l and external forces has made growth painfully incremental. These pressures were evident throughout the first half of the year and show no signs of letting up. Both Makro-Lotus’s (formally CP Axtra), Thailand’s biggest retail and wholesale conglomerate, and Berli Jucker, the parent company of retail giant Big C, reported their second-quarter results this month. Both companies have enormous standing and importance in the economy and community. While their wholesale businesses remained strong, their hypermarket businesses ended the quarter in another cloud of proverbial dust. Makro-Lotus’s (CP Axtra) pulled in total revenue across its three divisions – wholesale (Makro), retail (Lotus’s) and mall rental income – 2.5 per cent above last year in the second quarter. Total revenue for the quarter came in at 132.3 billion Thai baht (US$4.0 billion), bringing first-half revenue to 268.3 billion baht, an increase of 3.6 per cent over the first half of last year. Excluding the mall rental business, which accounts for slightly under 3 per cent of the top line, sales in the second quarter grew by 2.1 per cent, consisting of 3.5 per cent growth for Makro and 0.4 per cent for Lotus’s. First-half sales grew by 3.5 per cent, consisting of 4.7 per cent growth for Makro and 1.9 per cent for Lotus’s. Omnichannel continues to grow strongly and now accounts for nearly a quarter of all sales. The high-level story is that the wholesale side of the business is growing materially faster than the retail side, reflecting a pullback by cash-strapped Thai households despite ongoing government stimulus programmes. The gross margin percentage of sales was slightly down for both the retail and wholesale sides of the business, as was net profit for the owners, which slid 18 per cent in the quarter to 1.87 billion baht (US$57 million) and 5.3 per cent for the first half, to 4.67 billion baht (US$140 million). Makro wholesale dominates on the top line Including mall rental and services income at its stores, the Makro wholesale business accounted for 55 per cent of total revenue and 48 per cent of EBIT in the first half. The strong revenue growth of 4.8 per cent occurred despite two net store closures in Thailand, although sales momentum softened slightly in the second quarter. The store count at the end of the half was 167 in Thailand and 10 overseas, in Cambodia, India and Myanmar. The company plans to open two new units in Thailand in the second half and also wants to make its entry – or, rather, re-entry – into the Philippines in partnership with Ayala Corporation. Retail: Malaysia and the store count drive growth The retail business remains weak, with revenue growth of 1.9 per cent in the first half despite the addition of 80 stores, bringing the total to 2,570 in Thailand and 71 in Malaysia. Most of the new stores were in its Lotus’s Go Fresh mini-supermarket format. Another 12 openings are planned for the second half of the year, nine in Thailand and three in Malaysia. The company noted that the Malaysian stores were a principal driver of growth as consumer sentiment and spending in Thailand softened. Big C rolls back hypermarket space Big C, the retail arm of Berli Jucker, is one of Lotus’s key competitors and is sharing Lotus’s pandemic-weakened consumer sentiment in Thailand. It experienced another quarter of declining sales and lacks a strong catalyst for a resurgence in the second half. Retail sales were down 1.8 per cent year on year in the second quarter, to 29.0 billion baht (US$875 million). For the first half as a whole, sales amounted to 58.8 billion baht (US$1.8 billion), down 1.9 per cent year on year. Same-store sales were down 2.1 per cent in the second quarter, following a 3.3 per cent decline in the first. The small tenancies at Big C’s hypermarket-anchored community shopping centres are a bright spot. While many of the hypermarkets themselves are very quiet, particularly on the non-food side of the box, the small satellite tenants dominated by food, technology and apparel vendors are often vibrant. Occupancy in the small-tenant space is continuing to improve, reaching 92.4 per cent in the second quarter. The company has not failed to notice how much these tenants contribute: it is expanding the space available to them, and this is now an important part of Big C’s business. This is important not just for economic reasons but because, in smaller cities and towns that are not big enough to support a full-sized regional mall, Big C’s town centres, like Lotus’s, are genuinely important social hubs. Big C is now rolling back space in some of its hypermarkets to make room for more small-tenant and pop-up space from which it can earn rental income. That space will be more productive than the somnolent hard-goods space it replaces in the old hypermarkets. This kind of upgrade is particularly timely because it allows improving the look and feel of the shopping experience. The upgrades at its community centres and hypermarket anchors still leave the problem of its convenience stores, Big C Mini, which compete with 7-Eleven, Lotus’s Go Fresh and Tops Daily in the mini-supermarket and convenience-store space. Big C Mini exists in a merchandising no-man’s-land between 7-Eleven’s emphasis on quick meals to go, a broad and accessible health and beauty range and household essentials, and Lotus’s specialisation in fresh meat and produce. Worse, many of the stores are shabby and lack the chirpy welcome from staff that customers commonly get from competitors. Big C has some work to do, and with a store fleet as big as it has, will have to be three yards at a time. Further reading: Thai hypermarket Big C boosts profits with fresh food focus