Thai retailer Central to invest $1.5b in expansion at home and overseas

Central Group Chairman Tos Chirathivat
Central Group Chairman Tos Chirathivat. Photographer: Brent Lewin/Bloomberg

Thailand’s largest retailer, Central Group, plans to invest around $1.51 billion to substantially expand its store footprint locally and overseas, and is aiming to grow sales by 14 percent this year, its chief executive said on Monday.

Central, which has operations in Europe and Vietnam, also expects to open stores in Malaysia in the fourth quarter of this year, CEO Tos Chirativat told reporters.

Central plans to invest 47.5 billion baht ($1.51 billion) to boost stores in Thailand and Vietnam this year, Tos said. By 2022, the group aims to operate over 7,500 stores in Thailand, from the current 4,970 and add more than 500 stores to reach around 750 stores in Vietnam in the same period.

Tos didn’t give investment details for the 5-year period to 2022, but said the retailer is targeting group sales growth of 14 percent year-on-year for 2018.

Central’s companies have reaped the benefits of a tourism boom in Thailand. Profits at its property development arm, Central Pattana Pcl, rose 47 percent from a year earlier.

Thailand expects 37.55 million tourists to arrive this year, up 6 percent from 35 million in 2017.

Separately, Central President Yol Phokasub told Reuters in an interview later in the day that the firm expects to launch, its previously announced $500 million joint-venture partnership with, by the second quarter.

The online platform with China’s second-biggest e-commerce firm will initially feature “lifestyle, digital accessories and fast-moving consumer goods (FMCG),” Yol said.

Tos said that Central, owned by the billionaire Chirativat family, also wants to “strengthen businesses” through mergers and acquisitions, which has a separate investment budget. In 2017, the geographic revenue breakdown for Central was 72 percent in Thailand, 15 percent in Europe and 13 percent in Vietnam. The ratio is expected to be the same for this year, Tos said.

Its digital platform is expected to increasingly play a bigger role for Central.

Yol told Reuters the firm will use its brick-and-motor stores across the country to introduce customers to its online channel.

Among the online plans with its joint venture, JD Central, are food delivery and financial services, including payments and credit lines to customers and suppliers, Yol said.

Yol said Central is looking at using data from its customer loyalty card, collated over many decades, to better tailor its offers.

Outside of Thailand, Yol said that JD Central would work with to target the Chinese market, selling Thai goods in China.