r in Thailand by revenues. There are clear signs that the merger two years ago of Makro and Lotus’s, under CP Axtra’s corporate banner, is working.  Despite food price deflation in the Kingdom, the company’s same-store sales are edging up, its fresh food is getting better on the retail side, its omnichannel efforts are bearing fruit and it is eyeing more store openings both domestically and overseas. CP Axtra’s ambition to become the “number 1 B2B and B2C retailer in Asia” doesn’t look far-fetched. Not too far-fetched anyway. The company had sales of 361.3 billion Thai baht (US$10.3 billion) in the first nine months of the year, which represented an increase of 4.5 per cent on the same period in 2022. CP All, which has a 60 per cent stake in CP Axtra, owns Thailand’s 14,000-plus 7-Eleven convenience stores that racked up sales of 296.2 billion baht (US$8.4 billion) during the same period, thus running second to CP Axtra itself. A long way back is the nearest Thai competitor, Central Retail (182.8 billion baht, US$5.2 billion), which is now making a concerted foray into wholesale.  The growth in sales for both the retail and wholesale arms of CP Axtra is not being driven only by the addition of new stores. In the latest quarter, same-store sales for Makro (to both wholesale and retail customers, with a roughly 70/30 split) grew by 3.2 per cent and for Lotus’s (retail customers) by 2.2 per cent. That’s despite food prices in Thailand having spiralled downward.  The company reckons that same-store sales would have been 6.6 per cent higher at wholesale and 4.8 per cent higher for retail if last year’s fresh food prices had held good for this year as well. (These kinds of numbers are a little bit wonky because they value this year’s sales volume at last year’s prices. Still, since groceries are what economists call ‘price inelastic’, the numbers are probably not far off.)   Lotus’s is crushing it on fresh food  Aside from same-store sales growth in the face of deflation, several other key points are emerging about the evolution of the company since its formation two years ago with the merger of Makro and Lotus’s under CP Axtra. The first is that better fresh food sourcing – partly as a result of integration with Makro’s supply chain – is having a positive impact on Lotus’s fresh sales.  The share of Lotus’s sales from fresh food has risen from 25 per cent to 27 per cent just in the last year, which is significant, particularly if fresh food prices have fallen as sharply as CP-Axtra says they have. Even more significant is that before the merger in 2019, fresh food accounted for only 18 per cent of Lotus’s sales. So that is a massive uplift of 9 percentage points in four years, during three of which there were severe supply-chain disruptions because of Covid-19 and its aftermath.  The quantity and quality of fresh food have clearly improved across all Lotus’s formats and particularly the smaller supermarkets (Lotus’s Go Fresh), which now number 2,054 and are living up to their name: they have shifted from being glorified convenience stores to providing a genuine, highly convenient alternative at the neighbourhood level to full-sized supermarkets or hypermarkets. Omnichannel is up, up and away Another major development for the company has been the stellar growth of omnichannel sales, which this year have accounted for 12.5 per cent of company sales and are on track for 15 per cent penetration by the end of next year. This doesn’t mean the company has given up on expansion of its real-estate platform or even slowed it down. Leveraging real-estate assets is certainly supportive of omnichannel fulfilment, but more than that it is a sign of confidence in the future of in-store shopping. CP Axtra now owns 164 wholesale warehouses averaging 5,300sqm, and 2,525 Lotus’s stores, of which 268 are hypermarkets. The medium-term goal is to add 3-4 large-format Lotus’s, 10-12 supermarkets and 100-120 Go Fresh mini-supermarkets per year in Thailand.  The company is also looking at expanding its international footprint. It already has a major presence in Malaysia and a foothold in several other countries in the region, including India and Cambodia. Mall income is rising, too CP Axtra has yet another string to its bow, apart from retail and wholesale sales from its own stores. It also derives income from renting space in the hypermarket-anchored malls it owns that are dotted around the country and usually compete head to head with a similarly configured type of mall run by Big C. CP Axtra refers to these as ‘hybrid’ malls, which incorporate both a company-owned store (the Lotus’s anchor) and third-party tenants. The amount of leasable space in these malls is non-trivial: 1.1 million square metres of it and that is only the ‘permanent’ leasable space, and doesn’t include pop-up and other temporary tenancies that add to the vibrancy of the Thai shopping experience.  Mall revenue grew by 6.9 per cent in the first nine months of 2023, on a year-over-year basis, to 10.6 billion baht (US$297 billion), on the back of both higher rents and occupancy. The company is looking at further opportunities to expand the amount of mall space on the land it owns to drive revenue growth.  CP Axtra is not without competition: Central Retail and Big C are both formidable and capable of eating into CP Axtra’s market share. For now though, it has no genuine peer in Thailand’s retail and wholesale space, and the way things are looking, it will not easily loosen its grip.