Analysis: Central Group reveals objectives for 2020, including Euro push

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Central Group Thailand has unveiled its plan for the next five years, aimed at achieving double-digit sales growth in most overseas markets.

Chief executive Tos Chirathivat emphasised Europe as a priority market. Central Group Thailand (CGT) aims to increase sales from THB40bn (£790m) in 2015 to THB100bn (£1.98bn) this year.

To fulfil that ambitious target, the retailer will spend THB12bn (£238m), of which THB10bn (£198m) will be spent on renovating its existing businesses in Germany, and another THB2bn (£39.7m) has been allocated for a new branch in Italy.

As the only Asian retailer operating in Europe, Central Group currently owns three department store fascias on the continent – KaDeWe in Germany, La Rinascente in Italy and Illum in Denmark.

Double-digit growth in Vietnam

After successfully acquiring Big C Vietnam in a THB36.5 billion (£725.5m) deal, Central Group will temporarily freeze merger and acquisition activities in Southeast Asia and focus on restructuring its retail operation in Vietnam.

Although it is eligible to own the Big C brand name for the next 10 years, the retailer has revealed it is in the process of changing the name of the largest hypermarket chain in Vietnam.

One year after entering the Vietnamese retail market, the company now owns five retail businesses – Nguyen Kim electronic stores, Robins department stores, Lan Chi supermarkets, the Zalora ecommerce arm and Big C Vietnam hypermarkets – along with two franchise businesses, including M&S clothing and Supersports.

It seems Central Group is taking slow steps to group all of these businesses under one umbrella company, with the Big C fascia as the principal growth driver.

This united entity is poised to become the largest multi-channel international retailer in Vietnam, bigger even than AEON and Lotte Shopping.

Collaboration with government to boost domestic sales

Central Group’s chief executive Chirathivat clearly defined its strategy for the Thai market: “We will focus on the premium food market under the Tops brand, as we also have more business categories in Thailand.

“This is enough for our business expansion in Thailand’s retail market, although we sold our stake in Big C Supercenter.”

Last month, Central sold its 25% stake in Big C Supercenter Thailand for THB50bn (£993.8m) to pay for the Big C Vietnam deal.

Chirathivat also attended a consultancy group about boosting domestic sales in Thailand. The subsequent strategy will include investments in tourism, local products and international trade.