The success and popularity of luxury retail malls in Bangkok shows no sign of diminishing, despite the rather gloomy financial forecasts.
by Christopher Scott Dixon.
Crisis, what crisis? While the economic experts might be predicting a belt tightening 2016 in Thailand, judging by the numbers of people flocking to the capital’s shopping centers pre- and post-festive season, they are either simply ignoring the news, or indulging in retail therapy to forget the negative warnings.
Thailand is Southeast Asia’s biggest luxury goods market. In 2014 alone it generated $2.5 billion in luxury sales higher than Indonesia and Malaysia. Luxury spending is also a key part of Thailand’s vast tourism industry, which accounts for a vital 20 percent of the country’s GDP.
Bangkok itself boasts more than 120 shopping malls, ranging from the boutique style to the mega complexes, which dominate not only the area around them but also the skyline above. The motto among the select band of developers appears to be “the more the better” as further malls are planned for the future. The statistics are impressive as there are still 1.1 million-sqm of retail space under construction in the city, which will see the final completed supply in 2017 close to an eye boggling eight million square meters.
The Chao Praya riverside will have its new luxury-shopping complex next year when IconSiam opens. This will be a 500,000sqm retail and entertainment venue and will also comprise a 36,000sqm seven storey-high Takashimaya department store. This will be the first such outlet for the Japanese retailer in Thailand.
Since I first arrived in the city in late 2004, the pace of change of the retail landscape of Bangkok has been nothing short of amazing. Back then there was no Siam Paragon, Terminal 21, Central Embassy, or EmQuartier, to name but a few and that is not even counting a host of boutique shopping centers, which also continue to flourish.
If we focus on the upscale malls, then we can arguably discuss five: EmQuartier, The Emporium, Central Embassy, Siam Paragon, and Gaysorn. They are strategically positioned in the Phrom Pong, Chidlom, Siam, and the central Ratchaprasong areas, all key commercial hubs and situated close to, or on the, BTS and MRT rapid transport systems. Rachaprasong also contains the Big C supermarket complex, and Central World, although they target different markets.
The planners do their research carefully; they know that many of the local population are status-conscious and they like to look good and dress well. Despite its modern feel, Thailand in many respects is still a developing country and its inhabitants are anxious to attain the trappings of more advanced nations.
The Emporium, the “first” of the luxury malls, was established in 1997 at the height of another economic downturn but it has thrived. Thais, when compared to other nations, still do not travel overseas as much so top quality goods and lifestyle are offered to them at home.
The top-grade retail sector is a curious union of volatility and stability. The tragic incident at the Erawan Shrine in Ratchaprasong last year created real concern for the immediate future of that particular location, and whether shoppers, both indigenous and from overseas, would studiously avoid it. However it seems to be thriving as usual, emphasizing how resilient the market is.
Based on evidence, the high-end consumer culture seems to be increasing in strength and presence because we are witnessing a rush of international brands such as jeweler Tiffany & Co and confectioner Pierre Herme for example. Both launched flagship stores in EmQuartier.
Despite the fact that the prices of luxury goods might not be as competitive as in other destinations, one of many draws for tourists is the cheaper accommodation that Bangkok offers when compared to other cities such as Singapore and Hong Kong.
The malls–in design, variety, comfort, products and facilities–are undoubtedly world-class, and many retail experts envision that Bangkok can become the “Dubai of the East.”
The booming Chinese tourism market and the start of the ASEAN Economic Community are also seen as key factors boosting the growth of the retail and especially the luxury end of the industry in the country. In addition, the anticipated growth in the overall tourism industry a trend, which began in 2015 and is expected to continue this year is another positive for retailers.
What of the existing malls themselves? Each of the five has its own distinctive character and design and praise be for that. Generic is not always bad and is indeed sometimes necessary, but individuality is also much desired.
Even the most cynical “seen-it-all” shopper enters these glittering, multi-floored, colorful, pleasure palaces with widening eyes. Liveried staff, saluting, bowing, or opening doors for you. The tinkle of a jazz piano, or the smell of lemongrass from the exclusive spas, arouses the senses.
The spectacular window displays persuade men and women, local and foreign, young and old, to reach for wallets and purses, eager to buy into, or continue, a desired lifestyle.
Most if not all of the malls in focus have strong anchor brand stores such as Prada, Gucci, Chanel, Dior, etc., which not only solidify the particular venue’s reputation and attract visitors, but also act as a significant hook for other potential name brands to contemplate siting a branch there.
Change is integral to how the malls function. There is always a need to freshen up displays, move products around and to try to keep one step ahead of your rivals. The older malls know they have to adapt and upgrade in the face of challenges from their younger competitors. You notice the small details as well as the extravagant gestures.
The different sofas on the ground floor of Gaysorn from the last time you visited, or the startling and rainbow hued illuminations in Central Embassy and the emphasis on gold colors from shopping trolleys to wolf statues at the Emporium.
One area where the luxury retailers are keen to expand is recreational activities for children. Youngsters are an interesting group, as of course they are end consumers but are not usually the actual customers for example toys, they see and want the latest computer game or play station, but the parents do the purchasing.
In terms of leisure, the opening of Kidzania at Siam Paragon several years ago was a trendsetter for children’s activities zones in shopping malls.
The Emporium launched EmPlayground last year, an interactive playland separated into 19 different zones.
Themed shopping events and heavy promotions are crucial in luring shoppers with time on their hands and disposable income. The range is diverse and includes visits from top sports stars, pet shows, food festivals, music events, and again–with children in mind–a number of workshops, which draw crowds and increase potential revenue.
Midnight sales and seasonal sales, which seem to go on throughout the year with huge discounts, are also regular features of most of the malls and attract many people. It is about living, or at the very least sampling an opulent lifestyle, that is more lingering here than in the lower end stores where people go in, grab their groceries, and exit.
Luxury is meant to be savored. You can bask in the glow from the Rolex watches, inhale exotic fragrances and gasp at the prices, or stare in disbelief at the cost of that tailored jacket in the window, smile and tilt your head in hope at your partner.
Most of the malls not only have themed events, but themed floors, for example, lifestyle and leisure, or fashion venue, which more easily shepherd potential customers to their target goods. Signage and information boards and desks abound and there is numerous staff to guide shoppers to the right level etc.
The luxury segment of the market is just as competitive as the community malls and chains. While we may simply jot down appointments or family birthdays on a calendar, retailers view it month by month as a commercial journey. Christmas and New Year are barely a memory, with the trees and decorations only just taken down from outside the malls or in some examples, still there, before Chinese New Year and Valentine’s Day are next on the retail agenda.
The Chinese-Thai community is large, wealthy, and influential, and the malls mirror the hotels and restaurants in tactics as they roll out special Chinese New Year promotions. For 2016, these can be as diverse as large discounts on services and goods to free feng-shui advice for their customers.
Valentine’s Day means not only love’s in the air, this is a huge income time for the malls, with an emphasis on confectionery, perfumes, jewelry and clothes purchases. No expense will be spared to tempt shoppers with more “great” deals and special offers; lots of heart and floral designs to woo the visitors.
Next? Easter and Songkran – life in the luxury malls of Bangkok never stays still!