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Thai CP takes wholesale store to neighboring countries

Operator of 7-Eleven stores moves Makro chain into Cambodia, Vietnam and Myanmar

Thais shop at a Makro supermarket in Bangkok. CP All aims to modernize grocery shopping in neighboring countries where people rely on traditional markets. (Photo by Ken Kobayashi)

BANGKOK -- Thai conglomerate Charoen Pokphand is actively planning international expansion, hoping to apply its successful formula honed in its home market to its rapidly growing neighbors.

Its retail arm, CP All, operates 7-Eleven convenience stores in Thailand and opened its first Makro wholesale club supermarket abroad in the Cambodian capital of Phnom Penh at the end of 2017. Spanning roughly 10,000 sq. meters in floor space with parking space for 500 vehicles, the store is one of the largest such supermarkets in Cambodia. It draws crowds on weekends as street food vendors and families flock to stock up on ingredients and groceries.

Imported chicken and processed foods are among popular items at the store. "It's more hygienic and cheaper to shop here than traditional markets, and the air conditioning is nice," said a food stall owner.

A 56-year-old homemaker who used to go market-hopping to get her groceries now goes only to Makro, because she can find everything she needs there.

CP All is the retail arm of conglomerate Charoen Pokphand group, whose operations cover everything from livestock feed and chicken processing to food service and telecommunications. The retail unit, traded on the Bangkok stock market, generated 278.7 billion baht ($8.59 billion) in sales last year, and is one of the largest CP group companies, along with Charoen Pokphand Foods.

Siam Makro was established by CP All in 1988 as a joint venture with Dutch company SHV group. The membership-based retail model caught on in Thailand, and the chain became a go-to spot for food vendors and restaurant owners. There are 126 Makro stores in Thailand.

The chain touts low prices and broad selections of merchandise, backed by the wide-ranging operations of the parent group. CP All opened Makro business offices in India, Myanmar and China since the beginning last year to conduct market research, as well as in Vietnam, where it earlier opened an office. In China, another CP group company runs shopping mall and supermarket operations, but CP All has just begun its international expansion.

CP All is focusing first on the Makro chain over 7-Eleven because expanding the latter outside Thailand requires licensing agreements with U.S. 7-Eleven. Makro operations can be broadened to other countries without such hurdles.

With Thailand having led its neighbors in economic development, CP All CEO Tanin Buranamanit says the know-how the company built up at home can be used in countries in the rest of Southeast Asia, where many still shop at traditional markets.

Thailand has become a semi-developed country, so a high rate of growth in consumption is unlikely. In addition, household debt is high, casting a shadow  while the country's economic growth rate has just recovered to the 4% range. CP All is focusing on nearby economies with around 7% growth, like Cambodia and Vietnam.

Recent deregulation by in Vietnam and India of foreign retail operations is aiding the move, as big retailers from advanced economies, like Japan's Aeon and Tesco from the U.K., make inroads. CP group's strength lies in its vast operations that enable low-cost procurement.

CP All operates more than 10,000 7-Eleven stores in Thailand. Buranamanit says the company is taking steps to expand 7-Eleven shops into Cambodia, Laos and Myanmar. The bidding process for franchise licenses has started in Cambodia and Laos, according to some reports.

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