Tesco's flagship store hosts promotion, products prove popular despite prices
Tesco’s Guangxin store in Shanghai was packed with shoppers on Friday morning. The store was quite hot and noisy with people shouting while looking for the best deal on products. And Thai fruits were high on their agenda.
Thai fruit was displayed attractively in a corner. There were durians, mangosteens, pomelos, mangoes and longans. Durian is especially favoured by Chinese. An elderly housewife said she had tried Thai durian during a trip to the Kingdom and liked it very much.
Although Thai fruits are slightly more expensive than local varieties, some shoppers said they were willing to pay extra because of their flavour and freshness.
This was the scene at a promotion of Thai fruit and seafood by Tesco Lotus Thailand in a joint operation with the Thai Department of International Trade Promotion (DITP). The British hypermarket company has attempted to promote varieties of Thai fruit via its worldwide chain for years. In China, this is the first time it has done so, providing a special display area and special prices. It hopes the four-week event, which started on Friday, will help boost the popularity of Thai fruit here.
Salinla Seehaphan, Tesco Lotus Thailand’s corporate-affairs director, said Thai fruits were getting more popular every year in China. Beyond fruit, there are dried durian snacks, seafood, and other Thai products such as those from One Tambon One Product (Otop) on the shelves. The next potential product to be shipped from Thailand is seasonings.
Wimon Jarusathiti, director of the Office of Commercial Affairs, Royal Thai Consulate-General in Shanghai, said export of Thai fruit to China was valued at US$400 million (Bt12.6 billion) last year. It is projected to grow by 10 per cent annually over the next three years. Fruits are sold via several trade channels, especially modern-trade chains.
Because of the big potential in China’s biggest city, 40 Thai companies with various businesses have set up offices or representatives in Shanghai to look for opportunities.
Wimon said there was more room for the import of Thai fruits to China, where domestic consumption has been driven by the government’s economic stimulus campaign. Even as the Chinese economy has witnessed lower momentum this year, consumers’ purchasing power has remained high, especially in Shanghai, the nation’s economic centre.
A modernised logistics system is also a driving force, making it easier for consumers of every category to access a variety of products. Online purchases are an example; they are delivered to buyers within one day after placing an order.
Wimon said it was essential for Thai operators to understand Chinese consumption behaviour. For example, those living in the north may not be accustomed to fresh food products, while those in the south prefer them. Therefore, promotional campaigns for Thai food products have to be aggressive, educating people to drive demand.
Salinla said China had shown big potential for Thai products driven by a rising number of higher-end consumers. To spur the volume of exports, Tesco Lotus Thailand has worked with the DITP to arrange business-matching events between Thai companies and Tesco buyers. A similar programme is to be introduced in Europe.
Tesco entered China in 2004 and currently operates 132 stores, comprising 117 hypermarkets, one Extra and 14 trial Express stores. Tesco Guangxin in Shanghai is its flagship store. In all of its stores, it sees more than 4.4 million customers per week.
At present, Tesco Thailand exports products to 12 nations to sell in the Tesco chain. Last year, its total export value was Bt13.5 billion, up from Bt12.5 billion in 2011 and from Bt8 billion four years ago.
This year, its exports are projected to grow only slightly as some markets, especially in Europe, are facing economic slowdowns. However, Asian markets will post big growth and help offset the declines elsewhere, thanks to this region’s ongoing economic prosperity. This is especially so for China, where imports of Thai products by the Tesco chain are projected to double to Bt200 million this year.