idespread in the northeast and central plains, not only scuppering construction projects but also displacing tens of thousands of people. Now, with summer coming again and the water gone, the whole country is buzzing with the sound of new projects. How will this affect home improvement retail? Estimates of the size of the market in Thailand vary wildly but the top three players – Homepro, Siam Global House, and Central Retail’s Thai Watsadu – account for about 135 billion Thai baht ($5.8 billion). They look set to enjoy growth of at least 10 per cent this year, much more if the heavens don’t rain on their parade again. ‘Abundant and powerful’ growth engines In Thailand and its ASEAN neighbours, structural growth drivers for home improvement are abundant and powerful. Some are obvious: populations that are experiencing rapid growth, accompanied by urbanisation and disposable income growth. This is affecting not just the main cities, like Bangkok, but also provincial cities that are targeted by governments to be urban growth nodes, diversifying economic activity away from the capital and causing a general uplift in housing prices. Another key driver of growth for home improvement is changing demographics: there is an increasing incidence of nuclear family and single households, replacing the more extended family groups of the past. Although lineal households – households occupied by grandparents, parents and children – are still common, non-lineal households, in which siblings, uncles, aunts and other extended family members cohabit are rapidly diminishing. In 1970, the average Thai household had 5.8 members. That’s now been almost halved, to 3.0 members. The market leaders cash in For the dominant players, these trends are rewarding their enormous investments in physical stores, distribution centres and, now, e-commerce infrastructure.  Home-improvement stores in the region are cavernous and tend to include products and whole categories that are rarely seen in stores in the West. For example, home-improvement stores here have departments for sporting goods, and much more extensive space allocations for indoor furniture, white goods and digital products. The clear market leader in Thailand is Homepro, which operates 87 stores, plus seven in Malaysia. Full-year FY22 results are not yet available but through the first nine months of the year, revenues increased by 9.36 per cent, to 50.922 billion baht. Assuming the same growth rate in the fourth quarter, revenues for the whole year will amount to 70 billion baht. Homepro gets about 70 per cent of its direct revenue from hardlines and 15 per cent from softlines. As a home-improvement retailer, Homepro is a bit of an oddball because it also operates a shopping mall concept called Market Village, of which the best known and most established location is in the tourist resort of Hua Hin. Market Village was badly hit by Covid and although leasing revenues account for less than 3 percent of Homepro’s total revenues, it is still set to benefit more than its competitors from the resumption of international tourism. The second and third spots in Thailand’s home improvement pecking order are contested by Siam Global House and Thai Watsadu. Before Covid, Global House had its nose in front but Thai Watsadu has overtaken it because of its rapid store expansion and its more intensive focus on Greater Bangkok. Thai Watsadu Executives of Thai Watsadu’s parent company, Central Retail, stated recently at a conference hosted by JP Morgan that the business was seeing a V-shaped recovery. That’s no exaggeration if one goes by the numbers. Thai Watsadu itself was reportedly pulling in something on the order of 30 billion baht in sales in 2019, but with 20 per cent growth in both of the last two years, that number has probably swelled to more like 45 billion baht. Recent sales of hardlines stores have increased by more than 30 per cent year over year, although this includes the sales of other Central Retail hardlines names, such as Power Buy and Office Mate, along with an electronics chain in Vietnam called Nguyen Kim. Central is now touting what it calls “killer” formats, one of which is a combination of Thai Watsadu with its home décor concept Baan & Beyond Home (BnB Home for short). Heading into 2023, there were 64 Thai Watsadu stores and seven BnB Home stores. Siam Global House Siam Global House, the other top three player, had 77 stores in Thailand at the end of 2022 but aims to have 85 by the end of this year and more than 100 by 2025. More than 40 per cent are in the northeast, where it originated in the city of Roi Et. The company’s home-improvement stores are more geographically dispersed across Southeast Asia than those of Homepro or Thai Watsadu. Global House has stores in Cambodia (Phnom Penh and Battambang), in Laos under the Souvanny Home Center banner (seven stores), in Myanmar as Pro 1 Global (11 stores), Indonesia as Depo Bangunan (11 stores) and Philippines as Global House (three stores). Total revenue for the first 9 months of 2022 grew 6.89 per cent on the same period of 2021, suggesting a full-year revenue of 36.467 billion baht, up from 34.116 billion baht in 2021. Greater Bangkok is still the meat and potatoes. Homepro pulls in twice as much revenue as Global House, despite the fact that the two companies’ store network sizes are not dissimilar. The primary reason for the revenue disparity is not superior quality but rather that Homepro has 37 stores in the Greater Bangkok area and seven in Malaysia, so it is concentrating in more affluent and high-density geography. Siam Global House has only a handful of stores in Greater Bangkok. Thai Watsadu also has a stronger presence in Greater Bangkok. Of its 64 units in Thailand at the end of 2022, one-third were in the Thai capital. Profit margins for all three companies are likely to fatten this year, through a combination of business normalisation after last year’s weather events and increasing emphasis on private-label products. Homepro alone has 36 house brands, encompassing 15,000 of its products. Longer-term, it’s hard to see a segment of retail in the region that has more attractive growth prospects. But, let’s see what the rains are like.