Central Retail Corporation Public Company Limited (CRC) Earnings Call Transcript & Summary

[Foreign language] CRC Analyst and Investor Meeting [Foreign language] CRC Retail [Foreign language] of Investor Relations from CRC [Foreign language] Khun Yol Phokasub, CEO; Khun Ty Chirathivat, CFO; Khun David Llamas, Chief Digital Officer; and Khun Olivier Langlet, CEO of Central Retail Vietnam [Foreign language].

[Foreign language] financial review. [Foreign language] life destruction during COVID for the last 2 years, yes. [Foreign language] life transformation [Foreign language] live, learn, eat, entertain. [Foreign language] the system platform robust enough, might be flexible adapt to any change. [Foreign language] is the right thing to do. That is being the first move [Foreign language] big giants offline to be a leader in omnichannel retail within the [indiscernible], allow us to focus on [Foreign language] position of strength. [Foreign language] China customer become [Foreign language].

[Foreign language] a significant factor [Foreign language] topline, bottom line [Foreign language] talking about the new [Foreign language] even without tourist contribution. [Foreign language].

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So our CRC intelligence strategy represents the new step of business transformation for CRC following for the last 5 years of our omnichannel strategy. As you know, today, in our categories and most of our categories, we are leading omnichannel retailer. All of our different banners have worthy omnichannel capabilities across. The new retail intelligence strategy combines two main factors that we want to push forward as part of the strategy and consumer proposition. One of them is the ability to have a multi moment capability. This is about our ability to interact in a complete real-time fashion with our consumers by capturing and understanding their behaviors and respond to their needs as well as the [indiscernible], our new data ecosystem. Data ecosystem in the sense that we will combine data, both first-party data, obviously, Central being one of the biggest data banks in Thailand, together with second and third-party data of some of our partners. We will also provide a number of use cases on data to drive deep learning and machine learning to better respond to consumer demands. Some of these data will be across the business. So we'll have that in terms of business experience, in terms of driving additional automation and decision making, not only being data informed but being data-driven. In-store digitalization, really blending digital experience with in-store, which is a next step forward from our omnichannel offering today. Omnichannel data presence in the way that we will capture and work seamlessly across all different channels in terms of data sharing as well as any opportunities that we'll have going forward to provide experience in other environments like meta omniverse. Some of the use cases that we see within the business related to price and margin optimization models. We have already introduced several of these, particularly on some of our sports and fashion business, promotion and coupon maximization tools, digital marketing acceleration to ensure that our digital marketing spend is really driving conversion and customer lifetime value, better offline and online and online to offline conversions, as well as commercialization of terms and optimization with our vendors and suppliers, customer-driven demand forecasting to ensure that we maximize our buying spend on a yearly basis and also ensuring that we control our obsolescent stock. Predictive real-time assortment selection for our customers as well as inventory -- optimized inventory allocation across our business and the ability to access an omnichannel pool of stock not only within any of our banners, but also across our banners. All of these in terms of some of the very high-level target KPIs that we are planning to improve with this new intelligence strategy relates to our new customer acquisition, which is part of the growth that we still see going forward from online and omnichannel perspective as well as improved margins, particularly with a much better executed performance marketing activity in the way that we capture these customers. Margin optimization and reduction in obsolescent stocks and margin optimization in terms of gross margin, particularly online, we've seen an improvement in several of our business in the last few months. Maximize sales and working capital performance in the way that we use, for example, our inventory across the business, as well as driving continuous customer satisfaction and customer retention. And we're still targeting a 25% omnichannel contribution in 2022 despite suppose we consider to be fully open throughout this year.

Onward to Khun Olivier, as we tell you about the key strategy in Vietnam this year.

