COVID-19 drags Central Group down?

March 30, 2020 | 11:25
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The prolonged interruptions from the COVID-19 pandemic are affecting the operations of Central Group both in its home market of Thailand and its largest foreign market, Vietnam – and while emergency measures are being made to deal with the health crisis, it is difficult to balance out a compulsory temporary closure.
covid 19 drags central group down
Central Group has 133 Big C supermarkets and 49 Nguyen Kim home appliance stores in Vietnam

The early months of 2020 have not been easy for major companies, especially those specialised in retail and shopping malls like Central Group. In Vietnam alone, the firm has 133 Big C supermarkets, and 49 Nguyen Kim home appliance stores, among others.

Central Group has poured billions of US dollars into mergers and acquisitions deals in Vietnam, its largest overseas market. In 2017, the country contributed about 13 per cent of its total revenue.

According to Bangkok Post, the conglomerate is targeting an initial public offering in this year’s first quarter with the expected value of THB61 billion ($1.87 billion).

However, these plans may just fall through due to the COVID-19 outbreak that has been growing more serious in both Thailand and Vietnam for months now. On March 21, the Thai government ordered the closing of all shopping malls in Bangkok for 22 days when in a single day 89 new cases of infection were diagnosed, raising the total number to 411 in the country. This means that Central Group has seen little revenue from its nine shopping malls in the Thai capital these days.

The outlook in Vietnam is also far from bright. Following Ho Chi Minh City, Hanoi authorities last week also decided to temporarily close some business establishments like cinemas, bars and clubs, internet cafés, massage parlours, and karaoke bars, among others. Moreover, shopping malls in the cities will also have to close down for two weeks.

The tepid shopping appetite has also put a burden on supermarkets, including the Big C chain. Contrary to the great sales predicted before the pandemic, supermarkets in Vietnam are running a very real risk of an oversupply situation because people refuse to leave their homes to avoid the health crisis. Saigon Co.op, Lotte Mart, and even Big C have experienced a plunge in the number of customers for weeks.

A representative of Central Group told VIR that the company has been strengthening epidemic prevention measures in all areas.

Following this is the latest news about Nguyen Kim home appliance stores starting to sell instant noodles and hand sanitizers – best-sellers amidst the COVID-19 outbreak.

About 15 Nguyen Kim stores in Hanoi and Ho Chi Minh City have started selling everyday essentials like rice, sugar, instant noodles, and canned food. Moreover, the electronics retailer have also cleared out a few shelves for the most sought-after products during the epidemic like hand sanitiser and toilet paper.

These goods are sourced from its parent company's – Central Group – supermarket chain Big C. The items are sold at the same price as at the supermarkets. According to Central Group, this aims to help consumers easily purchase their necessities and thus help contain COVID-19.

Previously, Nguyen Kim piloted this new business model in three stores in Ho Chi Minh City. While there are no statistics available, Central Group said that the pilot was successful and so the model will be extended across the local market.

Nevertheless, as all business establishments (with the exception of food suppliers, petrol stations, and drug stores) are forced to temporarily stop operations, adding groceries to home appliance stores may not yield good results for Central Group.

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