Central Group adds link to retail chain

Central Group’s acquisitions have put it in the driving seat in Vietnam’s retail sector-Photo: Le Toan

At the end of April, Central Group paid $1.14 billion to France’s Groupe Casino to take over their Big C Vietnam operations.

Casino, which is the majority shareholder in Big C supermarkets, has 33 stores nationwide, making it one of the top retailers in the country. More than 90 per cent of items on its shelves are made in Vietnam.

This big purchase brings Central Group’s tally of various stores in Vietnam to almost 100, including four shopping centres, 27 sporting goods stores, 30 fashion stores, one hotel, 21 electronics stores, one retail website, and 13 Lan Chi supermarkets.

These assets are spoils of a sustained period of actively acquiring local businesses. Central Group set foot in Vietnam in 2011.

In 2014, it bought 49 per cent of Vietnam’s electronics retailer Nguyen Kim. Central Group’s chief executive officer Tos Chirathivat said that the partnership is part of the group’s international expansion strategy, under which Vietnam will be its key market in the ASEAN region.

Central Group plans to have at least 50 electronics stores in the country by 2019, up from its existing 21 stores. Nguyen Kim has also made plans to increase their e-commerce revenue by 50 per cent from last year.

Central Group expects that Nguyen Kim will become an internationally-recognised brand in the ASEAN electronics retail market, and a dominant player in Vietnam.

In late 2015, Central Group also bought a stake in Lan Chi Mart. Founded in 1995, Lan Chi is a pioneering force in bringing modern retailing to rural Vietnam, a segment not yet tapped by strong foreign competitors.

Central Group is also buying online retailer Zalora’s operations in Thailand and Vietnam.

Similar to other major retailers in the region, Central Group may be expanding its online presence with the Zalora deal in order to ride the wave of online shopping. The Vietnam E-commerce Association forecasts that e-commerce revenue will grow by 30 per cent each year from 2016 to 2020, at which point the revenue will have reached $10 billion, or roughly 5 per cent of the total retail market.

In a related development, in early April Chinese online retail giant Alibaba announced the purchase of a controlling stake in Lazada Vietnam, one of the leading online retail sites in the country.

In recent years, Central Group has been buying stakes in retail companies in other ASEAN countries besides Vietnam, such as Malaysia and Indonesia.

Given Central Group’s ongoing expansion, more mergers and acquisitions in areas other than retail can be expected in the near future.

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