OBG talks to John Christie, CEO, Ek-Chai Distribution System (Tesco Lotus)

Interview: John Christie

In the wake of recent floods, what measures can the government adopt to support a rapid recovery in consumer demand, especially in retail?

JOHN CHRISTIE: The government has launched various initiatives to support the flood victims and to stimulate consumer demand. We appreciate the government’s assistance in disbursing cash and cash coupons to affected families to use to restore their houses. These activities will help to bring about a strong recovery in consumer demand.

Moreover, it is important for the government to facilitate the fast reopening of factories that were devastated by flooding in 2011 as it will ease supply shortages, get people back to work and increase domestic consumption overall.

In terms of how retailers can mitigate risks, lessons can be learnt from recent events and robust business continuity plans put in place. For example, our new stores are designed with flood prevention measures to ensure that we can continue to serve our customers during any difficult times that arise in the future. Broadly speaking, we remain as committed as ever to Thailand and to our customers here. Our main aim continues to be to ensure we deliver for them, whatever the circumstances.

With new entrants such as Ikea, as well as the consolidation of Carrefour and Big C, what is your view of the level of competition in the sector?

CHRISTIE: The retail sector in Thailand is competitive. Nevertheless, we continue to retain our market leader position in the country due to our strong commitment to our customers. I am very proud of what we have achieved over the past 17 years in the market; we have brought a range of new and high-quality products, services and solutions to our customers at competitive prices.

In terms of our most recent achievements, a few months ago we launched our Tesco Extra format, which sets new standards for modern trade in Thailand. We continue to strive to deliver more value for our customers in the coming years.

How does the scope for local sourcing of goods in Thailand compare to that in other Tesco countries, in terms of soft and hard infrastructure?

CHRISTIE: Wherever possible we source locally. We purchased around BT137bn ($4.4bn) worth of products and services from Thai suppliers in 2010, and the volume of local product sourcing is growing every year. The Tesco Group network also gives us opportunities to export Thai products to other markets. An example of this is our running of an annual Thai fruit export event in the UK.

How do the government’s current zoning regulations affect the expansion outlook for large retailers such as Tesco Lotus?

CHRISTIE: We always work within the national planning law, and we believe that despite the zoning restrictions in Thailand, there remains plenty of growth opportunities in the country. Indeed, we’ve got a strong store opening programme that includes the opening of additional Tesco Extra stores and the delivery of other formats across the country to meet our customers’ evolving needs.

What is the growth outlook for retailers in provincial markets, compared to the traditional focus area of greater Bangkok?

CHRISTIE: Thailand is set to have strong economic growth levels, as it has an expanding population, growing wealth and increasing consumption. There is also a clear trend of urbanisation of cities around the country. So, there are good growth opportunities for retailers in both Bangkok and the provincial markets. We are obviously working to both contribute to and benefit from these opportunities and have a store opening plan that sees us investing in more stores and jobs across the entire country.