Thailand's Big C Supercentre has ruled the roost for the past decade but is finding that a brash newcomer, Tesco-Lotus, is making inroads into its retail turf.
A partnership between Thailand's Central Group and France's Casino group, Big C has been able to maintain its nine per cent share over the last three years. But its rival has surged past with a 14 per cent share and an aggressive plan to build on its success.
The rival alliance between Britain's most successful supermarket operator and the local Lotus group is stepping up upcountry expansion - an area that Big C has up to now dominated. "Back in 2000, Tesco-Lotus only had 15 stores, now it has 40 and is planning more both in Bangkok and upcountry," notes an industry observer.
The sector leader has also finely segmented the market, developing three smaller alternatives to its giant flagship stores - Tesco Express, Tesco Supermarket and Tesco Value. The move pitted it against small grocers and side-stepped government regulations, but allowed Tesco-Lotus to quickly make its brand and presence felt at various levels. To offset its rival's rapid expansion, Big C has been playing a location game. In an area in north Bangkok, where Tesco-Lotus has three stores, for example, Big C has built one in the middle. In terms of total number of mega-stores, however, it looks likely that Big C, with plans to add three stores to its existing 33 this year, will fall further behind its rival.
It will also follow its rival's lead, opening smaller discount stores, but the first will only come online next year.
One strategy hailed by analysts is its move to add several Leader Price stores to its existing four. These supermarkets are significantly smaller at around 800 sq m as opposed to the traditional 10,000 to 15,000 sq m discount stores, and sell only house brands targeted at lower income earners.
Big C has also increased its ad budget this year by 25 per cent. Much of its promotions focus on pricing, with its 'Match It' campaign promising to match the lowest prices of its competitors. But are these initiatives enough to outflank the savvier Tesco?
VITAL SIGNS
Big C Tesco-Lotus
Launched 1993 1999
Market share 9% 14%
Number of stores 33 40
Planned openings 3-4 NA
BIG C'S TURNOVER (million baht) 2000-03
2000 (25,591) 2001 (32,637) 2002 (38,213)
Source: Company data
DIAGNOSIS
PRACHAWAN KETAVAN, Vice-president/strategic planning director, J.Walter Thompson Thailand
Big C's achievement as the pioneer in the retail business lies in the design of a shopping environment that reinforces the positioning as an 'inexpensive' place to shop.
But sadly this perception is not unique to Big C. The challenge lies in how to differentiate itself from competitors. Big C's move away from a cliched proposition to one of 'inexpensive and fun' appears to be a good sign.
It is expected that creating a low price appeal is often the goal of any superstore, and the result of one retaliatory price slash after the other has led to a decline in industry profits. By communicating some kind of added value, Big C has introduced a new value equation into the industry. But with price being the only message, how long can superstores rely on claims like 'super cheap' to surprise the customer? On a brand level this is not the way Big C can differentiate itself. It is by combining the functional and emotional benefit that gives it the edge and the brand a recognisable personality. The challenge does not stop at retail communication.
In terms of advertising, although overt humour may not help to create the brand identity, it can afford to be more creative; keeping in mind that today's Thai customers are much more responsive to distinctive and sophisticated communication.
ANDY WHEATLEY, Managing director, Enterprise IG, Thailand
Big C knows that location, price and service are the key pillars of a successful retail operation. It has location and price covered. But so too has Tesco Lotus, Makro, Tops and Carrefour.
Big C's challenge is to go beyond price and location to see if it can create a genuine bond with its customers and build on something more compelling than convenience and cost. For a company that proudly declares that it is about 'More than just low prices', this challenge needs to be met swiftly.
Customer service is paramount and internal branding programmes can play a substantial role in motivating supermarket staff to provide higher levels of service to their customers.
Safeway's 'Make a difference' campaign in the UK in the late 1990s is testament to this and Big C needs to make it clear to its own staff how 'More than just low prices' impacts the way they do their jobs. Loyalty programmes also have a role to play, but they need to be more than just discount vehicles for other in-store products and promotions. They need to engage the customer by offering access to other genuinely useful non-proprietary products, services and brands that can actually benefit their lives. As practical as it is, the Big C Card does not provide this kind of goodwill.
TREATMENT
Prachawan's prescription
- Big C and its agency should fashion an image around the brand that is not only consistent with its proposition, but also credibly promised.
- Rethink the underlying business system which is needed to deliver 'Inexpensive and fun' as well as examine the customer journey through the superstore and identify areas of 'fun' it can own.
- Be innovative in the production of breakthrough communication and raise the creativity bar. Go beyond traditional media to really reinforce the proposition.
Wheatley's remedy
- Corporate social responsibility is another avenue for building Big C's brand equity. The Big C Foundation is a step in the right direction, but it is too early to gauge its success. Corporate social responsibility allows brands to play a major role in the fabric of society and it must be administered with care and without cynical self-promotion for the brand.
- Big C must make it clear to its own staff how its 'More than just low prices' programme impacts the way they do their jobs.
