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Tesco has announced its full year results with LFL sales in Asia showing improvement in Q4.

Significant improvement in the second half

Although full year LFL sales in Asia fell by 6.2%, it declined by 3% in Q4, showing signs of recovery. Sales in the first half was impacted by the retailer’s decision to exit unprofitable bulk selling. Thai government’s issuance of welfare card, which could only be used in traditional stores also impacted sales by 1.2% over the full year, but this had eased in Q4. Profitability was recorded at £286m, down 4.3% in Asia. There was a marked improvement in H2, as the retailer successfully completed renegotiations with suppliers and progressed quickly on its store restructure and office operations plans.

Store repurposing and network optimisation

Tesco repurposed a total of 26 stores, the majority of which were in Thailand where it had formed new partnerships with Mr. DIY home improvement, Echo Game & Karaoke play centre and Cosmo Beauty. 70 of the 72 new stores opened were in Thailand, primarily in the convenience format. There were also 56 stores closed to optimise its convenience network.

Strong performance for overall group

Sales at the group level was up by 11.5% at actual rates to £56.9bn, boosted by its new partnership with Booker wholesale in the UK. In UK & ROI, LFL sales grew 2.9%, including Tesco UK gaining 1.7% and Booker increasing by 11.1%. Central Europe saw LFL fall by 2.3%, due to a shopping ban on Sunday in Poland and lower general merchandise sales.

Confident of completing journey in 2019/2020

Tesco CEO, Dave Lewis said, "After four years we have met or are about to meet the vast majority of our turnaround goals. I'm very confident that we will complete the journey in 2019/20. I’m delighted with the broad-based improvement across the business. We have restored our competitiveness for customers - including through the introduction of 'Exclusively at Tesco' - and rebuilt a sustainable base of profitability.”

 

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Mr Yuthasak Phumrasakul, Senior Executive Vice President of CP All and founder of 7-Eleven stores in Thailand, reveals a range of ready meals created by Iron Chef Thailand under its Ezygo private label.

Partnership with three chefs

Chef Pom-Thanarak Chuto, Chef Kai-Thananya Khaikaew and Chef Art-Prasopchoktrakun have been invited to create 12 delicious dishes and desserts. These three chefs are past participants of Iron Chef Thailand, the biggest professional cooking competition in Thailand. The chefs will be involved in every step of the dishes from the selection of ingredients to the cooking technique. These dishes include crab soup, stewed pork with herbs, Pad Thai udon, roasted chicken, pork satay sandwich, Hong Kong soy sauce chicken rice and jumbo steamed bun. 

More about Ezygo 

Ezygo is a range of ready to eat frozen meals available at all 7-Elevens in Thailand. Most of the meals are based on local dishes like Thai basil stir-fried chicken with white rice. Shoppers can request these meals to be heated up with an additional egg to complete the meal at the store. 

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Lazada, the leading ecommerce platform in Southeast Asia, owned by Alibaba Group, plans to expand its cross-border trade for international brands.

Global Collection 2.0

One of the key initiatives announced was a revamped “Global Collection”, which is a dedicated channel to showcase  Lazada’s cross-border merchants from around the world. The platform aims to help the brands grow their businesses and achieve higher visibility among the Southeast Asian shoppers.

Global Collection 2.0 uses an algorithm-based search function to filter the product offerings and highlight the vendors for shoppers to find them easily. Shoppers would also receive their deliveries much faster and within seven working days from the time their placed their order if they choosese the standard shipping option.

From April, cross-border sellers interested in joining Lazada can submit applications in the self-service system, instead of getting an invitation from Lazada. Once the review is completed, they will become Lazada merchants.

Lazada's cross-border ecommerce business

First launched in 2013, Lazada’s cross-border business has grown to become one of the most diverse marketplaces. The sales have quadrupled over the past three years and, with the aim of boosting sales further in 2019, the company plans to identify and nurture the top 300 brands in each of the six countries that it operates in – Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam. 

The top five markets which cross-border sellers come from are Mainland China, Hong Kong, Korea, the US and Europe, with women’s fashion, home and living and kids’ fashion ranking among the most popular cross-border items.

 

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Berli Jucker, operator of Big C in Thailand, has announced revenue growth of 5.7% to THB 109.8 bn (US$ 3.4bn) for its modern retail business unit.

Profit margin declined

New store openings and same store sales growth of 1% supported the strong sales performance. However, profit margin slid from 16.7% to 16.5% due to sales mix changes and higher business to business sales compared to last year.

Store expansion to continue

The retailer plans to open eight hypermarkets (including one overseas), one Big C Food Place and about 200 mini Big C in 2019. It has also installed solar rooftops in 32 stores and one distribution centre, expecting to save about 4% on energy cost in each site.

Achieving stable same store sales

Big C has achieved positive same store sales growth in the last two quarters, with plans in place to maintain its growth momentum. Big C Food Place in Bang Sue is an 800 sqm supermarket focusing on fresh food, ready to eat, organic food and healthy ranges. This new format may be the model for converting some Big C Market into a more compact store in the future.

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This in-depth guide to Thailand explores the key trends in grocery retail and the growth strategies of the leading retailers in the country.

Five year growth forecasts for the grocery market, the leading retailers and modern trade grocery channels in Thailand.

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Included in this report:
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