Thai Group hopes to become Vietnam's biggest food and property retail platform
According to Nikkei Asia newspaper, Thai retail conglomerate Central Group is planning to expand aggressively in neighboring Vietnam, hoping to tap an expected jump in demand when the COVID pandemic ends.
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The newspaper cited an annual report on business strategy from Central Retail, the core retail arm of Central Group, which said that the Group has set aside 30 billion baht ($848 million) to invest in Vietnam, where it intends to increase sales to 100 billion baht over the next five years, up from the current 38.6 billion baht.
The plan matches analysts' forecasts, which expect Vietnam's resilient economy to keep growing after the pandemic. These forecasts see the country's retail sector growing 9% per year to around $150 million, the newspaper said.
It also quoted a Kasikorn Research Center analyst as saying that Central Retail has a strong presence in Vietnam, a market it entered more than 20 years ago. "This time it will shift its investment focus from brick-and-mortar stores to technology to expand its selling platform and gain a greater customer base", the analyst said.
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| Central Retail went public in February 2020, with its IPO priced at 42 baht apiece. They closed below that price on Wednesday at 39.25 baht each. (Photo: Nikkei Asia) |
Central Retail has 340 malls and stores as well as 10 retail brands in Vietnam, including Go! Mall, Nguyen Kim, SuperSports and Top Market, spanning the sales of electronics, to sports wear, to groceries.
The company also has BIPBIP, an e-commerce food and grocery shopping platform that stocks more than 12,000 items and has a 12 million-strong customer base.
Central Retail hopes that its 30 billion baht investment will help it to become Vietnam's biggest food and property retail platform.
Apart from expanding existing operations, it will also seek to buy businesses that can help to expand its reach.
According to the newspaper, the company is pushing a business strategy it calls "omnichannel" that lets online consumers choose whether to pick up their orders or have them delivered. Central Retail expects omnichannel sales to make up more than 15% of the company's total over the next few years, up from the current 8%.
In addition, it sees its Vietnam operations contributing more than 25% of the company's total sales, up from the current 20%.
The newspaper noted that analysts expect Vietnam's retail business to grow substantially. However, competition is increasing as more foreign players enter the market. Before COVID-19, the country's economy was growing at an average rate of 5% to 8% a year. In 2021, that slowed to 2.6%, it said.
"It's the right timing for Central to focus on Vietnam as business is growing. However, competition is also intense with both local and foreign brands jumping in," the newspaper quoted an analyst from SCB Economic Intelligence Center.
(Source: Nikkei Asia)
