Thailand’s largest multichannel operator CP All is investing up to THB9bn (£179.3m) to expand its Siam Makro business at home and overseas.
Two-thirds of the budget is allocated to opening 20 stores in Thailand, while the remaining investment will be dispersed across the region in markets including Laos, Cambodia and Vietnam.
Siam Makro is easily Thailand’s largest cash-and-carry chain, with a 98% market share in the country.
The banner, which targets the hotel, restaurant, café (HORECA) and B2B sectors, boasted a 91-store network in 2015.
In 2016, Siam Makro expects revenue to rise by up to 10%, although this may be less as a result of a recent restructuring of parent company CP Group.
The investment strategy is seen as 7-Eleven owner CP All’s swift response to Metro Group’s withdrawal from Vietnam – one of its chief operational bases in Southeast Asia.
The German retailer is shrinking its operations, with the exception of China, due to pressing domestic concerns, handing Siam Makro first-mover advantage to expand into potential-laden markets.
Recent years have seen many Southeast Asian countries transform their economies and legislative environment.
International wholesale retailers used to encounter many difficulties operating in these markets due to complex ownership laws preventing foreign investors owning 100% of their business.
The situation has recently been changing. These markets are now rolling out the red carpet, inviting overseas investors to enter, especially in the wholesale sector, where conditions are especially favourable.
For the past five years, Siam Makro has overseen a low-key operation in Vietnam through a local joint venture.
With the country’s new openness, having joined both the World Trade Organization and Trans-Pacific Partnership, CP All will soon be able to take advantage of amended ownership and tariff rules, unlike a player such as Metro.
Recent moves have seen Japanese and Korean retailers such as AEON, Lotte Shopping and E-Mart making landfall in Vietnam, and FamilyMart expanding to Malaysia, as they try to build strategic strongholds for future growth.
The benefits will not only be in terms of revenue growth, but also international supply chain efficiencies.
Last year, Siam Makro also confirmed it was keen on expansion into other developing Southeast Asian nations, including Myanmar and Indonesia.
With feasibility studies on Myanmar already completed, Siam Makro’s market entry to this 53-million-strong consumer market is now a reality, pending approval from local authorities.