Index Living Mall targets expansion in overseas markets

Index Living Mall, one of Thailand’s leading furniture chains, is negotiating with potential franchisees in a move to expand into Nepal, Qatar and India by 2013.

Managing director Kridchanok Patamasatayasonthi said the expansion overseas was in line with its brand-building strategy as well as part of a move to diversify its business risks. The company aims to become a leader in the home-furnishings market in Asia.

"We are opening a franchise in Ho Chi Minh City next week. This will be the third franchised outlet to be opened abroad, following the ones opened in Cyprus and Dubai a couple of years ago," Kridchanok said.

She added that the new outlet in Ho Chi Minh City required an investment of Bt300 million and occupied about 7,000 square metres in retail space.

All operations in Vietnam will be run by its local franchisee, Caophong Company, which is committed to opening about five stores in Ho Chi Minh City, Hanoi and Da Nang in the next five years.

Kwanchai Kitkongkajornchai, senior vice president, said Index Living Mall saw good potential in Vietnam because it has a huge population. Though the country is only about 335,000 square kilometres in total land area, its population stands at more than 80 million. Many property developers from Singapore and South Korea have also entered the Vietnamese market.

Kridchanok said the company was in negotiations with different franchisees and was aiming to open two retail stores in the Nepalese cities of Kathmandu and Patan next April and May, and in Qatar and India in the first and second quarters of 2013 respectively.

She said that exports currently accounted for about 30 per cent of the company's total sales revenues, with the rest contributed by the domestic market. This is quite different from a decade ago, when almost 70 per cent of the earnings were from exports.

"However, we want to equalise the ratio of export and domestic sales in the next seven years. We will open a couple of new stores annually each in the local market and abroad. The overseas expansion, however, will only be through franchising," Kridchanok said.

She said that in the local market, the company had spent Bt1 billion and Bt1.2 billion respectively on two home-furnishing centres to be opened next year in Ratchapruek and Kaset-Nawamin Road.

Kridchanok said the company's sales had risen 12 per cent in the first nine months of this year compared to the same period last year. However, sales in October and November had dropped by more than 10 per cent due to the floods, which forced four key stores in the Bangkok districts of Rangsit, Bang Yai, Phetkasem and Phaholyothin, to be closed for nearly a month. Many customers have also delayed their purchases.

"Despite the floods, we expect to achieve an actual growth of at least 5 per cent this year to about Bt8.05 billion, though it will be lower than the Bt8.5 billion target set previously," Kridchanok said.

She said the company expected the home-furnishings market to dramatically rise by 15 per cent in the first quarter of next year as flood victims want to buy new furniture to replace damaged items.

"For Index Living Mall, our sales target next year is expected to increase 7 per cent to Bt8.6 billion," Kridchanok said.