Intense competition ahead as homes repaired

“We expect the competition to be quite intense, similar to the war of hypermarket chains about five years ago,” Suthisarn Chirathivat, president of CRC Power Retail Co, said yesterday. Despite the widespread flooding, which forced the temporary closure of major HomeWorks and Thai Watsadu hardware and home-improvement centres, CRC Power Retail is committed to spending Bt6 billion to open 10 stores next year.

Half of the capital-expenditure budget would go to the expansion of Thai Watsadu stores, with a focus on high-potential secondary provinces throughout the country.

The ninth Thai Watsadu branch started business formally on November 24, serving shoppers in Sakon Nakhon at a cost of Bt600 million, including stock. With 30,000 square metres of retail space, the Sakon Nakhon branch is expected to generate Bt60 million to Bt70 million in monthly sales.

A Thai Watsadu will open in Surat Thani this month.

Only one Thai Watsadu was opened last year – in Bang Bua Thong – and nine stores have been launched this year, including the latest branches in Sakon Nakhon and Surat Thani. 

Thai Watsadu would lead its rival Global House in the number of stores, but would have only half of HomePro’s numbers. “We will see very intense competition among major retail chains for home improvement and furnishing products in the marketplace. HomePro cannot be a ‘sleeping tiger’ anymore but has to adjust to cope with the new competitive environment,” Suthisarn said.

HomePro would be in a difficult position with pressure from both sides. “In building and construction materials, HomePro will face tougher competition from Thai Watsadu and Global House, while on the home-decoration front, they will face severe competition from Index Living Mall, SB Furniture and Ikea,” he said.

Many branches in places such as at Srinakarin, Fashion Island Ram-Indra, Soi Kingkaew Bang Na and Mega Bangna have had to shift to carrying mostly home-decoration products, which are less competitive in the areas.

Nath Jaritchana, executive vice president for marketing at Home Products Centre, the operator of HomePro stores, said the company would invest Bt2.5 billion to Bt3 billion to open eight to 10 stores next year. The 45th HomePro store would open in Sakon Nakhon on December 16.

“We are ‘home-improvement centres’ and customers can actually identify with our store concept, which is quite different from the competitors. We have provided our customers a ‘one-stop” shopping solution,” he said.

Furniture represents only 15-20 per cent of products available at HomePro. The stores also focus on selling basic furniture, not fashion-oriented items. 

Lars Svensson, marketing manager for Ikano (Thailand), which just opened its first Ikea store at the Mega Bangna complex on November 3, said the company would like to emphasise that it feels with the many Thais that have lost their homes, loved ones or had their property damaged or destroyed.

“This is not a situation that Ikea or any other company would want to happen or reap any benefits from. We would have preferred the flood to never have happened. Our vision is to create a better everyday life for many people, and want that to be based on a normal situation, not because people’s everyday lives have been destroyed because of the flooding,” he said. 

The flooding would have a significant impact on many people’s finances, disposable income and future spending patterns. Their first priority will naturally not be home furnishing but more vital aspects.

When this will take place and when people will have sufficient funds after having spent money on all the other priorities will vary between households and between geographic areas. 

“So it would only be speculation when it comes to our business performance and we will find out over time. But we can also see that there are a lot of unaffected households that are coming to us and shopping,” he said.