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HomeBusinessSathien Setthasit’s vision of modernizing grocery stores for local communities

Sathien Setthasit’s vision of modernizing grocery stores for local communities

Tookdee, a brainchild of veteran entrepreneur Sathien Setthasit, aims to become “low-cost convenience stores of the future” serving villages and communities throughout the country, with an ambitious plan of setting up as many as 50,000 shops by 2023.

Sathien, chairman of TD Tawandang Co, the operator of Tookdee convenience stores, said they would serve as a “connecting point” between vendors and consumers. Its customers can order products unavailable there and in the future in the shops could offer e-commerce service.

“Tookdee started as a grocery shop and it is becoming a point of sale and eventually a point of everything,” Sathien said.

He explained that as a “point of everything”, Tookdee offers not only products but also services for communities where the shops are located. Tookdee aims to serve as a community learning centre and help to strengthen the grassroots economy.

“The company has technology and young staff who closely watch and follow the trend of changes,” the chairman said.

TD Tawandang, which describes itself as a retail technology company, is a subsidiary of Carabao Group — the maker of Thailand’s popular Carabao Dang energy drink. Sathien also serves as Carabao Group’s chairman and chief executive.

With the plan to have 50,000 branches by 2023, Tookdee sets its sights at Thailand’s 70,000-plus villages. That means a massive amount of big data about customers from all over the country, which could benefit suppliers and businesses interested in the trends of Thai consumers.

From Carabao Dang and CJ Supermarket to Tookdee

For almost 20 years since Carabao Dang energy drink was launched, Sathien has done his business with grocery stores throughout Thailand, which number over 400,000. He and his team have regularly visited about half of them.

After having worked with them for many years, Sathien came to a conclusion that traditional Thai grocery stores have no future. More and more of them are going out of business as modern convenience stores are expanding strongly.

About seven years ago, Sathien started a new business of modern retail stores called CJ Supermarket. Then came his idea of helping old grocery stores boost their business with his know-how based on the strengths of modern retail stores.

He found that grocery stores cannot compete with modern retail stores because they have far fewer products, lack know-how and technology, and unable to afford sale promotion.

“We have to help them improve their competitiveness,” Sathien said.

As grocery stores lack funds, goods and knowledge in product display and shop decoration, for instance, TD Tawandang can help them compete with modern retail stores with technology, know-how and the Tookdee brand, the chairman says.

“We deliver goods to them regularly. We have information and we know what kind of goods they want.”

As a trial, the company has opened almost 100 Tookdee shops in many provinces to measure customer behaviour and test its theory that a grocery store needs to make at least Bt10,000 a day in order to survive.

It was found that people tend to buy consumer products from nearby shops if they are available there. A community of 300-500 households has enough purchasing power for one Tookdee convenience store, with sales of at least Bt10,000 a day.

If they work with Tookdee, community grocery stores can have access to quality products with low prices, thanks to the company’s strong bargaining power against suppliers.

The grocery store owners need to follow the Tookdee brand’s standards regarding cleanliness, brightness, convenience, product display and use of technology.

“Actually, they are low-cost convenience stores,” Sathien said.

He estimated that each Tookdee store could make a net revenue of over Bt40,000 a month. “Stores with good business can make between Bt60,000 and Bt70,000, or up to Bt100,000.”

In order to join Tookdee, the owners need to improve their grocery stores in a way required by the set design standard regarding flooring, walling and lighting.

As a standard, Tookdee shops are required to open from 7 am to 8 pm although some may start their business at 8 am or 8.30 am if needed.

Tookdee is responsible for providing display racks, refrigerators, freezers, goods, POS machines and security cameras. For each store measuring 50 to 100 square metres, Tookdee invests about Bt1 million.

To join Tookdee, the store owners need to put a deposit of Bt200,000, which will be returned after three years if they no longer use the brand. The store owners may seek loans from Kasikornbank, which offers a special interest rate under an agreement with the company.

Location is the most important factor for the business. So, a condition for joining Tookdee is that the grocery stores must be located somewhere that can ensure a daily sale of at least Bt15,000.

The “power of ownership” helped to double sales from the original estimate at first Tookdee stores, according to Sathien. He allowed his company’s employees to take over 30 of the 100 original Tookdee stores, and the new owners enjoyed a sale increase of 30-40 per cent in the following month.

Being part of the community, owners of Tookdee stores tend to understand their customers and know their demands.

Preparing for big loss in ‘business of sharing’

TD Tawandang offers a profit-sharing model of 15 per cent for the company and 85 per cent for the owners of Tookdee stores. 

Sathien describes the business model as “business partnership”, and not franchise, as owners of the original grocery stores still retain their full ownership despite investment from Tookdee. The stores are required to be renamed “Tookdee” although the original shop name can follow.

The chairman expects his company to start making profit when there are 20,000 Tookdee stores although it is suffering an estimated operating loss of Bt1.5 billion this year.

At present, there are about 1,000 Tookdee stores in 58 provinces and the number is expected to reach 8,000 by the end of this year, 30,000 in 2022, and 50,000 in 2023.

Tookdee is setting up local management offices throughout the country. Sixty-two of them are expected to be available by the year-end.

Regarding the 15:85 profit-sharing formula, Sathien says his goal is not the maximum profit, but instead sharing with owners of the original grocery stores. He encourages instilling in his company’s young executives the idea of sharing with local communities and their residents.

The company has invested Bt1 billion in some 1,000 existing Tookdee stores. It plans to rent eight warehouses within this year capable for supplying goods to about 10,000 Tookdee stores — one warehouse for 2,000 to 2,500 stores. 

In 2022, the company plans to build 15 warehouses of its own, with total investments of Bt45 billion.

Covid-19 has made it more difficult for Tookdee to find partners. But the health crisis is benefiting the existing Tookdee stores, as people now prefer to buy daily necessities from places not far from their home. Also, most Tookdee stores take part in the government’s Covid-19 relief programs that offer discounts and subsidies to eligible citizens.

Tookdee stores are owned by community residents for the benefit of their communities, Sathien says. Local suppliers with inexpensive quality products also benefit when Tookdee stores grow stronger.

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