Page 167 - CRC_One Report 2021_EN

Business Overview and Performance Corporate Governance Financial Statements Enclosure

and strategies, the best utilizing customer database, clearly dividing the structure for the online team, learning
the strengths and weaknesses of online and offline channels, sharing and linking compatible databases, choosing
appropriate infrastructure and technology to avoid any complication in the future. Central Retail takes various
actions to promote, and deliver products and services that meet the needs of customers and ensuring customers’
satisfaction which will consequently create good reputation and images for the business of the Company.

Moreover, Central Retail has established risk response measures to ensure risk is within the acceptable level by
appointing an Omnichannel Steering Committee to continuously monitor operating results and oversee operations
in different areas, e.g., Click & Collect service, inventory management, home delivery and picked from store
delivery, product returns through Omnichannel platforms, and customer service to efficiently accommodate
the sales through Omnichannel platforms. However, Central Retail may be affected by the risks and uncertainties
related to online channels and Omnichannel, including changes in customer’s behaviors and satisfaction,
changes in technology interface, website downtime, internet connection problems, costs and expenses,
technical problems regarding software upgrade, computer viruses or other technical problems and changes
in applicable laws. Central Retail has to continuously make investments to catch up with the trends and
the latest technological advancements, including new or developed technology application, functional development
and other E-commerce marketing trends; all of which increase its operating costs and may not increase sales
or attract customers as desired. If Central Retail fails to respond to the development, risk factors and uncertainties,
its sales or profits may be negatively affected, and it loses the reputation.

(5) Logistics and Distribution Risk

As of 31 December 2021, Central Retail has a total of 26 distribution centers, which includes 14 centers in Thailand,
11 centers in Vietnam and a single center in Italy, having an aggregate area of approximately 379,000 sq.m.,
40,000 sq.m., and 35,000 sq.m., respectively to distribute products to its stores properly and timely. It may have to face
the logistic difficulties to dispense the goods to its centers in many areas. For example, according to infrastructure
systems in Thailand and Vietnam and weather in Thailand, Vietnam and Italy, in 2011, Central Retail was unable
to access one of Central Food Retail’s distribution center because of flood and had to use the other center with
limitations as a replacement.

Furthermore, Central Retail also uses the services of external transportation providers and international
forwarding agents in distributing its merchandises to its stores in some areas in Thailand, Vietnam and Italy,
especially during the festive holidays. Regarding the suppliers, Central Retail uses the services of external
transportation providers to transport the merchandises to its distribution centers, warehouses and / or stores.
Therefore, if interruptions occur to its or suppliers’ distribution centers, this may cause the delayed transportations,
lost or damaged products or inadequate number of products to be delivered to the stores as the transportation
may be interrupted or delayed before the long holidays. Occurrences like strikes and lockouts or protests of employees
domestically or internationally, natural disasters, strikes or protests affecting the transportation sector may cause
Central Retail higher expenses or lessened number of commercial goods. In addition, there have been changes
in shopping behavior of consumers that the customers tend to spend on essential goods, such as food,
rather than fashion or luxury goods such as bags, shoes, or cosmetics. In addition, the weekly shopping frequency
was reduced due to the customers prefer to make bulk purchase at one time for their living before the next purchasing
including an increase of purchasing through online channels. Due to changing of customer shopping behaviors
have created huge challenges to maintain at appropriate level of inventory management for the Company,
with efficient cost management, timely distribution, products quality to ensure the safety from virus, including
appropriate supply of essential goods in high demand during the pandemic to respond the customers need.
Central Retail uses online channels to communicate, receive complaints, as well as keep track of the rapidly changing
customer demands in each period.

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