Ek-Chai Distribution System Co, the local operator of Tesco Lotus hypermarkets, will build a 2.5-billion-baht distribution centre in the North in the next five years.
Distribution director Monchai Intarapornudom said the centre would increase the retail chain's logistics management efficiency.
The company currently uses distribution centres in Bangkok and Khon Kaen to supply products to Tesco Lotus stores in the North.
The new distribution centre, spanning 150 rai, will be built in Chiang Mai or Lampang and support stores within a 400-kilometre radius.
Ek-Chai has distribution centres in Ayutthaya (Wang Noi district), Nonthaburi (Bang Bua Thong), Pathum Thani (Lam Luk Ka and Sam Khok), Khon Kaen and Surat Thani, servicing nearly 1,800 Tesco Lotus stores.
"Having distribution centres in each region will help us to deliver fresh products faster," Mr Monchai said. "This will help to increase our competitiveness amid fierce retail competition."
The latest distribution centre in Surat Thani province cost 2.5 billion baht and opened a few months ago to support business growth in the South.
The hub serves roughly 190 Tesco Lotus stores in 14 southern provinces.
Mr Monchai said the opening of the distribution centre in Surat Thani's Phunphin district marked another milestone for Tesco Lotus in meeting customer needs in the South and stimulating the economy.
The Surat Thani facility has 55,000 square metres of service space and employs 800 workers.
The centre will give local small businesses an avenue to sell their products at Tesco Lotus stores nationwide and help small vendors and suppliers to save on transport costs.
Mr Monchai estimates the transport savings at 400,000 kilometres and 270 kilogrammes of carbon emissions a week (14 tonnes of emissions a month).
Apart from directly serving Tesco Lotus, the Surat Thani centre has storage space for lease to vendors, suppliers and partners in the southern region, freeing them from costly investments in infrastructure and warehouse management.
One of Ek-Chai's partners is market expansion services provider DKSH (Thailand), which leases 5,145 square metres at the Surat Thani centre to enhance its ability to serve customers in the southern provinces.