The Thai retailer hoovering up Europe’s luxury department stores

The top floor of Central Embassy in Bangkok feels more like a tech company employee lounge than a shopping mall. Visitors can browse for books, order Japanese food, work on laptops, or sprawl on sofas and gaze at the skyline.

The Thai company that owns it, Central Group, is in negotiations to buy the UK’s venerable Selfridges stores from the Canadian branch of the Weston family in a £4bn deal to be agreed before the year-end, according to people with knowledge of the transaction.

At a time of a pandemic that has accelerated the migration to online shopping, Central has pioneered ways of luring people back to department stores, so the Bangkok mall may contain some clues to the future for Selfridges. Central declined to comment on the sale talks.

Picking up a top global brand would be a prize for Central, Thailand’s biggest department store operator, which is controlled by the billionaire Chirathivat family. The group operates one of Bangkok’s poshest food halls and during an acquisition push over the past decade has bought and transformed a number of luxury European department stores, including Germany’s KaDeWe, Italy’s Rinascente, Switzerland’s Globus and Denmark’s Illum.

Though little known outside Thailand or luxury retailing, Central is one of the country’s biggest conglomerates — groups often founded and owned by families of Chinese descent that parlayed international businesses from hardscrabble starts in Bangkok “shophouses”. Fellow retailers are now waiting to see what the group, already one of Europe’s largest luxury retailers, might bring to Selfridges.

“Central Group are experienced retailers, and they will be a perfect fit and high-quality owners following the Weston family,” said Ewan Venters, a former chief executive of UK luxury food emporium Fortnum & Mason. “You can never just buy in on a short-term basis and expect to create value; it’s about creating destinations, and they have a track record on that.” 

Central is in talks to buy the UK’s Selfridges stores © Jason Alden/Bloomberg

Central last year vied against rival Thai-Chinese conglomerates Charoen Pokphand and TCC to buy Tesco’s Thai and Malaysian supermarkets, eventually losing out to CP’s $10.6bn bid.

One of the top attractions of Selfridges, according to people familiar with the company’s thinking, would be the property; the brand owns the freehold on many of its stores, including its Oxford Street flagship.

Central has a history of banking land in prime locations. It built Central Embassy on land it bought from Britain in what used to be the UK embassy’s front gardens. In 2017, after Britain decided to move the embassy to a high-rise, Central joined Hongkong Land in buying the rest of the compound, which included an elegant villa and a statue of Queen Victoria, for £420m, Thailand’s biggest-ever land deal. Central has made no announcement yet on its plans for this land.

The group was founded by Zheng Ni Tiang, grandfather of its current chair and chief executive Tos Chirathivat, who arrived in Thailand from China’s Hainan island in 1927. Tiang initially helped with his father-in-law’s rice business before setting up shop in Thonburi, across the Chao Phraya river from central Bangkok. The company was established in 1947 and began importing from 1950 under the name Central Trading.

At the time, only a few big Thai stores imported goods, mostly from elsewhere in Asia. Tiang and his son Samrit pioneered imports of US products including neckties, cosmetics and English language magazines and books. In a city where bargaining was the norm, Central pioneered fixed prices. The group expanded from Charoen Krung road in what was then Bangkok’s downtown, building new department stores in the capital and beyond.

After Tiang died intestate, the family introduced a family decision-making council that remains in place today. Central’s ownership and management are more widely shared among the family than for most other Thai conglomerates.

The group’s seven-member executive committee or “family board” is headed by Tos and composed entirely of Chirathivats. Central’s 11-member management team has four family members but also includes Vittorio Radice. The Italian businessman joined the Thai company when Central bought La Rinascente in 2011. Having overseen an overhaul of Selfridges in the 1990s, it is expected he will lead a fresh revamp if the deal proceeds.

Thailand’s politics have been notoriously volatile and its economic performance mediocre over the past decade, which analysts said accelerated the company’s expansion abroad. Its biggest mall, CentralWorld, was burnt down during unrest in Bangkok in 2010.

Central tried and failed to enter the Chinese market, later refocusing on Vietnam, where it is now the top foreign retailer, and on Europe. In 2017 it formed an ecommerce partnership with Chinese online giant JD.com. 

Covid-19 and a hard lockdown this year have hammered the Thai economy and pushed the group’s recently floated Central Retail unit into a third-quarter loss of Bt2.22bn ($67m). As the pandemic accelerated ecommerce, Central has aimed to lure shoppers back to malls by bringing in more options to eat and drink, expanding seating areas, and offering what one analyst called “experiential retail”. 

“Customer experience is becoming one of the key elements in designing retail stores,” said Jariya Thumtrongkitkul, head of retail, advisory and transaction services at property group CBRE. “It’s a quality that online shopping and ecommerce cannot compete with.”

If the sale went through, analysts said, Selfridges would become Central’s best-known foreign franchise and be one of the highest-profile foreign acquisitions by a Thai company to date.

“Whether you go to Rinascente in Milan, KaDeWe in Berlin or Illum in Copenhagen, these are nice stores, well presented, with good brands in an attractive environment,” said Peter Williams, a former Selfridges chief executive who chairs several retail companies. “I think they’ve done a good job, and I can well understand why they’re interested in Selfridges.” 

A decade of expansion into Europe’s poshest shops

2011

Central Group buys Italy’s Rinascente department store chain

2013

Buys Copenhagen store Illum

2015

Central buys Germany’s Kaufhaus des Westens (KaDeWe) from Austrian group Signa

2020

Central and Signa buy Switzerland’s Globus

2021

Central and Canadian branch of Weston family enter talks on sale of Selfridges

Follow on Twitter: @JohnReedwrites




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