CRC Thai Watsadu Co, a home improvement unit under Central Retail Corporation, plans to spend 3.5 billion baht to expand its business next year.
Suthisarn Chirathivat, the company's chief executive, said the spending would go largely to open five new Thai Watsadu stores, two digital concept stores and renovation of 10 stores.
The company spent about 3 billion baht this year to open five new branches, including its first digital store at Nong Chok, which was introduced to the market late last month in response to changing consumer behaviour.
With an investment outlay of 300 million baht, the Nong Chok digital store covers 10,000 square metres and has 20,000 products for home building, with another 40,000 items available online.
The digital store does not offer home decoration items.
At the Nong Chok branch, customers can pick up regular items as usual but for construction products, the product is displayed on shelves with a barcode.
Customers have to download an application and complete the transaction via mobile phone.
"The Nong Chok branch provides a business model that offers service closer to customers' homes, both in Bangkok and upcountry, while the investment is less than our traditional stores," Mr Suthisarn said.
With this scale, the company can penetrate new provinces easier because the investment cost for a digital store is about half that of traditional stores, he said.
The new model requires only 50-80 employees, down from 150 people.
The company expects 360 million baht in sales per year from Thai Watsadu digital stores.
The company's total sales are expected to grow by about 20% this year to 30 billion baht, said Mr Suthisarn.
Next year, the company set a target for sales growth of 15% to 34.5 billion baht.
Thailand's home improvement business is estimated to be worth 150 billion baht per year.
The overall market is forecast to stay flat this year because of the weak economy and lower exports.
Thai Watsadu is third in the market after Home Pro and Global House.
There are 50 Thai Watsadu stores in Thailand -- 35 branches upcountry and 15 in Bangkok.
There are two varieties of Thai Watsadu stores: original and the digital store.
The original store is built on a 30-rai plot with retail space of 20,000 sq m, while the digital store is built on 10 rai with retail space of 10,000 sq m.