Page 43 - CRC_One Report 2021_EN

Business Overview and Performance Corporate Governance Financial Statements Enclosure

The vast retail network and business scale of Central Retail provide significant operational advantages in
merchandising, which drives lower unit costs in procurement and distribution and helps bolster margins. Central
Retail achieves significant economies of scale in numerous aspects, including centralized distribution, consolidated
transportation and logistics and shared support functions, which help to optimize productivity and operating
efficiency. For example, Food segment changed its structure and combined merchandising units for both products
and procurement as well as other related units between FamilyMart and Central Food Retail. Fashion segment
also changed its organizational structure by merging business units of Central Department Store and Robinson
Department stores to increase more efficiency and effectiveness in operations and resource efficiency. Also, Hardline
segment which some business units’ operations have been improved to increase the efficiency and effectiveness
of operations and to manage resources more cost-effectively. Central Retail also believes that its scale helps to
attract and retain talented and experienced managers and staff in the retail industry, while also making Central
Retail as an attractive business partner for large suppliers and other vendors. In addition, with Central Retail’s strong
position, it has the ability to negotiate with suppliers and other counterparties. Central Retail also leverages its size
in securing prime retail locations at favorable rates, for example, it can deploy multiple store formats to optimize
leased retail spaces collectively.

Being part of the broader Central Group ecosystem, close affiliation and strong synergies with other members
enhance Central Retail’s competitive position in the retailing industry, delivering numerous benefits to the customer,
partner and overall business.

Customer Relationships

Central Retail participates in Central Group’s The 1 loyalty program in Thailand, which grew from 13.1 million
members in 2017 to approximately 18.5 million members as of 31 December 2021, representing approximately 28%
of the total Thai population. Approximately 3.0 million members were the active monthly users who had made at
least one purchase on the platform per month. Central Retail believes that such a strong loyalty program helps
to deepen customer’s engagement and increase average spending per customer. Acquisition of new members is
carried out in-store, through omnichannel platform, webstores, Mobile application of each business segment (such
as Central Application, Tops Application, and Supersports Application) and The 1 Application, and the ability to
earn points through purchases with other external partners, such as gas stations, digital banking platforms and
other businesses help make the program more attractive to new users.

Real Estate

Central Retail also has access to some of the most prestigious shopping mall locations in Thailand through its synergy
with Central Pattana Public Company Limited (“CPN”), a subsidiary of Central Group. Certain of Central Retail’s
retail banners, particularly Central Department Store, enjoy anchor tenant status in the shopping malls owned by
CPN, which are typically located in prime locations with strong foot traffic. Given the close working relationship with
CPN, Central Retail is at times provided with the early-stage opportunities to evaluate the commercial feasibility
of establishing a store at a particular site where CPN intends to build a shopping mall, which allows Central Retail
to more easily secure prime locations while also influencing store concepts and customer experiences planned
for the shopping mall. Additionally, the close relationship with CPN and Central Group allow Central Retail to be
nimble in adapting and renovating its retailing space to better respond to changes in consumer spending patterns.

Additional Benefits

Further, Central Group has shown its continued support through HCDS, Central Retail’s major shareholder,
and its subsidiaries, by providing Central Retail with certain Rights of First Refusal and call options allowing Central
Retail certain preferences in negotiating mergers and acquisitions, either in whole or in part and on arm’s length
terms, with respect to certain of its retail assets, including the KaDeWe, Oberpollinger and Alsterhaus department
stores in Germany, the ILLUM department store in Denmark and the Central Department Store in Indonesia,
Annual Report 2021 (Form 56-1 One-Report) 43