Index Living Mall forms Malaysian JV with Japan's Aeon Group

The move is part of a drive by the Thai company to expand its business in Asean.

Index Living Mall’s managing director, Kridchanok Patamasatayasonthi, yesterday spoke about her company’s growth strategy and strategic alliance with the Japanese retail giant through its first joint-venture business.

The company will hold a 30-per-cent equity stake in the JV, while Aeon will hold the remaining 70 per cent. The board will comprise of directors from both companies to formulate policies and direct the path that the new company will take, she said.

The JV represents a joining together of the strengths of Index Living Mall in furniture manufacturing and retailing and Japan’s Aeon, which is a leading player in Malaysia’s retail sector with the most extensive branch network there.

The business alliance will, therefore, help both sides to expand market share and boost their competitive edge in terms of production costs via economies of scale, which will lead to profit advantage.

It will also promote awareness of the Index Living Mall brand, paving the way for it to become the first Asean regional-brand furniture retailer ahead of the Asean Economic Community’s implementation in 2015, with the AEC presenting a market of 600 million, Kridchanok said.

Apart from the strengths of Index Living Mall and Aeon, Malaysia’s economy and the purchasing power of its citizens are conducive to the new joint-venture business, she said.

New-generation Malaysian consumers look for retailers that offer a wide variety of furniture and home decorations under one roof – one-stop shopping which fulfils their needs, she added.

Moreover, the Malaysian property development sector continues to grow, with 65 per cent of residential property concentrated in condominiums in the major cities.

Index Living Mall, which has been expanding abroad since 2009, has eight overseas branches, covering Asian and Middle Eastern markets.

Asean business

For the Asean market, the company has a branch in Ho Chi Minh City and seven Index Furniture Centre outlets in Vietnam, Myanmar, Laos and Nepal.

The company is expanding its business abroad through exports and via a franchise network by linking up with foreign investor groups and/or business partners.

It takes into account consumer purchasing power, preferences/needs, business rivals, location and the potential for success of foreign investors/business partners when considering the viability of each foreign business expansion.

The company’s foreign branches account for about 10 per cent of its total sales, with Asean contributing half of the amount.

For Aeon Malaysia, the JV with Index Living Mall represents an important challenge. With the financial support of Japan’s Aeon Group, the company will invest in specialty stores to sell and distribute furniture and home decorations.

There are few rivals in this type of business, which prompted Aeon to undertake this project. There is room for growth, especially in view of the expansion of the property sector in Malaysia, which should ensure the success of the venture, the company said.

Kridchanok said her company would review the operational results of the branches set up under the JV.

The board will analyse the Malaysian venture’s success from various aangles, including the market, economy, business, marketing and competitive environments.

Index Living Mall believes the appropriate size of each Malaysian branch store should be in the region of 6,000-10,000 square metres, she added.