Central buys makro office supplies unit

Central Retail Corporation (CRC), one of Thailand's largest retail conglomerates and operator of Office Depot stores, yesterday announced it had acquired Siam Makro's office-supplies business, called Makro Office Centre, for about Bt320 million.

The move will allow both companies to strengthen their core businesses - as the country's leading retailer in the case of CRC and the leading cash-and-carry wholesaler of fresh and dry food products for Siam Makro.

Makro Office Centre, recognised as a category killer in office-supply products, was founded in 1997. A category killer is a firm with such a distinct advantage that others find it almost impossible to operate profitably in the same industry.

Siam Makro currently operates 18 Makro Office Centres, mostly in Bangkok but with branches in Phuket and Pattaya. Two Makro Office Centre branches that are located within Makro Supercentres will be converted into other businesses and are not included in the CRC acquisition.

CRC executive vice president Ivor Morton, who is responsible for speciality retail-store brands, said the business integration between CRC's Office Depot and Makro Office Centre would be completed within four or five months. The process of rebranding the Makro Office Centre stores to become Office Depot stores will take three to six months. All 360 Makro Office Centre staff will be transferred without loss of jobs, giving the combined operation a staff of 800.

The combining of the two brands will give Office Depot 35 branches with a total sales area of 32,016 square metres.

Office Depot will become the leading modern retail player in the office-supplies market, with a 14-per-cent market share and Bt2.6 billion in combined annual sales. Office Depot itself achieved Bt1.1 billion in sales last year and expects growth of 12 per cent this year.

"The offices-supplies business has a total value of more than Bt90 billion, of which about 25 per cent is sold through modern retailers. It has shown healthy growth year on year," Morton said.

"The increase in the number of stores from 19 to 35 will allow Office Depot to reach more customers with a wider inventory and stronger promotional programme," he said. "Central Retail Corp is a US$2-billion (Bt64.96 billion) enterprise that has developed Thailand's most successful store formats and brands. It is with pleasure that we can invest in a highly successful company."

The takeover deal was signed on Wednesday and will take effect next week.

Siam Makro managing director Suchada Ithijarukul said Makro Office Centre was a retail category killer specialising in office needs and with a delivery service for customers, whereas Siam Makro's core business was in wholesaling and food service.

"Our intention is to focus on the main business of a cash-and-carry wholesaler of food products.

The structure is vastly different from that of an office-supplies centre," she said.