Thailand’s Central Group cautious over 2016 expansion

2 min readUpdated May 26, 2025Dec 21, 201510:00 AM

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Central Group sees 2016 as another year to be more conservative with expansion, as the country’s largest retail operator is still concerned about weak domestic consumption. Prin Chirathivat, deputy chief executive officer, said yesterday that both the global and domestic economies are expected to improve in the coming year. The only worry was moribund consumer spending, as the group is heavily involved in the retail business.

Unlike the retail business, the group’s hotel business was still performing well this year.

The group will continue to develop department stores as planned but with a cautious approach.

“We have to be well prepared with a more flexible plan and put more focus on our core business,” he said.

The company appears to be hedging its risk by focusing less on non-core businesses like warehousing.

To support future growth of its hard-line business, which heavily relies on inventory management, Central Group’s CRC Power Retail is forming a 50:50 joint venture with WHA Corporation Plc.

WHA Central Alliance was established with Bt850 million in registered capital to manage its Bt4-billion warehouse project in Ayutthaya’s Wang Noi district.

Located on 320 rai (51.2 hectares) of land owned by Central Group, the new warehouse will offer a total of 250,000 square metres of space. As the first phase, Central Group has already built a 56,000sqm facility on 100 rai.

The JV would take over both the land and warehouse under a sale-and-leaseback deal and carry out the next two phases to expand its capacity to 250,000sqm in three years. The Bt4-billion investment includes land.

“We have to be well prepared with a more flexible plan and put more focus on our core business,”

Jareeporn Jarukornsakul, vice chairman and chief executive officer of WHA, said that through the sale and leaseback of the first phase, the new JV will realise revenue of about Bt100 million from the beginning.

The first phase was aimed at serving Central’s hard-line retail business consisting of Thai Watsadu, HomeWorks, Baan&Beyond and Power Buy.

In preparation for continuing expansion, particularly of the new imported product line-up, the second phase is scheduled to be completed next year, adding 28,000sqm of rental space.

The hard-line business has played an important role in the group accounting for 10 per cent of total revenue, with an average annual growth of at least 10 per cent in revenue.

Somyos Anantaprayoon, chairman of WHA, said that after the completion of all phases, Central Group would lease 60 per cent of the total warehouse space for 10 years. The remaining areas would be available for new customers.

With experience in the build-to-suit warehouse business, WHA could help clients to save about 30 per cent in costs incurred by constructing their own warehouse.

WHA projects Bt400 million a year in income from the completed project, which would boost its rental, service and utilities income by 10 per cent.

Jareeporn said the JV was the third collaboration with Central Group. The company already provides the group a 23,000sqm warehouse and distribution complex on Bang Na-Trad Road and a 20,000sqm cold storage facility on Rama II Road.

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What this means

Central Group's cautious 2016 outlook, prioritising core business and logistics, is a shrewd move to navigate an uncertain domestic market. This focus on efficiency through the WHA joint venture, building on existing collaborations, contrasts with rivals like OCE and Human Made expanding their physical footprint in Thailand. While Tiffany & Co. Ventures into F&B in Singapore, Central Group is committing further to operational strength for its 10% revenue-generating hard-line business, rather than aggressive store counts seen from Panpuri's planned 16-store Asian expansion. The strategy pressures competitors by setting a higher standard for logistical excellence. We anticipate scrutinising the completion of the second 28,000sqm warehouse phase next year for immediate operational impact.

Wei Zhang

Questions & Answers

Why is Central Group taking a cautious approach to expansion in 2016?

The group is concerned about weak domestic consumption, despite expectations for improvement in both global and domestic economies next year. Consumer spending remains moribund, directly impacting their retail business performance.

What is the purpose of the joint venture between Central Group and WHA Corporation Plc?

The 50:50 joint venture, WHA Central Alliance, was established to manage a Bt4-billion warehouse project. This supports the future growth of Central Group's hard-line business, which relies heavily on inventory management.

How much of the new warehouse space will Central Group lease upon completion?

Central Group will lease 60 per cent of the total 250,000 square metres of warehouse space for a period of 10 years. The remaining areas will then be made available for new customers.

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