The acquisition of Carrefour's 42 stores at a cost of 35.5 billion baht will enlarge the Big C chain to 103 outlets and bring it close to the 116 hypermarkets run by the market leader, UK-based Tesco Lotus.
Though Big C has not announced in detail its plans for the Carrefour store, intense competition is foreseen. In many locations in the capital, Tesco and Carrefour outlets are located within a block of each other.
Moreover, retail chains in other segments, especially those that offer foods, may feel some effects. Tops supermarkets and 7-Eleven convenience stores, for example, are preparing to guard their market shares and fight back against the two remaining hypermarket chains in their own ways.
Product suppliers are worried too, as Big C's expanded size will give it more bargaining power. Small suppliers fear that their costs of selling products to hypermarkets will be higher. Some products are expected to no longer appear on the shelves as their producers have weak financial status.
In any case, the rivalry between Big C and Tesco is shaping up as one that will rival those between mobile operators AIS and DTAC, or soft-drink companies Coke and Pepsi, for intensity.
On the other hand, it should be good for the whole retail industry as Big C would challenge the decade-long dominance of Tesco Lotus and consumers should stand to gain from heavy competition. Both chains will play on pricing to draw more shoppers.
Advertising agencies will probably get a windfall too as Big C will have to spend a lot of money on rebranding and store renovation to convert the Carrefour outlets to its brand.
However, some marketing experts fear that with only two chains dominating the market, there could be less incentive for them to compete and consumers would face price collusion and poor services. Additionally, it would be even harder for new Thai retailers to enter the business in the future.
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