Managing director Kijja Pattamasat-tayasonthi said the strengthening baht has had a negative impact on the company as nearly 45 per cent of production has been for export to many markets including Japan, Europe and the US. The company, however, has to maintain its retail price in those export markets to compete against furniture from competitors imported from China and Vietnam.

Kijja said that the appreciation of the baht - which currently stands at Bt35 to the US$1 - has led to an almost 12 per cent drop in returns. The baht is expected to further appreciate to about Bt34 against the US$1 next year.

"With this new strategy, we want to cut out the middlemen who deliver furniture to local retailers in the overseas markets," said Kijja. "By delivering our products directly to local chain store retailers, we will be able to reduce price pressure from the strong baht by cutting costs and the profit margin of the middlemen."

Kijja said that different exclusive furniture models would be developed by its team of designers for overseas retailers to avoid price comparison and price competition between them. The ratio of exclusive furniture models supplied to overseas chain stores will be increased from the current 30 per cent to 50 per cent next year.

On Saturday, the company opened the Index Living Mall in the Rattanathibet area. With an investment of Bt250 million, the new stand-alone furniture centre has more than 10,000 square metres of retail space to introduce its latest store concept of "Victorian Style".

Next year the company will invest Bt400 million to open a new 12,000-sq-metre mall in Phitsanulok. Another 14,000-square metre mall, costing Bt420 million, will be opened by the end of next year in Udon Thani.

Kijja said the company expected to increase its domestic sales by another 10 per cent this year and by 15 per cent next year. He said the company would also allocate a budget of Bt220 million for aggressive domestic marketing activities next year.

Index Living Mall expected to reach  sales of Bt6 billion this year.

"Our strategy next year will further strengthen our 'experience marketing' programme.

He said the company's Joy Price, a value-for-money campaign, has been successfully promoted among local consumers. The firm will focus two other initiatives for Joy Design and Joy Quality next year.

Kwanchai Rungfapaisarn

The Nation