after CP All’s 7-Eleven convenience store business, CP Axtra (the parent of Makro wholesale and Lotus’s retail), and Central Retail (which operates a whole hatful of popular retail chains, including Tops supermarkets). Sales losing steam but margin is improving In the fourth quarter, Big C’s sales increased by 3.2 per cent on the same quarter a year ago, to 26.1 billion Thai baht (US$746 million) with the help of the addition of over 150 new convenience stores and two hypermarkets over the course of the last 12 months. Gross margin held steady at 19.1 per cent. Net profit, at 1.1 billion baht, was down 7.7 per cent on the fourth quarter of 2022. Same-store sales fell by 0.5 per cent. For the full year, sales at Big C reached 101.1 billion baht ($2.9 billion), an increase of 4.3 per cent. Gross margin grew strongly to 18.1 per cent. Big C delivered net profit of 3.7 billion baht, down by 4.3 per cent from 2022. Same-store sales grew by 3.0 per cent. The quick take is that the Big C story is a familiar one across the Thai retail sector: a solid outcome for 2023 as a whole, driven by increased store counts and the revival of tourism, but experiencing a distinct slowdown in discretionary spending, particularly on big-ticket items, in the fourth quarter. More ominously, the decline in the fourth quarter signals a growing lack of momentum into 2024. Indications are that same-store sales growth across the chain is not exactly bubbling. Comp sales were already losing steam in the third quarter after averaging growth above 5 per cent in the preceding nine months. So the good news is not so much on the sales line but that the gross margin is still holding up. Meanwhile, Big C’s efforts to increase online sales are still in their infancy and are barely above 5 per cent of sales. That’s an increase over the past year but still very low compared with its peers. Rental business A little under 10 per cent of Big C’s retail business consists of rental and service income from the more than one million square metres of space it rents out primarily within its hypermarket-anchored malls. Indeed, its rental space is about equal to the total sales floor space of its own stores. Revenues from this source grew by 1.3 per cent year-over-year in the fourth quarter and by 4.4 per cent for the full year, attributable mainly to an expansion of leasable floor space. There is further scope for increasing the rental area this year and Big C is planning percentage growth in the mid-single digits. Put your head down and keep going Big C has a lot of ideas about how to keep the top-line rising but in essence, it is doing more of the same in 2024 that it was doing last year: adding stores, renovating existing ones, targeting tourists more vigorously and expanding a major collaboration with the independent mom-and-pop sector. The company currently has 1,814 stores under the Big C banner, most of them in Thailand but also a smattering in Cambodia, Laos and Hong Kong, where it recently purchased a 24-store chain of Thai-oriented supermarkets and rebranded them to Big C. (Big C also operates in a fifth country, Vietnam, but the chain there is operated by Central Retail, one of Big C’s competitors in Thailand itself.) Of the 1,814 Big C’s, 156 are large-format hypermarkets that anchor the small self-operated shopping centres. Big C plans on adding more sales space this year in the area of low-to-mid-single digits, along with the aforementioned increase in rental space. The additions will include two more hypermarkets in Thailand and one in Laos, and 200 or so more of its Big C Mini format, the smaller convenience store-type format that competes with CP All’s 7-Eleven, Central Retail’s Tops Daily and other popular retailers. It renovated seven of its hypermarkets in 2023 and wants to do a lot of it this year, including the revamping of stores in tourist-oriented areas to appeal more to the tourist segment. Stores that fit this profile are in the Bangkok CBD as well as Phuket, Pattaya, Koh Samui and Chiang Mai. In Bangkok, it created a tourist shop-in-shop at its flagship Rajdamri outlet and plans to do something extra special on the fifth-to-seventh floors to drive foot traffic, including a religious site. Big C is also fighting for what amounts to, informally at least, control of Southeast Asia’s independent ‘mom and pop’ retail sector, having already signed up 6,350 traditional shops in a collaboration called ‘Donjai’ in the second year since its quiet introduction. Under Donjai, an investment of around 250,000 (about $7,000) gets the shop a technology upgrade, for example, it might be a modern POS system. The store owner commits to purchase about 50 per cent of its inventory from Big C, making it a funnel for Big C inventory. The company aims to have 30,000 signed up over the next few years, which is certainly doable given there are hundreds of thousands of mom-and-pop operators dotting the Indochinese region. The macro headwinds are a-blowin’ Despite its efforts, there are things that no retailer can control, and one of them is the broad-basedslowdown in the Thai economy that is rippling through the entire retail sector. Big C, with its balance ofmerchandise across both necessities and discretionary items, will weather these kinds of conditions aswell as anyone. Still, it has some nimble competitors in both the hypermarket and convenience formatsand many of its stores just don’t look fresh. Renovations — and a lot of them — are essential, and theycan’t wait too long.