Robinson Department Store plans to invest 2.8
billion baht to open five new stores this year as part of a plan aimed at
boosting revenues by 20%.
Jiraphan Thongtan, general manager for finance for
Robinson, told investors at a briefing yesterday that the company would aim to
open five new stores per year over the next five years.
Investment for each store is projected at 500
to 700 million baht, she said.
CentralPlaza Chiangrai, which opened its doors on March 30 last year. Photo Source: Bangkok Post
Retailers are cautiously optimistic about their outlook
in 2012, believing there will be a slow business recovery
from the recent flood crisis.
Some investments may be delayed due to the continuing
global economic slowdown and oil prices fluctuating on further problems in the
Middle East. Thais are also still concerned about the possibility of future
flooding.
The sector will face new challenges such as the hike in
the daily minimum wage to 300 baht and starting salaries
of 15,000 baht a month for new university graduates. If
such government policies drive retail prices up, then inflation will also rise
and have a modest effect on local consumption.
People's purchasing power will recover this year after
the heavy flooding, although product supply will not be enough to meet demand,
as manufacturers still need time to return to normal operations.
"In the best-case scenario,
business will start to recover in the first quarter, returning fully to normal
in the second half," said Piyawat Titasattavorakul, the managing director
of CP All Plc, local operator of the 7-Eleven convenience
store chain.
Mr Preecha (centre) with actress Mint Chalida Vijitvongthong and actor Naded Kugimiya at the launch of Robinson Department Store’s Rama IX branch.
Robinson Department Store Plc plans to double its
branches and sales over the next five years after expanding slowly over the
past several years.
The number of branches in 2016 is
expected to reach 50, up from 25 by
the end of this year. Sales would rise to 34.6 billion
baht over the same period.
Robinson president Preecha Ekkunagul said at least 2.5 billion baht would be spent to add five new branches each
year for five years, with the funding to come from the company's cash flow.
Next year's five new branches will be in Bang Na, Bang
Khae, Surat Thani, Lampang and Suphan Buri, each creating 500-600
new jobs.
Even if product prices rise, Robinson gains from revenue-sharing with manufacturers, says Mr Preecha.
Improved consumer purchasing power has revived department stores, which have been hit hard by competition from discount stores in the recent past.
Preecha Ekkunagul, the president of Robinson Department Store Plc, said higher crop prices, minimum wages and civil servant salaries were driving consumption, even as employment rises.
At the same time, Bangkok residents are spending more on lifestyle items such as fashion, electrical products and consumer electronics and furniture. The momentum started last year, leading Robinson to steady growth.
If there are no new political problems and the country's economy keeps growing, he expects consumers will buy more premium products at department or specialty stores instead of making purchases at hypermarkets or convenience stores.
Robinson Department Store Plc will spend 4 billion baht to open seven new outlets this year and next.
Customer response to first lifestyle centre in Trang has exceeded expectations since the opening four months ago, says Mr Preecha.
Included in the two-year expansion plan is Robinson Suphan Buri, its second stand-alone lifestyle project, worth 800 million baht, where outside tenants will be invited to rent space next year, said president Preecha Ekkunagul.
The first lifestyle centre opened in Trang last November to penetrate secondary provinces where big shopping malls were not present.
"The feedback in Trang has exceeded our expectations with double-digit growth every month since it was opened four months ago," he said.
Apart from Suphan Buri, the other six new stores will be in Chiang Rai, Phitsanulok, Bangkok's Rama IX and Bang Khae areas, Mega Bang Na and Surat Thani. By the end of 2012, Robinson will have 30 branches.
Year-to-date sales of Robinson Department Store Plc have grown by more than 20%, the highest in the past three years, because of recovering purchasing power from local shoppers and tourists.
Sirinij Chokchairittikul, the company's vice-president for marketing, said half of Robinson's 23 department stores recorded sales growth of between 20-40% this year. These branches are in tourist destinations such as Phuket, Khon Kaen, Hat Yai and Chon Buri.
The sharp sales growth was mainly driven by fashion products for men and women, shoes and handbags, which together grew 20% and contributed about 60% of total retail sales.
