, the operator of Tesco Lotus, the company aims to open 750 Tesco Lotus Express convenience stores during 2019-21.
Each store requires an investment of 5-10 million baht.
The move is in line with the parent company's recent announcement to allocate 50 billion baht to expand the business globally, especially in emerging markets, this year.
The expansion plan will bring the number of Tesco Lotus Express stores to 2,250 by 2021.
"Our parent firm [Tesco Plc, Britain's biggest grocer] remains committed to continuing its investment in Thailand because the Kingdom is one of the emerging markets," Mr Sompong said. "Normally, in the past, we would open about 50-60 Tesco Lotus Express stores per year. But from this year, we will move at a faster pace by opening an average of 250 new stores per year in the next three consecutive years."
According to Mr Sompong, the group sees urbanisation as a significant trend that continues to shape the way people shop.
"As more than 58% of the population is expected to live in urban areas by 2030 from the current rate of 50%, we plan to serve the growing urban population better through differentiated propositions that enhance both our product offerings and shopping channels," he said.
With growing urbanisation, shoppers want both convenience and a good shopping experience, without compromising quality and value for money.
To better suit customers, the company has focused on simplification, including rearranging space in its large stores to improve the shopping experience, as well as utilisation of technology and an omnichannel platform to enhance convenience, Mr Sompong said.
Of the total 250 stores, the company has already opened 30 stores in urban areas in the initial phase. The first 30 Tesco Lotus Express stores built around this concept have received positive responses from customers, the company said.
In addition, Tesco Lotus plans to upgrade its existing 1,500 Express stores into a new proposition over the next three years. The executive did not disclose the budget for store renovation.
For large stores, the company will adjust the size of Tesco hypermarkets to suit each location.
Retail space at a hypermarket will scale down to 3,000-4,000 square metres, from 10,000-12,000 sq m and leave more space to tenants such as small shops and cinemas. Some 20 hypermarkets have already been repurposed.
In parallel, the online business will be expanded to cover more areas in addition to Bangkok, Phuket and Chiang Mai.