Berli Jucker Plc (BJC), the SET-listed consumer goods maker and the owner of Big C Supercenter, remains committed to ramping up its retail business despite the pandemic.
The company says the retail business generates cash faster than other businesses and has unlimited growth opportunity in Thailand's 3.6-trillion-baht retail market, as long as it relies on its own distribution channels.
"We shifted our focus to downstream a few years ago and look set to increase our effort in this business later this year," said Aswin Techajareonvikul, BJC's chief executive.
In 2019, BJC reported total revenue of 174 billion baht and a net profit of 7.27 billion baht.
The company is engaged in the modern retail supply chain, operating modern retail stores and online stores; in the packaging supply chain, manufacturing, marketing and distributing packaging products, including glass containers, aluminium cans and rigid plastic containers; in the consumer supply chain, manufacturing, marketing and distributing consumer goods in food and personal care; and in the healthcare and technical supply chain, distributing products and services related to pharmaceuticals and pharmaceuticals.
BJC also operates other business units, such as retail in Southeast Asia, and is interested in mergers, acquisitions and new business development.
Mr Aswin acknowledged that the company put its retail expansion on hold temporarily during the coronavirus outbreak because it was unsure whether the situation would recover in the third quarter.
"With a better situation, we will resume investment with the same budget allocation of 10 billion baht, the majority of which will be slated for retail business expansion," he said.
The company plans to open two new hypermarkets, two Food Place branches and 240 Mini Big C stores this year.
In the first half of the year, the company opened 46 new Mini Big C outlets and four new Big C Depots, which are wholesale stores focusing on business clients.
Each Big C Depot contains a Mini Big C store under the same roof. There are five Big C Depot stores: two in Nakhon Ratchasima and one each in Buri Ram, Kalasin and Nakhon Sawan provinces.
"The Big C Depot format is still in a testing period, and initial results have been encouraging," said Mr Aswin, who was instrumental in expanding BJC into retail business in 2008.
Once Mr Aswin started working for BJC as its president, he set up TCC Logistics & Warehouse Co to open the first MM Mega Market, a wholesale and retail store format, in Nong Khai province in 2014. A second branch opened shortly after in Sa Kaeo.
BJC acquired 19 Metro stores in Vietnam in 2015 and renamed them MM Mega Market.
The company also opened B's Mart convenience stores in Vietnam in 2013. It now operates 109 B's Marts in Ho Chi Minh City.
"We opened the 20th MM Mega Market in Hanoi a few months ago," Mr Aswin said. "We will still use Vietnam as a springboard to expand MM Mega Market in Indochina within the next 2-3 years."
Stores in Laos, Cambodia and southern China are in the pipeline.
According to Mr Aswin, there is ample opportunity to open more MM Mega Markets in Vietnam, due to less competition than in other retail categories. MM Mega Market is a wholesale concept store, serving customers in the HoReCa (hotel, restaurant, catering) segment.
As of the second half of 2020, BJC operates 1,448 retail stores under various brands and formats, including Big C, B's Mart, MM Mega Market, Asia Books, Food Place, Pure and Depot, covering hypermarkets, supermarkets, convenience stores, wholesale centres, bookstores and drugstores.
"With consumers shifting to shop more at smaller retail stores near their homes during the pandemic, we are gearing towards this trend," Mr Aswin said, adding that the highlighted formats to open in the future are Food Place, Mini Big C and MM Mega Market.
In addition to an active expansion into new retail formats, the company vows to forge as many partnerships as possible to develop other necessary items in the future to cover wider product categories.
"We're open for partners in all business sizes to help co-develop new products under our own brands or theirs," Mr Aswin said. "Under this partnership scheme, we are willing to hold less than a 25% stake in the joint ventures. However, it depends on the potential partners' technology or our purpose of collaboration."
In the past, BJC took a majority or controlling stake as part of any joint venture deal.
BJC reported that sales in the first half fell by 5.4% to 74.6 billion baht, with a net profit of 2.08 billion baht, down 47.7% from the same period last year.
The company gradually saw sales recover after state-imposed restrictions were eased.
According to Mr Aswin, the company's sales after Covid-19 will stem largely from products with greater markets. The company plans to dial back non-performing items and broaden the product assortment with bigger package sizes to support the new normal, such as work-from-home and cook-at-home lifestyles.
The company has also adjusted the frequency of deliveries from suppliers to its distribution centres and from its distribution centres to stores; diversified delivery options with drive-through service and home delivery; and increased cross-merchandising and cross-format promotions.
"As a matter of fact, the Covid-19 outbreak not only dealt a heavy blow to our business, but it also created new business opportunities," Mr Aswin said. "We've seen many initiatives from our leaders and their dedications. Lessons from the outbreak have prompted BJC to become better and more ready to cope with any disruptions in the future, including a possible second wave of Covid-19.
"The outbreak caused BJC to speed up changes. Several things were implemented within only 4-5 months during the pandemic, from an earlier plan to do them in the next 4-5 months."