Well known at home, Central to use other brands abroad

“Using the Central brand in international markets was discussed among our executives because when we have to step outside Thailand, we have to think about whether we should use Central or native brands in the market,” chief financial officer Prin Chirathivat said.
Central last year acquired Italy’s La Rinascente Department Stores and will keep the La Rinascente name because it is quite famous there.
Central is well known in its domestic market but overseas even in neighbouring countries there is little awareness of Central as a Thai retail brand.
The group is expanding its retail business in neighbouring countries, given that Southeast Asia is an important market for it.
Outside Southeast Asia, Central has a growing presence in China and Italy.
The penetration into Southeast Asia will be made via acquisitions of retail outlets rather than by developing an operation from the ground up, Prin said. “We have to acquire local retail brands with potential and upgrade their outlets to premium class to make a difference. It is our strategy to strengthen local brands.”
The concept for overseas stores is not finalised, but it should be similar to the group’s Robinson Department Store and Big C Supercenter.
The group will not focus on expanding its hotel business in Southeast Asia because its retail business can cash in on the growing purchasing power in the region and the single market under the Asean Economic Community.
Central is willing to invest Bt30 billion a year. The limit for acquiring retail assets depends on the size – Bt5 billion for a medium-size company and Bt10 billion for a large one. If it develops its own stores, the budget is set at Bt3 billion each, the same as for its Thai stores.
Central is negotiating to take over retail businesses in Southeast Asia including Indonesia, but that deal might not be struck until next year. Prin and several investors visited Indonesia with Bangkok Bank when the bank opened its Surabaya sub-branch. Central Group is also interested in acquiring department stores in Jakarta.
“We had been planning to invest in Indonesia over the past few years but could not because local investors are likely to be unhappy with foreign investors. However, Indonesia’s economy is growing and it is welcoming foreign investment, so this is the time to acquire a retail business there.”
Surabaya, the capital of East Java province, is another promising target because the city is a business centre and enjoys high purchasing power. If the group can acquire a retail business in Jakarta, it will consider taking over one in Surabaya as well. The difficulties in doing business in Indonesia involve logistics because the country has many islands and poor roads.
Central is also looking at Myanmar, but it wants to study the market carefully before venturing into it.
Southeast Asia’s retail business is expected to contribute 15 per cent to the group’s sales. Based on expected revenue of more than Bt100 billion this year, when the group has extended its branch network overseas, it should realise revenue of more than Bt300 billion within five years.