April 10, 2014 12:00 am JST

Central Group's rapid rise from tiny shop to retail juggernaut

TORU TAKAHASHI, Nikkei staff writer

BANGKOK -- The history of Central Group, the biggest retail conglomerate in Southeast Asia, dates back 90 years, since its start as a tiny shop in Bangkok. Later it opened Thailand's first department store and aggressively diversified its business.

     In 1925, the founder of the group, Tiang Chirathivat, emigrated from Hainan, China, to Bangkok. Shortly afterward, he opened a small shop handling imported goods in the Thonburi district on the west bank of the Chao Phraya River. In 1956, the family set about expanding the business, starting in Chinatown with Central Trading, the precursor of today's business. Offering a wide range of clothing and household goods, it was the first department store in the country. In Thailand in those days, prices were set through bargaining between seller and buyer, so by introducing fixed prices for goods, the store revolutionized the business practices of Thai retailers.

     In 1974, the group advanced into the central part of Bangkok, opening the large Central Chidlom department store. After entering the shopping mall segment with Central Plaza Ladprao in a suburb north of Bangkok in 1982, the group began stepping up its store development. The group launched its hotel business in 1983, and later expanded to overseas destinations such as the Middle East, Bali and the Maldives.

     The group in the 1990s began embarking on bold acquisitions of other companies. After taking over Thai retailer Robinson Department Store in 1995, the group acquired in 2002 World Trade Center, a large commercial facility in the Ratchaprasong area in central Bangkok which houses the Bangkok store of Japan's major department store Isetan, among other tenants. Renamed CentralWorld, the gigantic complex is now known worldwide as the emblem of the conglomerate.

     Since the group's first chairman Tiang died in 1968, his sons have assumed top positions in the group. Eldest son Samrit served as the second chairman from 1968 to 1989, followed by second son Wanchai, who was in the position from 1989 to 2012. Another son, Sudhichai became chairman last November, after acting as CEO of Central Group, a post newly established for him.

     The second generation of Chirathivats, having run the Central Group for nearly half a century, is passing the reins to the third generation. Tos succeeded his uncle Sudhitham as group CEO last November. Tos, 49, earned an MBA from Columbia University in the U.S. and worked for Citibank before joining Central in 1989, where he held key posts in the group's mainstay retail division. The youngest of Samrit's eight sons, Tos is the first of the third generation of Chirathivats to take the top position in the group.

     With not just the top post but almost all high-ranking positions occupied by Chirathivat family members, Central Group is a true family enterprise. More than 150 relatives of the founding family are believed to work in the group.

     In parallel with the appointment of Tos as group CEO, Central reorganized its five core divisions -- retail, real estate development, wholesale, hotel and restaurant -- into eight segments. The most sweeping reorganization in 30 years is aimed at ensuring a more meticulous approach toward improving operational efficiency and strengthening competitiveness. The retail division has been broken into four divisions, including department stores and convenience stores. Each division has a CEO to speedily move operations forward, and groupwide business issues are discussed by the executive committee, which brings all CEOs together to thrash out solutions. The executive committee meets at least 25 times a year.

     Under the founding family's leadership, Central Group continues to grow at a breakneck pace.