LOTS Wholesale Solutions to open 12 new stores; invest over Rs 1,000 crore

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LOTS Wholesale Solutions, part of the US$ 50 billion Charoen Pokphand Group (CP Group) and a wholly owned subsidiary of Siam Makro Public Company Limited from Thailand – which runs and manages 113 Makro Cash and Carry stores, 8 Siam Frozen shops and 5 food shops in Thailand totalling 734,713 square metres of sales space and 1 Makro Cash & Carry store in Cambodia – is celebrating its first year of successful operations in India.

LOTS opened its first store, an over 50,000 sq.ft. outlet in Delhi in July last year at Netaji Subhash Place in Pitampura, west Delhi and has since gone on to add two more stores – one in Akshardham in east Delhi and another in Noida. Cash & Carry, also known as wholesale trade, is fast emerging in India, where LOTS Wholesale competes with players such as Walmart, Metro Cash and Carry and Reliance Cash and Carry, a unit of Reliance Industries Ltd.

Currently, with northern India as its focus region, LOTS’ objective is to increase its member base and strengthen its foothold in this region. “We have commenced operations in Delhi-NCR and are looking to enter Haryana, Punjab and Rajasthan in the coming years,” says Tanit Chearavanont, Managing Director, LOTS Wholesale Solutions, while discussing his company’s strategy with Progressive Grocer about growing its current audience base by multi-fold and the various initiatives that LOTS is implementing to meet its business objectives in India.

How would you like your customers to perceive your store brand and what have been your initiatives towards fulfilling your customer promise and delivering on your brand values?

With customer-centricity at the center of our business, our aim is to build the customer’s confidence by providing a one-stop-shop solution for all their retail needs. As a responsible brand, our priority is to add value and win the customer’s trust across segments. We believe that for a business to succeed, there must be a ‘pull’ effect from the customer’s end, which can only be created if you are closely listening to them. At LOTS, we are committed to regularly taking feedback to improve our services.

Additionally, keeping our end user’s best interests at heart, we deliver daily on our promise to pass on extra benefits to our customers. In order to generate value for our audience, we have also been creating customized marketing campaigns that help educate customers on our latest deals and offerings.

Tell us about any interesting concepts or innovations that you have introduced at your stores in terms of category management, merchandising strategy, cross-bundling of products?

As a differentiation strategy, we experiment with innovative technologies across various aspects of the business. With a heavy focus on digitising the backend solutions, our workforces are successfully tech-enabled to deliver a high-quality customer experience.

For us, category management is a crucial aspect of the business and to simplify the process, we use marketing analytics tools along with business development applications. Our intelligent tools, such as geo-tagging, help us to map customer buying patterns and after carefully studying our back-end data, we modify our product offerings according to their business needs.

How are you deploying technology to solve the big pain points in supply chain, logistics, and warehousing?

Supply chain is the most crucial aspect of any business and it has a cascading impact on trade and retail sector. A modernized and efficient supply chain is an essential part of improving ease of doing business. It helps to scale down the cost of manufacturing and accelerate consumption due to better market access. We are constantly improving our supply chain with our expansion in India. In our first year of operations, we faced certain challenges in terms of streamlining our processes. However, our preliminary market research has enabled us to localize our approach by using global practices, which led to creating a strong supply chain management across our stores. Keeping innovation at the core, we are constantly implementing technology to serve the changing needs of customers to deliver best price and quality with a focus on inventory management. Th is has further helped us to control and monitor our processes at every step of the way.

What role does your location strategy play in serving your target customer catchment?

Location strategy plays a huge role in our overall business framework. As a part of this, we prefer staying geographically near our customers and accordingly decide our store location. We are currently experimenting with different store formats basis the demand and demography of various regions. Based on our retail expertise, we want to populate targeted areas with multiple stores so that we can cater to our business customers effectively. In line with our cluster approach, all our stores are well-connected with various means of transport, increasing our customers’ convenience and their frequency of store visits. For instance, all our stores in Delhi-NCR region are within 20-25 minutes from customer catchments and are well connected with various means of transports, making it convenient for consumers to shop with us on a regular basis.

How do you look at the growth rate of the wholesale cash and carry trade in India in relation to the pace of growth in modern retail and how do you evaluate the opportunities and challenges for this format in the country?

India’s B2B retail market has proven to be profitable for domestic as well as global retailers. With the sector’s immense growth potential, the industry is set to grow to US$1.1 trillion by 2020. With a captive base of 12 million retailers and a growing HoReCa segment, India’s high potential market is backed by favourable policy reforms such as FDI in retail, GST and RERA.

This, in turn, has created opportunities for brands like us to implement our global strategies in transforming the retail narrative in India. Following this upward growth trend, we are aiming to tap into India’s organised retail trade, which currently comprises less than 10 percent of the total US$ 670 billion retail business.

Being a developing country, the market poses initial challenges for the retail sector, including adequate supply chain, real estate and the required infrastructure. Given the complex nature of the Indian market, it is imperative that global companies understand their uniqueness and adapt accordingly. With our 30 plus year expertise in the B2B retail segment and understanding of customers need, we are equipped with a unique approach to adjust to the current market conditions, which will further enable us to reinforce our position as a global leader.

