Billionaires muscle in on convenience store king’s domain
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Billionaires muscle in on convenience store king’s domain

An employee makes routine checks at a convenience store in Pattaya, Chonburi province. (Photo: Pattanapong Hirunard)
An employee makes routine checks at a convenience store in Pattaya, Chonburi province. (Photo: Pattanapong Hirunard)

Some of Thailand’s wealthiest tycoons are looking to muscle in on the convenience-store sector, betting that a shift in consumer preferences for buying less but shopping more often will fuel demand for years to come.

Leading the charge is Thailand’s richest person, Charoen Sirivadhanabhakdi. The liquor mogul, with a net worth of about US$11.5 billion, is planning an aggressive push to get 30,000 mum-and-pop shops to take up his 'donjai' business model by 2027. 

Under the program, his Berli Jucker Public Company Limited provides logistics, marketing and data management in exchange for a store's pledge to source a minimum level of inventory from his companies, which include Big C Retail Corporation and Thai Beverage Pcl — effectively converting standalone corner shops to convenience stores.

Others looking to stake their claim read like a who's-who of Thailand's business elite. They include mass-transit baron Keeree Kanjanapas and the Chirathivat family, who earned their fortune through department stores and shopping malls across the globe. 

But anyone wanting to expand faces stiff competition from the current king of Thai convenience: CP All Pcl. The firm, the crown jewel in the Chearavanont family's $28 billion fortune, runs more than 14,000 7-Eleven outlets. That is nearly three-quarters of the total number of convenience stores in the country, according to data from real estate services firm CBRE Group Incorporated.

The billionaires’ jostling underscores bullish expectations for the sector as new Prime Minister and Finance Minister Srettha Thavisin kicks off a program to hand out about 560 billion baht ($15 billion) in cash to boost the sagging economy. Bets on a tourism revival are underpinning growth expectations, too. 

At its core, though, is the rising popularity of the convenience stores that dot virtually every street corner in Bangkok and other major cities, providing one-stop shops for everything from ready meals to daily essentials and paying electricity bills. 

The sector is expected to expand 5.4% this year to 428 billion baht, following an 18% increase in 2022 that was driven by the easing of Covid curbs, according to Euromonitor International. Annual growth may be 5.5% through 2025, with more than two-thirds of convenience-store revenue coming from food and beverages, according to Bank of Ayudhya Pcl estimates.

CentralWorld shopping complex in Pathum Wan district, Bangkok. (File photo)

"We have very high optimism about the retail industry as the new government has made an aggressive move with huge spending to boost the consumption and the economy," said Varorith Chirachon, an executive director at SCB Asset Management Co, which manages about $51 billion including shares of CP All and Central Retail Corp Pcl. "Many new players are trying to get a share of this market with huge potential before it’s too late."

Some efforts to get a piece of the pie are hitting snags.

Despite Charoen’s early success in his ambitious mom-and-pop expansion program — he is already added about 1,400 stores in the three months ended June 30 for about 2,600 outlets in total — a planned initial public offering of Big C Retail that was expected to raise $1 billion was postponed in August. The firm said the share sale will be revived when the investment environment improves.

Branding overhaul

Meanwhile, the Chirathivat family, who made much of their $13.8 billion fortune from Central department stores, shopping malls and hotels, is overhauling their convenience-store strategy after the coronavirus pandemic hurt business in key tourist destinations. The group, which already has a foothold in the segment as the local franchisee of Japan’s FamilyMart, has seen the number of those stores fall to about 400 as of March from 900 in 2020. 

CentralWorld shopping complex in Pathum Wan district, Bangkok. (File photo)

In August, Central Retail said it would drop the FamilyMart name entirely and switch to Tops Daily to help in its branding efforts. It is already got nearly 300 Tops stores ranging from supermarkets to convenience stores in addition to the FamilyMarts. Combined, the two units generated sales of 43 billion baht last year, according to Bloomberg Intelligence (BI) analysts Lisa Lee and Siti Nur Fairuz Khalil.      

And finally, billionaire entrepreneur Keeree Kanjanapas, is looking to leverage the elevated-rail system in Bangkok he has spearheaded over the past three decades, as well as his investments in smart-card, finance and consumer-product companies. His BTS Group Holdings Pcl this year opened its first Turtle convenience stores on prime platforms of some of the stations serving the metropolis’ 10 million residents. It is also installing vending machines near station exits. 

But whatever the brand, every one of their ambitions must compete with CP All’s plans to strengthen its already outsized dominance. 

The firm is looking to grow its network on expectations there will be a rebound in consumer spending and foreign tourists from Covid-19 pandemic lows, according to Jiraphan Thongtan, head of investor relations. CP All will invest as much as 13 billion baht on its 2023 expansion plans, including opening at least 700 more 7-Eleven stores, Jiraphan said. 

CP All’s convenience-store revenue rose 22% in 2022 to 354 billion baht, with food and beverage products comprising 74% of sales, according to BI. The company — part of a broader business group that includes Thailand’s largest food producer — will see 2023 group revenue and operating profit both grow by double digits, as it increases its focus on premium-food and non-food items, as well as new cost controls and economies of scale, according to BI analysts. 

"Competition is fierce, leaving only the toughest to survive," said Jariya Thumtrongkitkul, head of retail for Thailand at CBRE Group. "Convenience stores need to review how they are going to compete and expand."

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