Central Group is in the news again, as it is setting aside US$1.5 billion to grow its physical stores across Thailand and Vietnam. According to this article, by 2022, the group aims to operate over 7,500 stores in Thailand from the current 4,970 and open 500 new stores to reach around 750 in Vietnam.

What could potentially warrant its aggressive push into physical stores when everyone is trying to go online?

Most transactions still happen offline

Well, perhaps Central Group is seeing what many pundits are missing. While online commerce is being held in high regard, here are some important facts. Online commerce only accounts for around 5%-7% of the total commerce in Thailand, while in Vietnam it is only 2%-4% of the total commerce. Suffice to say, it does seem that online commerce is still at its nascent stage. Malls and stores are still hugely popular.

Families in Thailand love to drive to the local mall (or in the case of Vietnam, ride the scooter), to enjoy the cool air-conditioned environment for free, grab an ice-cream, or a meal. Couples love to go to the mall to catch a movie. It all makes a lot of sense to continue to invest into malls, as most disposable income go to food, and entertainment (after housing and transportation).

However, it is also hardly uncommon to see the younger generation testing phones in the mall, only to go home and log onto Lazada to shop for better prices and promotion. This is again, an unstoppable trend.

Opportunities in online-to-offline (O2O)

Perhaps seeing its counterpart in Thailand, CP Group aggressively expanding its revenue channels by leveraging its 7 Eleven stores, triggered Central’s aggressive push into physical stores such as its own Big C or Family Mart stores. One can walk in to any 7 Eleven store to pay bills, top-up phone credit, and even purchase a bus ticket.

Buying a bus ticket in a 7 Eleven store in Thailand : holding up the queue, but it works

Most existing online shopping sites presently leverage payment gateways who have linked up with physical stores to receive payments. In Thailand for example, at least half of the online shoppers still opt for cash-on-delivery (COD) or to pay over the counter (meaning to pay at physical locations – such as Family Mart, 7 Eleven etc). While smartphones and mobile internet are widely accessible and affordable, many still do not have the debit or credit cards. This is true in Thailand, and even Vietnam.

That is just for payments, and we have not even touched yet on the physical stores acting as a logistics drop-off points. The opportunities are limitless, in our view.

Untapped potential in Vietnam

In Vietnam, due to lack of trust for online shopping operators, most shoppers still choose to pay by cash. Having a physical store helps to bridge the gap, and using this strategy, Central can wait it out while the market for online shopping matures.

That said, the physical stores could easily operate as payment collection channels, as it already is the case for Central’s stores operated across Thailand. In addition, many Thai investors see Vietnam as what Thailand used to be, but growing much faster. The young and growing population in Vietnam convinced Thai mall operators such as Central to continue to invest as they know they will be able to reap the returns down the road. This is the exact opposite in Thailand, where the population growth is seen to have hit a plateau.

Aging population in Thailand could spell a slower economy in years to come


In short, Central may not be not totally ignorant. Their partnership with JD, although still too early to be judged for success, speaks volumes. You do not become the biggest shopping mall operator in Thailand without some know-how and guts. For now, it is still sufficient to say that (unlike Malaysia), the shopping mall glut is not yet too apparent in Thailand or Vietnam.

Central Group’s strategy of growing the number of location it operates is perhaps a step in the right direction, as it would later be leveraged for its online operations. In any case, we will watch them more closely during the launch of JD in May 2018.

Thanks for reading The Low Down (TLD), the blog by the team at Momentum Works. Got a different perspective or have a burning opinion to share? Let us know at [email protected].


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He has worn many hats in the past - selling advertising space, banking services, and even trading stocks. In 2013, longing for a change of scenery, he joined Rocket Internet’s (now Alibaba’s) Lazada as a online marketer in Bangkok, where he experienced first hand life in a startup. He never looked back since - landing lead roles at Rocket’s EasyTaxi (Singapore), Rocket’s MEIG (Dubai), and Bamilo (Tehran). After that, he launched (and ran) the Thai venture for one of Singapore’s biggest cross-border ecommerce. Last year, Chong put his expertise to work, helping an SGX-listed company relocate to and run operations in Thailand. Nowadays, he’s just chilling by the countryside.