As head of LOTS’ operations in India, what is your current focus and business game plan?

As part of our growth plans, we are aiming to capture the largest market share in India by bringing in new technologically driven practices to organise the current retail segment. Having launched three stores in just over a span of six months of operations, we are one of the fastest growing B2B retailers and are headed towards an even more robust expansion. Over the next three years, we are looking at opening 12 new stores in the country. In addition to this, within the next five years, we plan to invest over Rs 1,000 crore towards developing a stronger retail ecosystem.

Currently, with northern India as our focus region, our objective is to increase our member base and strengthen our foothold in this region. We have commenced operations in Delhi NCR and are looking to enter Haryana, Punjab and Rajasthan in the coming years. With an integrated approach, our e-commerce portal will also support our objective to help grow our current audience base by multifold.

Our concerted efforts remain in line with our customer’s business objectives and our omnichannel business model aims to effectively deliver convenience to every customer segment. One of our current client requirements is to reduce their sourcing time and we are actively working with them across various initiatives to provide the same. In a nutshell, our glocalisation strategy aims to overcome challenges by applying global practices with localisation of our products at core.

Investor interest in India’s online food and grocery has perked up as never before. What are the reasons for this heightened shift and do you see a major channel transformation afoot in the industry?

The expansion of the middle-class population with disposable income is driving a strong purchasing pattern across the online food and grocery segment.

India is home to the youngest population in the world and various factors including increased internet and mobile technology penetration have contributed towards creating a dynamic market environment in India. This has opened up various avenues for the organised e-retail players. According to RedSeer Consulting, India’s grocery market is valued at $500 billion and merely a 0.2 percent of that value is online. Considering the massive growth potential, the industry is expected to expand at 50 percent growth over the coming years based on various online and offline models. This has further increased investment opportunities from global and domestic investors.

In terms of your e-commerce business in India, how are you looking to grow and expand it and what are your goals for the future?

Going by the current consumer demography in India, e-commerce is the next big thing, which will help acquire a large share of customers in the retail segment. We are looking at a ‘three-click experience’ by investing in e-commerce platforms that will further be complemented by our application. Our core idea is to harness world-class online capabilities that off er tremendous ease of purchasing from LOTS Wholesale Solutions. Th is is also done with the aim to help members achieve their business goals of reducing their sourcing time. As an active player of the cash and carry segment, we feel that a complete online transition will still take time for smaller entrepreneurs and Kirana customers. Thus, retailers need to look at a combined online-offline approach for a sustainable business model.

Tell us about the latest initiatives concerning LOTS’ support & partnership programs for kirana traders, farmers and women entrepreneurs?

Our primary efforts in India are concentrated towards community and people development. As responsible business partners, we have been sharing our growth benefits with our member base including small retailers, kiranas and traders at large. Our customer-centric initiatives have also benefitted upcoming entrepreneurs including women, start-ups, etc. to leverage their products and services to their benefit and increase their overall business growth. We provide a sustainable ecosystem for kiranas, farmers and small suppliers and lend support to home-grown brands, which are an essential part of our region-specific business strategy. Th is approach is also extended to the daily needs and grocery section of our product range.

As a part of our farmer engagement programme, all efforts are made to source fresh produce from local farming communities, which help them get better returns while reducing wastage during transportation and storage. We are also working towards creating a market for start-ups and smaller brands in the field by providing them with a credible launchpad.

Looking ahead five years from now, how do you visualize the F&G industry landscape in India and where do you see LOTS India in the future perspective of things?

India is one of the most favorable retail hotspots due to extensive retail expansion supported by economic growth, increasing consumer consumption, rising urbanisation and increasing spending power. The overall organised India retail market is currently valued at the US $60 billion, out of which food and grocery accounts for the largest share of the revenue. Th e government has also played a strong role by supporting this segment and creating better opportunities in the sector. Riding on these factors, we are leveraging our international market expertise to provide high quality products and services to our customers.

In India, we have noticed that food and grocery retailing is still dominated by general stores, kiranas and convenience stores. This was a strong indication to us that we could use this opportunity to be an active contributor and supporter of the whole ecosystem. Th e organized retail expansion has grown from mega cities to smaller towns as well as villages. Th is further complements our vision to launch 15 wholesale distribution centers across northern India catering to a larger audience with high quality food and grocery services.

How would you describe your strengths and best achievements so far?

Our success story in India so far has been led by four strategic cornerstones – increased accessibility, targeted region-specific strategy, focus on homegrown brands and our cluster approach. Our customers’ encouraging response has been a strong force of inspiration for us. Going by our growth trajectory, we have already successfully acquired 1,40,000 customers in the first six months of our operations. Th is is a testament to our hard work backed by our strong market expertise and differentiated services. We have also fared well on customer satisfaction with our delivery turnaround time spanning anywhere between 12 to 36 hours, almost at par with the e-commerce market.

Our innovative customer campaigns have also been instrumental in attracting a large customer pool leading to repeat purchases at our stores. These campaigns go beyond just business narratives by also building excitement within the LOTS community. India is one of our key focus markets and we are thoroughly invested in organising and growing the retail industry here.

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