Home-furnishing retailer Index Living Mall has announced its 2020 vision to continue its push beyond Thailand into other ASEAN countries.
With franchised stores already trading in Malaysia, Thailand and Vietnam, the company believes the region’s urbanisation has shifted consumers toward a more modern lifestyle, including the way they buy and use home-furnishing products. It also notes a rise in the number of middle-income earners throughout the ASEAN Economic Community.
MD Kridchanok Patamasatayasonthi says the company aims to double the present 5 per cent contribution to its total revenue from AEC markets by 2020. The company’s total revenue of Bt9.5 billion (US$264.8 million) last year was 5 per cent up on 2014.
“Our market expansion through international franchisees is the result of growth in the home-furnishing and accessories sectors among ASEAN member countries,” says Kridchanok. “Other positive factors, including the bustling economic outlook, rising gross incomes and similar customer behaviour, helped accelerate our decision to look for investment opportunities in new markets.”
She says the company has appointed VinDS, the retail investment arm of Vietnamese commercial property developer Vingroup, as its franchisee to tap into the home-furnishing and accessories retail market in that country. The first Index Living Mall under that partnership had a soft opening last month in Ho Chi Minh City, occupying 7000 sqm in Vincom Mega Mall Thao Dien. Costing more than Bt200 million, the store is expected to achieve Bt350 million in sales in its first year.
Index Living Mall has had a store trading in Ho Chi Minh for more than four years, effectively testing the market. Now with VinDS it expects to open 10 more stores in major cities in Vietnam, including Ho Chi Minh, Hanoi and Da Nang, within five years.
“Economic growth indicators show that the Vietnamese retail market is number two in Asia, after only China,” says Kridchanok.
“During the first half of last year, the Vietnamese economy posted 6.28 per cent growth, the highest since 2008. With a population of 90 million, this will continue to grow, thanks to per capita income rising more than 10 per cent over the past decade.”
Kridchanok says it is expected that the number of Vietnamese earning a median income of 15 million dong ($673) a month will grow to 33 million by 2020.
Index Living Mall’s director for international business development Ekaridhi Patamasatayasonthi says the company’s venture into Vietnam highlights its marketing direction to tap into emerging CLMV (Cambodia, Laos, Myanmar and Vietnam) markets, aimed at strengthening its leadership position in the home-furnishings and accessories retail market in the ASEAN region.
Ekaridhi says the company plans to open store in Manila in September via a joint venture with SM Retail, a Philippine business conglomerate involved in shopping mall, property development, banking and retailing. Index Living Mall has a 30 per cent stake in the venture.
In Malaysia, Index Living Mall opened its first home-furnishing store in Putrajaya last year in a joint venture with AEON. Three more stores are planned for Malaysia this year – in Kuala Lumpur in March, Kota Bharu in April and Johor Bahru in the fourth quarter.
Ekaridhi says there are six franchised stores in five countries – Malaysia, Russia, Maldives, Nepal and Vietnam – as well as dealers in Laos and Myanmar. In its home country, the company has 25 stores in 17 provinces, of which nine are in Bangkok. It plans to invest Bt470 million this year to open two stores, in Nakhon Pathom and Chachoengsao.
Index Living Mall expects to post Bt10 billion in revenue this year and to grow its annual sales by 10 per cent over the next five years.