French supermarket giant Auchan is set to sell its one remaining outlet and shopping centre in Chiang Mai in Thailand to sector rival Groupe Casino, and withdraw from the Thai market completely.
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A statement issued by the company blamed poor sales and returns for the decision to leave after four years. Last year, sales did reach 2.48bn baht, but the company faced fierce competition from three other major operators in the sector: UK giant Tesco, French group Carrefour and Makro from the Netherlands.
The deal will see Auchan’s French rival pay approximately 5bn baht for the hypermarket and shopping complex, putting paid to Auchan’s high expectations when it entered the Thai market in 1997. At that time it had hoped to open at least ten outlets in the country, but aggressive sector competition and an economic crisis in Asia put a hold on development plans.
Now, Auchan revealed it will reassign foreign staff at its Thai operations to employment in China and Taiwan, where the company is witnessing more rapid growth. Casino is to retain the remainder of the 395 employees at the Auchan store after the buyout, which should be completed within a few weeks.
Casino has revealed that the store will be re-branded a Big C hypermarket, adding an important acquisition to the nationwide network of 23 Big C stores, of which it owns 66%. The company is expecting sales of 1.5bn baht from the outlet this year and a Big C executive commented yesterday, “We will grow our business with two methods, either by ourselves or by acquisitions. Auchan is our first acquisition.”
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By GlobalData
