Downsized community malls are sweeping the
country in response to a demographic shifting to the suburbs and demanding
convenience
Retail
centres in Thailand are not just for shopping these days. We often find a
playground or game corner by the food court for children. Many parents take
their children to shopping centres on weekends for extra activities such as
learning music, taekwondo, art or tutorial schools. While waiting for their
children to finish classes, parents often catch up on chores such as banking or
grocery shopping. This is why we have education, banking, beauty and skin
clinic zones in shopping malls. Cinemas, restaurants and fashion shops also add
to the appeal.
Twenty
years ago, Thais who wanted to visit a department store had to travel to the
centre of a large city, but nowadays, sophisticated retail centres are
available within easy reach of people living in Bangkok's suburbs and in many
provinces as well.
The
original department stores in the country were all located in the Bangkok
city-centre area. Beyond shopping for a variety of goods, they had little to
attract people to linger, beyond a restaurant or two. It was not until 1983
that the capital had its first modern-style shopping mall, Central Lardprao.
The development of new malls followed the movement of more people to the
suburbs where housing was cheaper.
The new
model for retail businesses emerged between 1989 and 1994, when developers
extended their reach into giant retail centres in the suburbs. Makro opened its
first store on Lat Phrao Road in 1989, and this was when the word
"hypermarket" entered the local vocabulary. The modern-trade format
came of age with the first Big C supercentre in 1994.
In
1994, the opening of two giant shopping malls, Future Park Bang Khae on
Phetkasem Road and the Seri Centre on Srinakarin Road, had a huge effect on the
retail business. Each catered to a vast residential community, though the two
properties struggled in later years to keep up with changing trends. Future
Park Bang Khae has been acquired by the Seacon group and is scheduled to reopen
in August. The Seri Centre, meanwhile, has been given a successful second life
under new owners as Paradise Park.
Two
other giant suburban malls launched in the mid-1990s _ Future Park Rangsit in
Pathum Thani and Seacon Square, just north of the Seri Centre _ have also made
a big mark on the capital.
THE
HYPERMARKET FLOOD After Big C and Makro became known to the Thai market,
Carrefour of France entered the country through a joint venture with the
Central Group in 1993, opening its first store on Sukhaphiban 3 Road. Tesco
followed in 1997. Big C, Carrefour and Tesco Lotus all had similar strategies
to open and expand their stores in every main city up-country.
Fast-forward
to today, and the Carrefour name is gone, its Thailand stores having been
acquired two years ago by Big C. Bangkok now has 664,000 square metres of
hypermarket space from more than 60 stores, or nearly 12% of the retail space
in the capital.
Tesco
Lotus, the market leader, is expanding in all areas of the country with smaller
developments. The standard size for a hypermarket is usually 8,000 to 15,000 sq
m, but operators face high land prices in some cities, zoning that limits where
big retail developments can take place and in some cases opposition from
communities. As a result, Tesco Lotus has developed smaller formats ranging
from 300 to 2,000 sq m, and Big C has followed suit.
The
biggest convenience store chain in Thailand by far is still 7-Eleven, with more
than 5,000 outlets, but Tesco is also trying to take some market share by
introducing Tesco Lotus Express. These outlets are bigger than 7-Eleven and
offer fresh foods and vegetables.
THE
COMMUNITY MALL LIFESTYLE Rising oil prices, the difficulty of finding parking
space in shopping malls and the expansion of residential communities to the suburbs
have all been a major boost to the popularity of community malls in Bangkok.
Siam Future Development (SF) pioneered the format with J Avenue on Thong Lor in
2004, with a new lifestyle concept. SF recognised that people in Bangkok needed
a place to relax or hang out with friends after office hours with delicious
food and easy-to-find parking spaces, and the community mall was their best
choice. Many residential projects now include community malls to support and
attract buyers.
In the
first quarter of this year, community mall space totalled 577,000 sq m in
Bangkok and the figure is expected to exceed that of hypermarkets in the next
one or two years, because no more of the latter are planned in the immediate
future.
Recently,
new community malls have been focusing on novel concepts including iconic
designs to attract attention. Many have become backdrops for photographers, who
in turn upload the images to their social media networks, creating even more
buzz for the malls.
SHOPPING
FROM EVERYWHERE Online shopping is still a relatively new market for all retail
developers, though the big-name players have all been beefing up their shopping
websites and launching new campaigns or promotions online.
Locals
constitute the majority of the demand for retail businesses in Thailand.
However, businesses in key tourist areas such as Bangkok, Pattaya and Phuket
also need to cater to foreigners. The main retail developers in Thailand are
now focusing more on other large cities across the country, especially in some
border provinces, as they expect trade will pick up once the Asean Economic
Community takes effect in 2015.
A lot
of people from Laos already cross into Thailand at weekends for shopping. As
the economy of Laos grows, and as the AEC opens up more opportunities in
general, people from neighbouring countries will become new demand drivers for
retail businesses in Thailand.
Surachet
Kongcheep
Business & Investment Opportunities
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