"The economic recovery in the fourth quarter of last year increased consumer confidence. We also work closely with fashion suppliers to launch products one step ahead of other retailers with various selections," Ms Sirinij said.
Robinson Department Store Plc will speed up its expansion plan for the upcoming economic recovery by investing 3 billion to 4 billion baht in another eight new projects over the next three years.Store expansion is one of the company's three priorities for next year, along with brand building and customer relationship management, said President Preecha Ekkunakul.
"In the past, we opened just one outlet [a year] on average. But we will move at a faster pace with at least two or three new branches per year after the economy gets better," he said.
The new branches next year will include one at a Central Pattana shopping complex, he said.
Robinson wants outlets across the country and in the next five years may open 10 branches to double its stores upcountry, said Mr Preecha.
The investment budget will come from the company's cashflow, he added.
The 23rd Robinson branch will open in Khon Kaen on Dec 3. The 680-million-baht store covers 20,000 square metres and features a luxurious, hip atmosphere. Along with luxury and fashion brand names it will stock items from the Only@Robinson house-brand line.
Robinson has confidence in its Khon Kaen store because the province has the highest per capita income in the Northeast, said Mr Preecha. More than 3 million customers can reach Robinson Khon Kaen within an hour and Khon Kaen is a centre for business, education and transport, he added. The company will spend 10 million baht to promote the store.
In addition to its outlet expansion, Robinson will focus on brand building and customer relationship management to draw customers.
"In the past two years, we have slowed down marketing events because the economy was not good. But next year, we anticipate that the economy will recover and we will then allocate more budget to build brand and communicate with customers," said Mr Preecha.
The company plans to spend 80 million baht to launch its campaign for the upcoming festive season. The company expects its sales this year to grow by 3-4%.
Robinson shares (ROBINS) closed yesterday on the Stock Exchange of Thailand at 9.70 baht, down five satang, in trade worth 5.23 million baht.
Robinson Department Store Plc's Rarm Intra outlet has become a new strategic centre for the company's Bangkok operations due to the area's growing number of upscale housing developments, a senior executive says.
Customer purchasing power in the Rarm Intra area has increased dramatically when compared to shopping behaviour in downtown Bangkok, said vice-president for marketing Sirinij Chokchairittikul.
Average spending per bill at Robinson Rarm Intra, which is located at Fashion Island, increased to about 2,500 baht from almost 1,000 five years ago.
Best-selling products were high-priced items such as watches, high-tech gadgets and fashion and lifestyle products, she said.
A company study found that half of Rarm Intra households earned between 50,000 and 60,000 baht per month. They also liked to shop locally.
"In my opinion, department stores in Bangkok's outskirts and upcountry areas got a modest impact from the economic downturn and political unrest when compared to downtown stores," said Ms Sirinij.
Due to better-than-expected performance of Robinson's Rarm Intra and Rangsit branches, the firm will increase the marketing budget for the two stores and develop specific strategies for each outlet's customers.
"We see tougher competition in Bangkok and what we want to do is to focus more on suburban stores and those locating upcountry. These stores have less competition and the business potential is tremendous," she said.
Yesterday, the company launched its 10-million-baht "Beauty World @ Robinson Fashion Island" which runs from Oct 22 to Nov 2. The event features about 50 cosmetic brands, more than 20 of which are high-end brands.
Prasert Sriuranpong, executive director of Siam Retail Development Co, which operates Fashion Island shopping complex, said the recession has only had a small impact on the mall's business.
"Despite economic and political difficulties, we have seen the number of shoppers grow 8.5% year-on-year so far this year," he said.
Mr Prasert said Rarm Intra was a prime residential area with high-end housing projects where units can range from 5 million to 30 million baht.
Cosmetics was one of the product categories least affected by the recession. Cosmetics sales at Robinson increased by 5% in the first nine months and are expected the rise by 7% to 8% for the whole year. The category contributes 15% to Robinson's overall sales.
Shares of Robinson closed on the Stock Exchange of Thailand at 10 baht, down 40 satang, in trade worth 12.98 million baht.
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