Thai retailer banks on customers’ new shift to “shop locally”

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THAILAND - With more customers choosing to shop at smaller stores nearer home, a Thai retailer has decided to open 200 new convenience stores by the end of this year.

Thai retailer Sun 108 Co, a Saha Group subsidiary, has announced plans to open 200 new 108 Shop convenience store outlets this year to cater to changing customer behaviour in this sluggish economy.

This will expand the local retailer’s store network to 900 outlets nationwide. Half of the 200 new stores will be directly managed by the company, while Sun 108 intends to franchise out the remainder.

According to Sun 108 managing director Vathit Chokwatana, more consumers are choosing to ‘shop locally’ to cope with the higher costs of living and declining purchasing power.

In Southeast Asia, traditional retail formats such as the mom-and-pop small stores commonly situated near housing estates are generally viewed as providing more affordable groceries compared to modern retail formats such as supermarkets and hypermarkets.

Chokwatana believes that the convenience store retail format can fulfil the same functions as mon-and-pop stores, with more modern facilities.

As such, "We will cash in on this shopping trend by increasing the number of 108 Shop outlets by 30% this year," Chokwatana told local newspaper Bangkok Post.

The retailer is also currently considering the expansion of its own-brand product range beyond its existing four categories of washing-up liquid, detergent, floor cleaner and fabric wash.

"Our house-brand products have received a better response than we initially expected," Chokwatana explained.

In addition, Sun 108 will increase the number of vending machines and other services such as free-of-charge utility bill payments at its existing stores to provide extra customer convenience.

In 2008, Sun 108 achieved US$71.04 million (BHT2.5 billion) in sales. With store sales increasing by 8% in the first three months of 2009, the retailer estimates this year’s sales growth to exceed 50% to US$106.56 million (BHT3.75 billion).