Thank you very much, Khun Ji. So yes, Vietnam, we have been able in -- in the last 2 years actually to be one of our fast-growing mall company actually with four opening in the last 2 years. We will have 41 mall ending in 2022. We opened two in the north of the country, in Thai Nguyen and Thai Binh, one in the South in Ba Ria. And we will open very soon one in Lao Cai. So if we go to the next slide, the store and the mall of Lao Cai actually is the concept, as has been described, the best family shopping experience you can have in the country, bringing the full power of our concept, Eat, Play and Shop, with also the ecosystem of our different brands we have in the country. So the mall will be roughly under 12,000 square meter NLA with the hypermarket of 3,800 and we should open it at the end of April. It's quite -- Lao Cai is the north as well at the Chinese border, very much touristic area. We are pretty comfortable to say that it will be successful actually more openly. We continue also to build our like-for-like performance to renovate the existing mall. We have seen a really good improvement in terms of sales and frequency as soon as we change from Big C to GO malls. So we will do 6 of them in 2022. It will be 19 at the end of this year, changing the tenant mix to bring really much more experience, customer experience in the mall. We put a lot of the space in terms of entertainment but as well food and beverage. And we support also the local, let's say, Vietnamese fashion with our concept fashion [indiscernible] and bring some services as well in terms of technology. This should bring our occupancy target a little bit over 80%. And we can say there that when we benchmark ourselves with our fellow colleagues and peers in the country, we have quite a strong performance in terms of occupancy in this very tough market due to the pandemic situation. To also secure our P&L, a lot of cost optimization projects are launched, mainly also the solar panel. We have already 20 malls and we will go for 3 others. So you see, actually, if we go to the next slide, that one of the main focus we have is food. Food with a very strong multi-format operation. In the rural area, we have launched [indiscernible]. I will come back a little bit later on that one. In the suburban, we have the GO Mall and GO hypermarket. And in the urban city, we have Tops. There, of course, we go full speed on expansion, but we are also building our like-for-like, thanks to the improvement and the rollout of our food concept that we are going to do in the hypermarkets. We work also a lot with our colleagues of talents to improve the import range of projects, which is really bringing a high differentiation on this market in our multi-format solution that we have. We will start also this year -- it's quite brand new -- to work on private label. We're going to have in the near future, approximately 2,000 SKUs. That we will be also available across all the banners that we have. And nonfood also, very important to attract people in the hypermarket. There, we're going to test also the new department, let's say, nonfood style in our hypermarket. And we will also there, roll out this concept in 2022 and '23 onwards. We will have to build, of course, a very strong supply chain to ship out this development. I mean expansion will be key in the future but as well at the center of our preoccupation omnichannel and for that one, supply chain will be also a strong pillar. So as I mentioned to you, expansion in '22 will be 1 mall: 8 Mini Go!, which is quite a very successful rural supermarket concept we have launched in 2020; 1 Lan Chi and 3 Tops Market. In terms of omnichannel there, 2 major pillars, I would say, 1 for hypermarket. We have our GO app, and we're going to have also in the future our in-house delivery service. Today GO app is among the top 5 downloaded app in Vietnam. But as well, we have more than 2 million downloaded customer there, so which is quite very impressive. And for the urban solution, we have BIP BIP. It might be the first time you hear about BIP BIP. So let's just dive a little bit into that one with the next slide. BIP BIP should actually support our supermarket, but also ecosystem to become really the winning omnichannel urban retailer in the future. So we are using this platform developed here in Vietnam but as well supported by the group and [indiscernible] team in order to bring a solution, click-and-shop for Tops but as well drive to where we will come very soon with the fulfillment center. We have already one in [indiscernible], but we're going to come with much more than that in the future. And click and delivery with a solution that will help us to actually deliver in less than 2 hours, our customers. We will use also in the future, our network, the ecosystem, the brand that we are supporting here in the country, like Amazon, Superstores, Look Kool, NK, or eventually GO! Wow to have a delivery point actually in those supermarket or actually a concept that we have in nonfood. And last but not least, we just opened in Go Dau, the second Mini go!, the rural concept we have. It's really overachieving, actually our best destination. So we are quite confident that we have a very good concept there, bringing a minimal concept, let's say, in this rural untapped area. We are talking about nonfood. We are talking about food as well. But also entertainment and food and beverage with some very strong tenant like Pizza Hut and KFC. We will open ATC, as I mentioned to you, but we have also quite a strong ramp-up coming in '23 onwards.

Thank you, Khun Olivier. Back to Khun Ty [Foreign language] plan for other countries [Foreign language].

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