me cautionary references to ‘headwinds’ and ‘uncertainties’.  These kinds of words are deployed to soften expectations and provide cover if financial expectations are not met. Invariably they direct attention to factors that are out of the retailer’s control and away from areas where the retailer itself might be screwing up. In this spirit, Central asserted that Thailand was experiencing a ‘K-shaped’ economic recovery, meaning that different sectors of the economy were expanding at different rates.  With company sales in Thailand growing by a moderate 3.9 per cent, year on year, in the fourth quarter – on the back of an expanding store fleet – and total company revenues across all its markets increasing by only 1.2 per cent, it isn’t exactly clear which arm of the ‘K’ Central believes it is riding on. Perhaps it is straddling both. In Central’s other major market, Vietnam, business has been softer lately because of a fragile economy. In both countries, there were also rising costs and household debt burdens to contend with, along with the uncertainties related to global conflicts. Tourism is a bright spot, but the PM says border processing needs improvement There were some bright spots in the macro picture, however, with Central pointing out strong support for retail growth coming from the burgeoning tourism sector, which was well on the road to recovery in Thailand, where 28 million international visitors arrived last year, up from 11 million in 2022. This should get a further boost throughout this year, with visa waivers now in effect for visitors from key countries and visitor numbers still lagging the pre-Covid level by about 30 per cent, suggesting that there is still a lot of upside. The importance of tourism to the Thai economy and its retail sector cannot be overstated: the Prime Minister, Srettha Thavisin, recently made a surprise trip to Bangkok’s Suvarnabhumi Airport to sniff around the facilities, reportedly saying later that he was unhappy with the long queues visitors had to endure to get through immigration. The message to those in charge of processing visitors at the airport was plain: You need to lift your game. Mall revenues jump Central now operates 1633 stores under its various banners and 33 malls in Thailand. For perspective, Central’s combined selling and leasable space in Thailand alone is the equivalent of 100 decent-sized regional shopping centres. And that doesn’t include the malls operated by sibling company Central Pattana. Central also operates 133 stores and 39 malls in Vietnam and nine upscale department stores in Italy. For the full year, rental revenues from the company’s 72 malls jumped by nearly 20 per cent, to reach 7.8 billion Thai baht (US$222 million). Mall traffic is now more than 20 per cent above 2019, company data shows. Revenue from sales at company stores under its various banners rose 4.7 per cent, to 221.9 billion baht (US$6.3 billion), nudging total revenues up 5.3 per cent, to 248.7 billion baht (US$7.1 billion). After-tax profit for the year was 8.5 billion baht (US$243.5 million), an increase of 12.1 per cent. Fashion leads, food struggles  The fashion segment is the big bright spot in company sales growth, enjoying double-digit percentage growth, thanks partly to higher spending in tourist-oriented regions of Thailand, and also the addition of a couple of new department stores. Meanwhile, sales in the hardlines category grew by slightly less than 2 per cent, to 74.2 billion baht, despite the addition of 14 large-format home-improvement stores. Still, this means that Central’s home-improvement banner, Thai Watsadu, is in a serious battle with Thailand’s other giant, HomePro, for market leadership. (HomePro reported 2023 sales of approximately 73 billion baht last year.) The comparison across the two companies, however, isn’t a clean one. Central’s numbers include stores in Vietnam (where sales actually declined during the year) and non-home improvement retail banners in the office supplies and stationery businesses, among others, while HomePro’s numbers include rental revenue from its mall business. Rightly or wrongly, Central touts itself confidently as Thailand’s “number 1 omni DIY retailer”, a title that is just ambiguous enough to be defensible. It has 81 home-improvement superstores dotted around the country, 25 of them in Greater Bangkok, and plans to add about 10 new ones every year over the next five years. Central’s sales in the food segment also grew by about 2 per cent over the course of the year, also held back by falling sales in Vietnam. Everyone singing from the same hymn book The company has an ambitious expansion plan for 2024 and beyond. For this year alone, it aims to add 28 large-format stores: two department stores, nine home-improvement warehouses, 10 supermarkets and seven of its new Go Wholesale banner. It will pause on further opening of its flagship Robinson Lifestyle malls (a scaled-down regional mall format that it operates in second-tier locations) until next year. Over the past year, it has been pretty clear that sales growth has been driven increasingly by store counts and the recovery in tourism, while same-store sales are being held back by macroeconomic conditions, particularly the higher interest rates and household debt that are giving the recovery that odd ‘K’ shape. One after another, almost every major Thai retailer has made the same kind of pronouncement and there is certainly something to it. The Prime Minister knows there is a problem, but is the central bank listening? Further reading: Go Wholesale: Central Retail’s new concept takes on Pattaya