Sathien sets the scene for retail ambitions
Convenience stores hold pathway for expanding segment
Sathien Setthasit, 66, the billionaire entrepreneur, founder and chief executive of Carabao Group, the energy drink producer, plans to gradually step down from day-to-day operations over the next five years once he succeeds in building up the company's retail stronghold.
Mr Sathien has branched out into the retail business over the past five years, starting with CJ Express Group, the operator of CJ Supermarket. This venture is mainly funded by Mr Sathien. More recently, TD Tawandang is a new convenience store format, which is relatively small in terms of size. TD Tawandang's stores cover an area of 50-100 square metres.
Mr Sathien has already taken steps in terms of succession plans when it comes to his retail empire. His oldest son, Veeratham, has been tasked with handling CJ Supermarket, while his youngest daughter, Tientham, is looking after TD Tawandang. His second son, Romtham, has been assigned with taking care of international business, particularly in relation to China.
"Our retail business now remains relatively small when compared with our beverage businesses," he said. "We are aiming high and hope that the retail business will become much bigger in the future. We aim to have 30,000 TD Tawandang convenience store outlets within the next 5-6 years. I am very serious about building the group's retail business before retiring."
CJ Express Group currently operates 530 CJ Supermarket stores, mainly in central and western provinces. CJ Supermarket stores typically cover an area of more than 1,000 sq m. CJ Express Group is aiming to open at least 200 new CJ Supermarket outlets per year from 2021, as well as 50 CJ MORE stores per year. CJ MORE stores represent a new compact community mall concept. The company expects to have 580 stores operating by the end of this year, but is aiming to have 1,500 stores operating within the next three years.
Carabao Group sells its Carabao Dang energy drink in both domestic and international markets and the company has discovered some trends in terms of its experiences with retail outlets.
"Through our 15 years of experience in marketing and distributing the Carabao Dang energy drink, we have found that there are about 500,000 small-scale grocery stores nationwide. We estimate that Carabao Dang is sold at about 250,000 of them," Mr Sathien said.
"We have also noticed that the number of stores has gradually declined on an annual basis. While new stores do open, these do not typically offset the number that have closed," he said.
After witnessing that there is a strong base of local grocery stores in Indonesia and the Philippines, Mr Sathien said that he came up with the idea of creating a new retail format that would help small local grocery store owners to grow stronger and function as a distribution base for the company new products in the future. He said TD Tawandang's presence would aim to tackle the issue regarding points of sale, which had been one of the main problems among suppliers.
"Only a few local brands have been able to stay alive in the [Thai] market over the past twenty years due to the dominance of the local market by just a handful of giant retailers. And do you know how much you have to pay if you want a product to be displayed on the shelves of leading convenience store chains in Thailand?" said Mr Sathien.
"We specifically introduced TD Tawandang to try to address this issue for all kinds of suppliers and manufacturers."
Mr Sathien launched the first TD Tawandang outlet in Nakhon Pathom province two years ago. There are now 200 TD Tawandang branches mainly in central provinces. It is estimated that there will be 300 outlets in operation by the end of 2020. The company aims to have 5,000 outlets by the end of 2021 and 10,000 outlets operating by the end of 2022.
"We aim to have 30,000 TD Tawandang outlets open within the next 5-6 years," Mr Sathien said.
Mr Sathien said that existing operators of grocery stores interested in participating in the TD Tawandang store concept would be required to invest about 100,000 baht in order to renovate and modernise their stores in preparation to become TD Tawandang outlets. Meanwhile, TD Tawandang will spend 1 million baht on fittings, products, technology and sales promotion support.
Participating store owners would need to create sales of 500,000 baht per month with a net profit of 60,000 baht, Mr Sathien said.
Shop owners fetch an average of 90,000 baht in sales per month, he said.
Store owners would be entitled to receive 85% of the total profit, while 15% of profit would go to TD Tawandang.