A total of Bt1.3 billion will be used to open 450 new 7-Elevens and Bt400 million to renovate 400 existing ones.

Raising the capital of the company's food-processing subsidiaries and opening distribution centres in major regions will cost Bt1 billion, while increases in fixed assets and an IT system will use up Bt400 million.

In China, Bt500 million to Bt1.2 billion will be allocated to launch two to five Lotus Supercentres.

Piyawat Titasattavorakul, managing director of the Charoen Pokphand Group

subsidiary, yesterday reported the company's total revenues grew 6 per cent to Bt104.8

billion last year, from over Bt98.9 billion in 2005. However, its net profit declined 11.7 per cent to Bt1.3 billion, due to deepening losses from its supercentre business in China. Subsidiary Shanghai Lotus Supercentre operates 43 Lotus Supercentres, 20 of which are in Shanghai.

The Chinese operation's sales and service revenues increased 5.7 per cent to Bt33 billion last year, but sales costs also rose, causing its operating loss to worsen from Bt1.1 billion in 2005 to Bt3.3 billion last year.

Out of a total of 3,784 7-Elevens in Thailand, 1,960 are in Bangkok and the surrounding area and 1,824 upcountry. The company has targeted 5,000 7-Elevens within two years, half of which will be franchises.

The overall retail trade grew 5 per cent to Bt2.3 trillion last year and is expected to maintain that pace this year, said Piyawat.

Not many discount stores opened for business last year, due to strict zoning restrictions on large-scale discount stores in urban centres, but Tesco Lotus has turned to a small retail format called Lotus Express, in order to expand to small communities. It now has about 250 Lotus Expresses.

"We were affected by the appearance of Lotus Expresses near our locations. We needed to adjust to stand up to tougher competition in those areas," Piyawat said.

Products that were similar to theirs but could not compete in terms of price were pulled from 7-Elevens shelves, he said.

"We've differentiated ourselves by developing merchandise catalogue sales with more than 1,000 items now. We've put Book Smile bookshops next to our 7-Elevens to attract more shoppers and support 7-Eleven sales," he said.

Customer traffic at 7-Eleven increased from about 900 visitors per shop per day in 2005 to more than 1,000 last year. Same-store sales were also up 7.8 per cent on average last year.

Sales at stores that have been open for at least a year are a key performance indicator for the retail industry.

Kwanchai Rungfapaisarn

The Nation