Thai retail company Central Retail Corporation (CRC) announced an investment of THB 28bn (US$ 826.6mn) in February to expand its presence in its core markets Thailand, Vietnam, and Italy in 2023. The investments come in as a response to the slow return of the travel and tourism sector to normalcy after the adverse effects of the COVID-19 pandemic. With the new investment, CRC targets to exploit the expected tourism-driven economic rebound in Thailand and Vietnam, says GlobalData, a leading data and analytics company.

According to GlobalData’s estimates, the Thailand and Vietnam economies are expected to show real GDP growth of 3.8% and 6.1% in 2023, respectively. A significant portion of their GDP is tied to tourism. Furthermore, the size of the retail market in Thailand is expected to grow by 7.7% to reach US$ 166.5bn (THB 5,889bn) in 2023 from US$ 154.6bn (THB 5,422bn) in 2022*.

Shekhar Chowdhury, Retail Analyst at GlobalData, comments: “As the economies of Thailand and Vietnam bounce back from the impact of the COVID-19 pandemic, these countries are becoming lucrative markets for retailers. With its investment, CRC expects to generate total revenue of THB 270bn (US$ 7,970mn) in 2023. In February 2023, CRC also announced plans to invest THB 50bn (US$ 1,476mn) within the next five years in its Vietnamese operations, targeting sales of THB 150bn (US$ 4,432mn) by 2027 in the country.

“The retailer intends to fuel sales growth by enhancing its loyalty platform and expanding and improving its store network. The primary focus of these investments will be to shape the retailer as one of Asia’s largest omnichannel retailers while enhancing its IT infrastructure. CRC is planning to expand its store network mainly because consumer preference is shifting back towards in-store shopping.”

According to GlobalData Q4 2022 survey**, 19% of consumers in Vietnam and 21% of consumers in Thailand are shopping online less frequently for non-grocery products. CRC’s investments in its IT infrastructure will help the retailer enhance customer experience on all channels as it will enable the retailer to harness the latest systems and technologies in its stores and online platforms. The investment is part of its 5-year business plan ‘CRC Retailligence’ and is focused across all its business groups viz. Fashion, Food, Health & Wellness, Property (primarily focuses on renting out retail space to other businesses and its own stores), and Hardline (includes office equipment, books, e-books, stationery, electronics, and home improvement).

Chowdhury adds: “Due to the inflationary pressures experienced in many countries, consumers are looking for cheaper destinations that offer similar traveling experiences. Many people think of Vietnam and Thailand as relatively inexpensive and accessible destinations for travel. Even though travel expenses can vary based on your budget and preferred mode of travel, Vietnam is renowned for having a lower cost of living than many Western nations.

Vietnam has also been experiencing rapid urbanization, increased trading activities, and robust growth in tourism, which were primary reasons for the CRC’s investment decision. Similar to Vietnam, Thailand also offers hotels, dining, transportation, and activities that are less expensive that in most Western countries, while also providing many options for travelers on a low budget. Due to these reasons, tourism is expected to grow sharply in Vietnam and Thailand.

Chowdhury concludes: “While the reopening of international travel in Vietnam along with the recovery of purchasing power in Thailand hold lucrative prospects for retailers, consumer confidence is likely to be affected due to fears of recession and rising inflation. According to GlobalData Q4 2022 survey, 34% of consumers in Thailand and 65% of in Vietnam were extremely concerned about their financial situation. Retailers looking to expand in these countries need to look for ways to tackle this issue to succeed in these markets.”

* GlobalData Retail Intelligence Center – Market Analyzers & Macroeconomic Database, accessed in February 2023

** GlobalData Q4 2022 Consumer Survey – Thailand and Vietnam with 506 and 537 respondents respectively, published in November 2022