Advice IT Infinite Co is treading a fine line as it seeks to rebrand its stores, known for selling affordable electronics to upcountry consumers, wanting to cater to a broader urban audience ahead of its 2018 initial public offering (IPO).
Mr Chukkrit says an upcoming IPO will help the company expand its presence in Bangkok and Southeast Asian countries.
Advice expects to raise 3-5 billion baht when it goes public later this year. The firm already fulfils all the criteria set by the Stock Exchange of Thailand, which requires listed companies to have a net profit of at least 30 million baht and revenue of at least 2 billion in the latest year, as well as a market capitalisation of at least 1.5 billion.
The money will be used to expand the company's presence in Bangkok and other Southeast Asian countries, as well as to fuel its rebranding process, said chief sales and marketing officer Chukkrit Watcharasaksilp.
Advice made a name for itself selling outdated but affordable consumer electronics to dealers in the provinces. The company aims to target high-end customers at malls in Bangkok, requiring it to adjust its image.
While a rebranding may boost its initial stock market valuation, it also risks alienating its core upcountry customer base. The company's revenue remains highly dependent on rural areas, as last year only 15% of its 370 million baht in revenue came from Bangkok.
The company's 10-12% annual growth has been driven by an increase in PC ownership rates in these areas, which now averages 20%, still far behind Bangkok's 40%.
"I am afraid of repositioning ourselves, but you have to understand we are not going from standard coffee to Starbucks. We are finding a middle way," said Mr Chukkrit.
The change from provincial locations will be limited in terms of product mix and decoration, while maintaining the overall store atmosphere.
"We don't want to scare consumers into thinking our products are now out of reach," he said.
In Bangkok the company plans to test drive a new high-end concept store in CentralPlaza WestGate, aiming to derive a substantial part of its revenue from IT services, including returns.
The company has grown alongside small-town dealers that other large players were unable or unwilling to serve.
"Because we know these small-town dealers, we are more willing to provide them with financing and to sell them in small batches," said Mr Chukkrit.
"If a customer comes and asks a dealer for an iPhone he or she doesn't have in stock, the dealer can tell him to wait 10 minutes, hop on a bike and purchase a phone from one of our stores at a discount."
A few years ago, Advice entered the retail business, prompted by thin margins in the electronics sector, bringing along its 10,000-strong network by introducing a franchise model. As a vertically integrated company, one of its main selling points to franchises was the ability to keep less inventory than its competitors, said Mr Chukkrit.
Retailers are lured to the franchise model by the option of expanding rapidly at nearly no cost. For Advice, which pays the full upfront cost of every franchise, the model is aimed at shielding its most successful dealer and distribution networks from competition.
"It's a defensive strategy. Our model, which is based purely on profit-sharing, is different than that of Starbucks of McDonald's," he said.
The company owns 110 stores in 73 Thai cities and close to 300 franchises in district areas of Thailand and Cambodia.
But distribution is still key, constituting 65% of turnover, down from 85% five years ago. Moving forward, the company aims to reduce distribution to 50% of revenue.
Advice's dealers range from household-run stores to modern trade outlets. The company's most successful distributors are formidable local competitors. But Advice will persist in keeping ties to these long-time dealers as retail turns digital.
A large part of Advice's IPO funds will be channelled to a Taobao-like digital platform, where dealers can set up their own shopfronts and sell to customers directly.
"We will be there when the Lazadas of the world affect their businesses," said Mr Chukkrit.
