Thai wholesaler LOTS relies on 'glocalisation' to take on India market
Tanit Chearavanont, Managing Director, LOTS Wholesale Solutions, is optimistic about its foray in India despite many big players in the market.
Thailand's LOTS Wholesale Solutions entered India at a time when the wholesale business is being hotly contested by Walmart, Metro Cash and Carry, and Reliance Hypermarket. The cash and carry business is part of CP Group, a multi-billion dollar global corporation with interests in food, telecommunications, real estate, and commodities.
As one of the scions of the group, Tanit Chearavanont has interests in India because he believes the country’s mom and pop stores have a better reach than most organised retailers. India is a huge retail market with over $650 billion in estimated size. Tanit talks about how LOTS will take on India’s challenges and turn its cash and carry opportunity into big business.
Here are edited excerpts from an interview:
YS: When did you decide to enter India and how did you plan it?
TKC: We started our research into the Indian market in 2015-16, and by July 2016, we got the go-ahead from our headquarters in Thailand to set up operations in India. By January 2017, we were here as CP Wholesale India, and the company became Lots.
YS: What were your findings during your feasibility study of cash and carry operations in India?
TKC: Our biggest findings were the insights of the general trade market in India. If you look at countries like Thailand, the ratio between general trade and modern trade is 50:50. But in a country like India, general trade is about 92 percent, and modern trade is about 8 percent. This gave us a sign that the Indian market has the potential for us to participate and grow.
YS: Why India when several players such as Walmart and Metro AG have already been here and even Reliance is big in the market? Is it the rate of consumption rising or is it the return on investment that interested you?
TKC: The major factor was the GDP growth of the country, which was around 6.8 percent and was projected to reach 7.4 percent by 2019. We are looking at GDP growing to 7.8 percent over the next few years. These were the indicators showing a positive trend for economic growth. Looking at these indicators and World Bank data, we at LOTS believe it was the right time to enter India.
We entered in India with 28 years of experience in Thailand, and hope to apply that expertise in the Indian market. Our aim is to provide the best rates and services to both our suppliers and customers. We also feel that we can contribute to large and ever-growing HoReCa (Hotels, Restaurants, Caterers) community with solutions that can positively impact their businesses.
YS: In your recent reports, you have mentioned localising your practices for India. Could you elaborate what you mean by this, given that there are different states requiring different practices to be introduced? How do you plan to introduce best global practices here?
TKC: I would like to answer this question in two parts. In the first part, I want to talk about what glocalisation is. When you look at a market like Thailand, our wholesale business has been working with kiranas that form a large part of our customer base and HoReCa (Hotels, Restaurants, Caterers).
However, in India, the HoReCa segment has not developed as rapidly as in some other Asian countries so our focus here will have to be kirana customers, hence, our product assortments will also be according to the customer base. Our focus will also be to target micro-catchment areas, and our offerings will depend on the demand from these catchment areas.
Hence, even if there are multiple catchment areas within the same city, our product offerings might differ between these regions. Basically, for us, glocalisation means studying the local demand, habits of general trade customers and accordingly cater to them.
Another important aspect of localisation is that if you look at Thailand, the way ecommerce has penetrated that market has been very slow. We don’t have large ecommerce players back in Thailand like in India. So, a lot of modern trade players in Thailand are just used to brick and mortar stores. In India, we are adopting an omni-channel strategy to work with small stores.
YS: What would be your omni-channel strategy to reach out to kiranas in India?
TKC: The most important part of the strategy is to be closer to these kiranas. As mentioned earlier, Indian traders do not have their own logistical support, because of which having the store far away from these catchments would not be feasible. We are tech-enabling our sales force, so for each store, we have a dedicated number of employees, who will go out into the market and collect orders through Android devices.
We are also bringing new technologies such as geo-tagging and a LOTS ecommerce portal and app, which will assist our customers in the smooth functioning of day-to-day operations. This data will connect with our warehouse solutions. As a global practice, we will also offer storage facilities to our customers so that our stores can also develop as distribution centers for our customers.
YS: When it comes to your P&L, would you be separately looking at each store, its investment and performance?
TC: We will be looking at overall investment and performance.
YS: Recent media reports talk about the opening of 15 stores?
TC: We will be opening these 15 stores in the next three years, and will be investing in them over five years. We are almost ready to open our next store in July and three stores in this year.
YS: In Thailand, your stores as large as 120-150 thousand square feet; what will be your store size in India?
TC: Our wholesale operation in Thailand is called Makro and was set up in 1989. When we started operations, our initial store formats were really big stores of one lakh square feet. However, we have started adopting multiple store sizes and formats according to the requirement of the area. Some of the average store sizes that we have in Thailand is 50,000 sq feet and we have also started looking at smaller stores that could be anywhere around 10,000 sq feet. So, when it comes to India we are looking at 4500-6000 sq mtr depending on the opportunity available.
YS: When it comes to cash & carry, people talk about big partnerships with farmers, butcheries, seafood companies, seafood distributors or fishermen, this is the usual narrative of all the big players. What is your plan in this context?
TC: Yes, early this year, we collaborated with MoFPI and conducted a workshop with farmers and trained them to store, package, and transport goods. We also committed to working more closely with farmers in India, and in line with this, we will be setting up collection centres at multiple locations which will make it convenient for us to not only collect products from farmers, but also educating those in the area.
We have successfully implemented this in Thailand where we have worked with farmers and butchers, and over the years, having partnered with Makro, they have grown to a level and become one of Thailand’s largest suppliers of products. Similarly, if we replicate these practices in India, we can help farmers increase their produce as well as income. We will also be looking at building a proper cold chain to help increase the shelf life of the fresh produce and meat directly sourced from the farmers and butchers because usually, we see that fresh vegetables are directly transported to collection centres in open trucks that can damage them and reduce their shelf life.
YS: What are the other product offerings? Are you planning to tie up with manufacturers of furniture or television companies? What is your product SKU other than food and other cold chain products?
TC: The company brings specially curated assortments categorised into food and beverages, kitchenware, household appliances, home décor products, furniture, bedding, textiles, sport equipment, office equipment, stationery and office supplies, automotive equipment, lighting, maintenance tools, electronic products, and others; making LOTS Wholesale Solutions’ outlets, a complete one-stop-shop. As mentioned earlier, our product offerings will also depend on the demand from the catchment area. So, our offerings might defer from store to store.
