Page 122 - CRC_One Report 2021_EN

Business Overview and Performance Corporate Governance Financial Statements Enclosure

Central Retail controls slow-moving merchandise in store and through its systems and take action where necessary
through either transfer or price reduction as deemed necessary. All of the stores in food segment monitor their stock
position daily by reviewing the books and making appropriate adjustments where discrepancies are founded.
Apart from that, Central Retail performs inventory checking on an average two times per year and any discrepancies
are adjusted in financial statement.

1.2.5 Management, Operation, and Long-Term Goal

Central Retail believes that success in retailing is primarily driven by local factors and familiarity with the local
community, so Central Retail strives to delegate management to individual business units and local stores rather
than centralizing management at the group level. Central Retail’s business units therefore are responsible for certain
key functions, while central management is responsible for others.

(1) Group Management

Headquarters are currently located in Bangkok. While Central Retail strives to focus on local decision-making, Central
Retail also believes that Central Retail achieves numerous synergies by combining all of its business units under
a single group structure. The table below presents the core functions that are undertaken at Central Retail level.

Function Description
Logistics Central Retail uses centralized logistics centers for fashion segment and hardline segment.
Otherwise, logistics is generally handled at the business unit level, though Central Retail
tries to coordinate among business units whenever possible to consolidate transportation
for the distribution of merchandise and supplies in order to save costs.
Suppliers and sourcing By combining the buying power of numerous business units, Central Retail can achieve
strong bargaining positions with suppliers to lower costs and improve margins.
Managerial Talent Central Retail has historically identified key managerial talent with successful track
records in one business unit and assigned them to other business units.
Back-Office Services Each of business units share back-office support functions provided by HCDS such as
management, finance and accounting and legal services, and including certain aspects
of human resources and other functions to achieve economies of scale. (1)

Information technology Each of business units joins a common technology platform, such as omnichannel
platforms, and also share valuable IT talent (2)

Investments and funding Each of business units can leverage common financial resources to support capital
investment for store expansion and new businesses.

(1) A portion of such functions may be procured through corporate services agreements. The detail was demonstrated in “Nature of business
section - Corporate Services”
(2) IT Group level functions with respect to IT infrastructure and IT services are provided to Central Retail by RIS Company Limited pursuant
to certain shared service agreements, while omnichannel platforms’ services are in-house.

(2) Business Unit Management

Central Retail organizes its business operations by business units, each of which is responsible for one or more retail
banners. Central management for Thai, Vietnamese and Italian business units are located in Bangkok, Ho Chi Minh
City and Milan, respectively. Business unit management is responsible for merchandising, strategic marketing and
branding, space optimization (referring to the choice of store formats, banners and brands across the retail network),

122 Annual Report 2021 (Form 56-1 One-Report)