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Challenging the goliath


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Extracted from the Bangkok Post: Bangkok Post




For more than a decade since they began marching into the country, international retail chains have been the subject of resentment among operators of small local retail stores, blaming them for their misfortune as competition heats up.


The dissatisfaction has intensified in recent years with the big chains' plans to expand into small communities, long the stronghold of small operators. It culminated in heated protests in various areas with small entrepreneurs calling for state intervention.


But Pitak Ploempitakkul, the 55-year-old founder of Electronic Plaza Siam TV, has never been among the protesting crowds. This is despite the fact that his store, the largest electrical-appliance distributor in Chiang Mai, was among the first to feel the pinch.


Electronic Plaza Siam TV was picked by Chulalongkorn University's Sasin Graduate Institute of Business Administration as a case study on how a local operation could compete effectively with giant foreign stores.


Long after at least 20 local electrical-appliance distributors threw in the towel, Siam TV Chiang Mai has stood firm. And there is little chance that anybody can drive it out of the market, at least for now.


Siam TV currently operates seven stores _ five in Chiang Mai and one each in nearby Lampang and Lamphun. It plans to have a total of 10 outlets over the next three years, when sales are projected to double to three billion baht. In the longer term, Mr Pitak aims to have at least one store in every northern province, each of which requires an investment of 50-100 million baht.


Throughout its 25 years in the business, Siam TV has experienced its fair share of threats and setbacks, but none more challenging than when Makro opened its outlet in Chiang Mai about 10 years ago, says Mr Pitak.


''Makro offered not only a new shop ping ambience to Chiang Mai people, but also products priced below costs. Based on our sales experience, we realised that the only way to win this game was to compete head-on with it,'' he recalls.


And compete head-on he did, by introducing various strategies, which were unthinkable at the time, to woo back the customers.


''We are the pioneer in offering [cheapest] price guarantees. I sent our team to check prices at large retail stores every 10 days to make sure ours are the cheapest. More importantly, whenever Makro sold below costs, we bought the products from it and resold them at the same prices in our store,'' he explains.


Another winning strategy in his battle was the introduction of ''lightning service''. A customer could expect the TV he had just bought to be at his doorstep even before he returned home. It also provided repairs for products with spare parts in stock within one day, or three days if the parts had to be sourced from manufacturers in Chiang Mai.


Apart from Makro, Chiang Mai's electrical-goods battlefield was later joined by other foreign retail chains including Tesco Lotus, Big C, Auchon and Carrefour. Like Makro, those chains also offered large spaces dedicated to electrical appliances and new services including hire-purchase. But by then, Siam TV had recaptured the hearts of Chiang Mai people and become invincible.


''Before asking for help, you must help yourselves first by working harder than others, build your teams and be eager to learn new things,'' Mr Pitak says.


Despite his success, the man who owns this multi-billion-baht business came from a modest background. He started his sales career at the age of 10 by helping his brother-in-law sell lottery tickets, beverages and second-hand apparel.


Mr Pitak then decided to set up his own firm to sell second-hand electrical appliances bought from pawn shops and become a wholesaler of new appliances at the same time.


The turning point came when he turned to cash-only retail.


''Our sales increased by 40% in the first month after we became a retail business because we could reach out to 1.5 million customers in Chiang Mai, compared with 45 dealers when we ran a wholesale business in the past,'' he explains.


Moreover, selling in cash meant the company bore no business risk.


Mr Pitak says that although he had no experience in the retail business at the time, he knew he needed to build a customer database. He started out by sending leaflets and brochures to potential customer, picked randomly from a telephone directory. At the same time, he hired messengers to send newsletters to customers in selective houses.


Additionally, Mr Pitak promoted his store by asking public-transport drivers to help bring customers to Siam TV.


Another important strategy was to stock up to 10,000 items, which meant there was a very slim chance a customer could not find the right model.


''It was our duty to approach customers with new product models and technology. If we had not done so, we could never have sold high-technology products like plasma TVs, DVD players or side-by-side refrigerators and could have ended up selling only old models,'' he says.


Mr Pitak says that Siam TV is able close 100% of deals with customers who visit his stores because his staff receive proper training on product comparison and administration. Moreover, the company closely follows market trends, using Best Buy, Circuit City and ComUSA as case studies.

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