Despite a spike in infections at Omicron and a slower pace of economic recovery, Yol Phokasub, managing director of Central Retail Corporation Plc (CRC), believes the Year of the Tiger symbolizes strength and bravery, which will lead to a recovery for the retail industry.
“I don’t know how long the Omicron variant will affect the market. We have to adapt and learn to live with it, because viruses can mutate,” he said.
CRC, the country’s largest retail operator, remains committed to expanding in 2022, as it did the previous two years despite coronavirus outbreaks.
The company wants to focus on investments to strengthen its core business and ecosystem, Mr. Yol said.
Mergers and acquisitions remain an important strategy for the firm.
CRC is expected to spend 20-30 billion baht to expand its business this year. The budget is to open new retail stores, renovate existing stores and invest in technology.
“Technology is very important in helping us serve customers who have different demands as well as design strategies to tap the high spenders and those who want to buy lines of credit,” he said.
“With technology, our business over the next three years is expected to evolve.”
According to Mr. Yol, the company wants to strengthen its omnichannel presence, which now contributes up to 20% of consumer spending.
CRC believes physical stores will never die, and online shopping can empower physical outlets, he said.
In 2021, the company invested around 17 billion baht to expand its business both domestically and abroad. This included Robinson’s rebranding from Central Festival Khon Kaen to Central Department Store and the introduction of Go Wow, a new DIY store operated by Thai Watsadu.
Mr. Yol said Thai Watsadu is a successful business unit under CRC over the past year. After a decade in the market, Thai Watsadu is now the No.1 in the home improvement industry, he said.
In line with growing customer concerns about health and wellness, CRC plans to expand Healthiful, a health products store, and Looks, a new beauty store at Tops supermarket. For animal lovers, the company has launched Pet ‘N Me, a pet fashion and lifestyle boutique.
Outside of Thailand, Yol said CRC’s business in Italy is expected to be much better than last year.
“We are all ready to continue our investments abroad,” he said. “In the midst of the protracted pandemic, we renovated all branches in Italy last year. The market has improved as Italian customers have returned to our stores and sales there are likely to return to pre-crisis levels, driven by local and European customers.
The company has prepared its employees for future expansion, Mr. Yol said.
“CRC is now a multinational company. We need local and medium multinational expertise to help us go faster, ”he said.
As chairman of the Thai Retailers Association, Yol said Thailand will remain dependent on local consumers for another year as foreign tourists will be scarce until the pandemic is brought under control.
Nonetheless, he remains convinced that the retail sector in Thailand will contract less this year than in 2021. The association forecasts a 5-10% contraction this year for retail, compared to a decline of 10%. at 20% in 2021.
According to Mr. Yol, two years of living with the Covid-19 have allowed companies to adapt their operations. Retail is expected to be healthier than in the past two years due to mass vaccination and the public health guidelines that follow, he said.
“The government has learned lessons to deal with epidemics. It needs to make quick decisions when a crisis strikes,” Yol said.
As the retail and service sectors depend on local consumption, the government must continue to roll out stimulus packages to stimulate consumer spending, he said.
“We would like to see a series of ongoing stimulus packages to boost local consumption every quarter. Campaigns should cover all levels of purchasing power. The government should quickly end the campaigns that aren’t working and find new ones and effective, ”Mr. Yol said.
He said that with foreign tourists still reluctant to travel to Thailand in large numbers, the government should find ways to attract those with high purchasing power, including those who come for medical tourism, those who have expertise in certain areas and long-term visitors.
“To attract these client groups, the government must support long-term visitors by preparing facilities that make their stay more convenient,” said Yol.
He also called on the government to increase the tax deduction for individual taxpayers who buy goods or services, claiming that 30,000 baht is an insignificant amount to get people to spend.
On December 21, the cabinet approved new stimulus packages called the New Year’s Gift to boost spending during the holiday season. The packages include a tax deduction for individual taxpayers of up to 30,000 Baht when purchasing goods or services, an extension of the existing co-payment subsidy program, and a reduction in property transfer fees and mortgage.
The tax deduction for individuals concerns purchases made between January 1 and February 15, applicable for tax year 2022.
The program is expected to inject 42 billion baht into the economy, foregoing about 6.2 billion baht in state tax revenue.
The program is expected to help generate 0.12 percentage point of economic growth, Yol said.
Books and items under the One Tambon, One Product scheme are included in the tax deduction scheme, but alcohol, cigarettes, lottery tickets, gasoline, accommodation and airline tickets are excluded.
He also expressed concern about the plight of small and medium-sized businesses, urging the government to launch more measures to protect local brands and prevent foreign brands from selling products at lower prices.
“The world of retail keeps changing, moving from a digital world to a virtual one. Companies that want to survive must adapt to respond quickly to customer demand for more choice, offer good products at fair prices and work to retain employees, ”said Mr. Yol.