We will differentiate on service, availability, price: Tanit Chearavanont

Tanit Chearavanont, Managing director, LOTS Wholesale Solution
The organised retail market in India is very small but despite the resultant room for growth, do you feel the pace at which it is expanding is still slow? If yes, share reasons.

Most observers would suggest that the organised retail market in India has been growing at a slow and steady pace. Despite that, based on the recent growth trends, India is expected to become one of the global retail hotspot accounting for market size of $1.1 trillion by 2020. Furthermore, the modern retail market in India is expected to double in size over the next three years. By 2030, India is expected to be the third largest consumer market.

For business-to-business (B2B) players like us, India offers a great opportunity. With a captive base of 12 million retailers and a growing Hotel/Restaurant/Café (Horeca) segment, India makes for a high potential market. Also, with the rollout of reforms like GST, RERA, etc., the environment is conducive to the growth of organised retail in India.

You have set up three stores in India (all in the Delhi-NCR region) in the last one year. What have been the lessons here so far and how have you used those insights?

We have had an incredible journey in India so far. For LOTS, India is a crucial focus market because it is undeniably a global hotspot and offers us tremendous opportunities for expansion. In the last one year, our learnings about the market have helped us to further strengthen and localise our retail strategy in the country. The most important learning comes from our understanding of Indian customers, which is a very heterogeneous group with diverse backgrounds and buying behaviours. In spite of this, we have realised that the core requirements of professional customers remain hinged on three aspects: Service, availability and price. Our in-depth research about the Indian market has given us insights about customer expectations that are similar to those in Thailand.

We are bringing the best practices from Thailand in the Indian market. We have opened stores close to our customers so that we can champion the cause of convenience and offer speedy delivery service. We have achieved good customer satisfaction with our delivery turnaround time spanning anywhere between 24 to 36 hours, almost on par with e-commerce players.

Another unique learning about the Indian market has been in the technology space. Unlike Thailand, Indian consumers are digitally savvy and at LOTS, we have ensured that through digital intervention, we ease the purchase process for our members. For this, we have launched a business development application for our sales force team and are in the testing phase with our e-commerce site.

Also, we feel that our members connect with us better when we run customised campaigns that specifically address their business needs. We saw great participation of our members in the Kirana Karnival festival and the beverage festival, amongst others. This strategy not only helps us in business but also creates excitement in the community of LOTS.

Is the challenge only from the offline players or do you feel the push is coming from online and omni-channel partners as well? What is the specific strategy to deal with them?

Today, the business model can be disrupted at any stage. Impeccable customer service is at the core of our philosophy. This strategy has helped us convert customers into avid brand ambassadors. Keeping this core value in mind, our delivery service consists of an unloading facility at the shop, free packaging support at the store, early bird programme for Horeca, easy return and a highly enabled call centre with a stringent turnaround time for addressing all complaints. We have begun witnessing results in the form of a strong organic growth in the member base for each of our stores.

Deep discounting is the most popular way of customer acquisition today. Do you think here you can match up to the other big foreign players or even the big Indian companies?

Deep discounting and huge cash burning models have turned into a trend to ensure customer acquisition. However, we feel that this route is not sustainable in the long run because it is transactional in nature. This strategy does not instil loyalty in the customers. Also this phenomenon is an e-commerce play which focuses on “massification” strategies over quality. We understand the needs of our professional customers and offer them the most competitive pricing all year round along with regular product availability. By doing this, we ensure that our member base always meets the needs of their respective business. This predictability of price and availability helps them to plan better and thereby increases their profits. To add to our customers’ delight, we curate various campaigns that ensure that our members save more with each purchase. At LOTS, we run “Deal of the Day” campaigns where one product that is central to our customer’s business is given at a disruptive price. This is a win-win as it helps us to add value to purchases made by members; in return LOTS earns loyalty and repeat visits. Our strategies are devised based on building long-term relationships with our customers, who begin seeing value in associating with us. 

What are the similarities and differences in buying behaviour between the Indian consumer and the one in Thailand or in any other Asian market? 

Thailand and India are very similar in the business-to-business (B2B) retail segment; they are both led by diverse consumer demography and a robust retail ecosystem. However, the balance of modern and general trade varies in both countries. For instance, general trade contribution to the overall market in Thailand and India are 50 per cent and 92 per cent respectively. 

India is thriving on the trend of online retail whereas the penetration of e-commerce in Thailand is relatively slow. Apart from this, being a smaller country, Thailand has a stronger infrastructure for supply chain management which makes the logistics a bit easier compared to India. In India, we are trying to strengthen our logistics network and to that effect, we already have a fully functional warehouse to support our three stores.

How have you gone about choosing store location in India? 

We have decided our store location keeping in mind our ideology of staying close to our customers. We are experimenting with different store formats basis the demand and demography of particular regions. Based on our retail expertise, we want to populate the area 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. 

Are all your customers at present small grocers or have you managed to ink deals with some big corporate clients for bulk supplies. How do you plan to reach out to that segment?

Being a B2B player, we serve customers across small grocers, Hotel/Restaurant/Café or Horeca customers -- including 4 and 5-star hotels and services like schools, hospitals and other institutions. Our current focus is to develop the kirana and the Horeca segments. For these customer groups, we have several offerings like convenient pack sizes for shop owners, the international product range for specialised restaurants, a very competitive range of disposable products for caterers and QSR restaurants and many more.

We have partnered with some of the leading corporates to address their stationery and pantry needs along with providing customised gifting solutions. And since the launch of our in-house bakery, we have been able to offer them a complete pantry solution with bakery items, hot and cold beverages, snacks, disposables, among other options. This has been well received and we are witnessing a steep upward trend in business. 

Do you have a time frame in mind about breaking even? 

It will be difficult to estimate profitability, but we are aiming to break even in the next four years. Currently, we are only focusing on improving our services and infrastructure so that our valuable members can take advantage of our unparalleled customer experience.

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