Financial Times

Sathosa, expands, takes on Cargills
By Anjuli Gunaratne
Sathosa is planning to expand its market to stave off competition from its main competitor, Cargills Food City. One of its newest features is introducing vegetables and fresh produce in 30 of its outlets."The price of vegetables and fresh produce are better than that at the local pola," said Jeremy Ferreira, General Manager at Sathosa. "We hope to introduce these products to at least 100 of our outlets by the end of this year."

Since its privatisation, Sathosa's main objective has been to expand its customer base and provide customers with products that are of quality and value for money. "After privatisation our customer base has doubled and our turnover has trebled," Ferreira said. "We make our decisions based on how it will affect our customers."

He said in an interview that Sathosa's current market share is 30-35 percent of the estimated Rs. 14 billion contributed by urban retail stores to the Sri Lankan economy. With its 150 outlets Sathosa is the retail store with the widest reach islandwide. With the expansion of its market, Sathosa is confident that it will maintain its current share in the market.

"There is only so much a retail store can do to change its marketing strategies and we want to do something new, but not new to the point where we scare our customers off," Ferreira said. Sathosa's main concern is its customers, thus all its future plans concentrate on giving its customers the best products at the best rate with the best possible service.

Sathosa is also courting well-known brands in Sri Lanka to open pharmacies and household goods departments. "Retail is to drive customers in," asserted Ferreira. "We have to be the best place people want to shop at, which is why we focus on continuously improving our retail stores." He said that Sathosa was badly managed earlier and had to under go a restructuring process from refurbishing the outlets to training staff when the joint consortium comprising Richard Peiris', Carson's and Ceylon Biscuits took over.

Sathosa plans to invest at least Rs. 150 million to open new outlets in gap areas, re-locate some of its branches and upgrade its IT system. "Upgrading our IT system will ease the manual work load of our staff", said Ferreira. According to him, Sathosa is keeping its options open regarding employing new recruits. " We currently have approximately 3300 employees and we hope to channel excess staff to the new branches that we are planning to open," he said.

The General Manager added that they have a good working relationship with the Sri Lankan government and are currently having discussions with some ministers on lowering the cost of living of consumers. Sathosa will use its outlets as a channel for cheaper wheat flour and milk (powder) the government plans to import. " The CWE still owns 60 percent of Sathosa, so they benefit from all the steps we take to develop the business," he said.

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