New Tesco Lotus CEO highlights "growing together" scheme
New Tesco Lotus chief executive officer John Christie revealed his business philosophy of "growing together" via his first interview to the Thai media recently. He covered a number of topics, excerpted below.
Store expansion and growth
How many stores do you have now?
We had over 900 stores at the end of last year, 133 of them hypermarkets.
How many new stores will you open?
This year, we aim to increase our space by 135,000 square metres, which includes new store openings and store upgrades such as conversion of hypermarkets to Extras. We plan to convert at least five hypermarkets to Extras this year, for example, Bang Na and Navanakorn. Tesco Lotus results show 17-per-cent sales growth after Extra store conversion.
What is Tesco Lotus’ sales growth target for 2012-13?
We will continue our growth momentum and hope to achieve a similar sales-growth rate as in the previous year.
Tesco Lotus Growth Fund (TLGF)
Why has Tesco chosen to list the property fund this year?
We are always exploring opportunities to add shareholder value. We have explored a number of options, with a property fund currently the most suitable mechanism to achieve this by allowing us to unlock the value of our portfolio and create recurring streams of long-term fee income.
Are you happy with TLGF’s launch? What do you think contributed to the increase in the share prices?
We are very happy with the listing of TLGF. It is considered one of the most successful property fund IPOs [initial public offerings] in Thailand ever, with regard to sizing, pricing and the overwhelming responses from both institutional and retail investors. This shows that investors have a high level of confidence in the Tesco Lotus brand and our potential business growth.
As you are a foreign company, are you allowed to own properties and operate a property-leasing business, or launch a property fund?
Tesco Lotus is a local company, and is recognised as such by the Thai Ministry of Commerce. Tesco Lotus is investing, operating and reinvesting in the Thai economy. Tesco Lotus now employs more than 40,000 full-time staff and services over 35 million customers each month.
What is the long-term plan for the property fund?
We hope to see the fund grow through property acquisitions. The fund will have a right of first refusal to acquire both existing and future properties from Tesco Lotus.
Bt300 wage scheme
Do you have an opinion on the government’s Bt300 minimum wage policy?
In line with government policy, we have already announced an adjustment of pay structure for our staff who work in Greater Bangkok, Phuket and other provinces. This change is a direct increase in the minimum wage effective April 1, 2012, and benefits over 40,000 staff nationwide.
Flooding
What have you learned from the recent flood and what are your prevention measures?
We have learned many things and incorporated them into our robust business continuity plans. Moreover, we are redesigning some infrastructure to prevent and mitigate risks from flooding. For example, our new stores are designed with flood-prevention measures to ensure that we can continue to serve our customers during difficult times. We also plan to set up regional distribution centres. In broader terms, we remain as committed as ever to Thailand and our customers here, with our main aim being to ensure we deliver for them, whatever the circumstances.
Competitor issues
How do you view the level of competition in the retail sector, which has seen new entrants such as Ikea, as well as the consolidation of Carrefour and Big C?
The retail sector in Thailand is competitive. Nevertheless, we continue to retain our market-leader position due to our strong commitment to our customers. I’m very proud of what we’ve achieved over the last 17 years, with us having brought new and high-quality products, services and solutions to our customers, at competitive prices.
What is your response to Big C’s lawsuit accusing Tesco Lotus of unfair advertising and marketing practices?
All of Tesco Lotus’ sales promotions and campaigns are conducted transparently and run in full compliance with local laws. Tesco Lotus has received significant positive feedback from customers about these promotions.
Can you tell us more about the recent launch of your “Number One for Price” campaign? Are you in a price war with Big C?
Over the past 17 years, we’ve always been committed to keeping prices low for customers and have helped customers save over Bt4 billion through our Roll Back campaigns to date.
We launched our Number One for Price campaign in February and have received very positive responses from customers, as shown in our recent research conducted by Nielsen.
Do you have any opinion on Big C’s private placement to raise capital for store
expansion?
We don’t comment on this kind of activity of competitors. We would just like to reiterate our commitment to continued investment in Thailand, and our commitment to contribute additional benefits to our customers, communities, people and the country.
