Major furniture chain foresees good demand

Business News - Tuesday December 11, 2007

Index speeding up expansion

Major furniture chain foresees good demand

PITSINEE JITPLEECHEEP

Amid rising optimism about the economy next year, Index Living Mall, one of the country's largest furniture and home furnishing retail chains, is doubling its investment budget to two billion baht to open four outlets nationwide next year.

Managing director Kijja Pattamasonthi said that under its original plan, the company had planned to open only two outlets, in Chon Buri and Khon Kaen, in April and May respectively.

But the company has decided to speed up expansion based on the better-than expected performance this year. Index has seen 15% growth in sales from last year, even though the overall furniture and home decor market is estimated to have contracted by up to 30%.

''So, this shows there is still demand for large furniture and furnishing outlets,'' said Mr Kijja.

''The continuous increase in oil prices may be among the reasons for the change in consumer behaviour to shop at complexes near their homes as well as those offering one-stop shopping for products and services.''

The company is now looking for two new plots for Index Living Mall outlets that will have at least 15,000 square metres of space each. Each outlet requires an investment of 500-600 million baht and will create about 100 jobs.

This year the company has opened two outlets, in Phitsanulok and the latest one in Udon Thani last week. The 500-million-baht Index Living Mall in Udon Thani is located on a 28-rai plot with retail space of 20,000 square metres.

''We extended the space at the Index Living Mall in Udon Thani by about 5,000 square metres after finding huge market demand there,'' said Mr Kijja. ''It has become the largest furniture and home furnishing retail outlet in Southeast Asia,''

Apart from Udon Thani, the catchment area for the new outlet will cover Nong Khai, Kalasin, Khon Kaen, Loei and Sakon Nakhon provinces as well as Laos.

''We have seen the growth potential in Udon Thani, which is now the centre of northern Isan,'' said Mr Kijja. ''With the new transport route near the Mekong river, it will create a huge market opportunity along the Thai-Lao border.''

He said the company had shifted its focus over the past three or four years more to the domestic market because of fierce competition in the global market, particularly on price with China.

The demand in overseas markets is also flat while the baht continues to be strong against the US dollar.

The proportion of domestic sales has increased to 65% of the company's total from 55% a few years ago.

Apart from opening new outlets, the company is trying to increase its production capacity and efficiency to compete with other rivals.

''We will stop competing in the 'red ocean' but go toward the 'blue ocean' with innovative product and service offerings,'' he said.

The company expects overall sales this year to reach 6.8 billion baht, up 15% from the same period last year.

By : Bangkok Post