2018 RETAIL ASIA-PACIFIC TOP 500
OVERVIEW a strong foothold, making such stores an appealing shopping destination for many consumers. Supermarkets is also likely to benefit strongly from outlet expansion efforts, and the opening of neighbourhood stores that tap into the consumer demand for proximity and convenience.
— Ting Huang, Analyst
THAILAND
Retailing records a stronger performance in 2017 Retailing witnessed stronger current value growth in Thailand during 2017, with non-store retailing driving growth. Thailand’ s GDP growth is expected to pick up from 3 % in 2016 to reach 4 % in 2017, owing to stronger exports and tourism. This improvement in the economy also brought an improvement in unemployment, which stood at just 1 % in 2017. This benefited consumers’ disposable incomes and boosted their confidence in spending, therefore increasing growth in retailing. Middle- to high-income consumers remained the key target group for many retailers, as they demanded premium products and services to indulge their desire for better lifestyles.
Luxury apparel and footwear specialist retailers rebounded in current value terms in 2017, and premium retailers such as grocerants expanded. The increased presence of aspirational consumers, due to improved disposable incomes, also created opportunities for channels such as Internet retailing and specialist retailers, as these consumers sought novel brands and products. As retailers sought to innovate and align with consumers’ evolving preferences, this also resulted in the increasing blurring of channel formats. For instance, convenience store Family Mart launched a new outlet in 2017, which houses Segafredo Zanetti, a specialist coffee chain, and Bread Today, a bakery shop, as well as sells fresh fruit and cooked meals even offering a delivery service.
Internet retailing continues its transformation Internet retailing continued to gain popularity in Thailand during 2017, with the channel expected to strengthen throughout the forecast period. Internet penetration stood at over 80 % in Thailand during 2017, and the government’ s commitment to building a broadband network for all rural areas under the“ Thailand 4.0” policy will further increase consumers’ access to the Internet, therefore benefiting Internet retailing. Internet retailers’ continued investment in enhancing logistics services and payment platforms also increased consumers’ confidence in shopping online, although the majority of consumers still preferred to visit stores to see and feel products before purchasing.
Internet retailing is expected to increasingly be driven by mobile devices rather than computers or tablets. With smartphone penetration set to reach more than 50 % by 2020, consumers’ eagerness to shop on-the-go will be heightened; seeking instant gratification rather than having to wait until they have computer access. Realising this opportunity, retailers have already increased their efforts to create mobile shopping apps, and also dedicated promotions for this mode of shopping to drive consumers’ interest and awareness. The growth potential of Internet retailing in Thailand also attracted new players, with more players expected to enter the country in the forecast period, which is expected to lead to fragmentation. Consequently, existing players, such
as Lazada, will continue innovating in terms of offerings and services to maintain high customer satisfaction.
The competition intensifies in retailing Within the fragmented landscape in retailing in Thailand, local retail groups including CP All, Ek-Chai Distribution System, Central Group and Big C Supercenter have emerged as the leaders. Besides having their own retail brands, some of these local players also act as franchisees for international brands; for instance, CP All for 7-Eleven and Ek-Chai Distribution System for Tesco. While these local retail chains lead due to their long-standing presence, the evolving retail landscape in Thailand, including the constant growth of Internet retailing, also saw these players investing to transform their models to ensure alignment with consumers’ needs.
However, the competition in retailing in Thailand increased in 2017, particularly in Internet retailing, and this is expected to continue throughout the forecast period, due to the attractive market potential. February 2017 saw the official launch of the Korean marketplace 11Street, which managed to capture a healthy share in Internet retailing in Thailand within a short period. JD. com, a leading Chinese e-commerce player, also announced a joint venture with Central Group to launch a new marketplace platform, JD. co. th, in April 2018. Besides these international giants, niche brands are expected to set up e-commerce, as they seek to target consumers’ eagerness for novelties.
New formats emerge to attract consumers With higher disposable incomes and greater sophistication, consumers will continue to increase their expectations of retail offerings over the forecast period— be it new brands, the provision of convenience or value-added services. To ensure they remain relevant, retailers have thus invested in rejuvenating their stores, such as Central Group’ s Bt350 million( US $ 11 million) investment to revamp and rebrand its department stores in order to keep shoppers in stores for longer.
Retailers also explored new concepts to provide added convenience for consumers, as well as novelty. For instance, Family Mart’ s new Holiday Inn Silom Store, opened in February 2017, houses a Segafredo Zanetti coffee shop, Bread Today bakery, as well as offering products beyond packaged goods, including fresh fruit, cooked meals and more. Premiumisation to target middle- to high-income consumers, particularly millennials, was also noted, with the launch of grocerants in supermarkets. Positioned as premium supermarkets, grocerants provide a dine-in service, whereby consumers can select the ingredients in the supermarket and then pass them to a chef for preparation. This concept allows consumers to enjoy a freshly-cooked meal at a reasonable price, compared with dining at a full-scale foodservice outlet.
Retailing is expected to continue to see growth Retailing is expected to register a positive performance in value terms at constant 2017 prices over the forecast period. Thailand’ s economy is projected to pick up further over the forecast period, with 2018 GDP growth set to remain at 4 %, stemming from increased government spending and infrastructure projects. Consequently, this will benefit consumer confidence, brought about by an improvement in disposable incomes and low unemployment. Non-store retailing, driven by Internet retailing, will continue to lead growth within retailing. Mobile will steer the development of Internet retailing, as smartphone penetration continues to rise, and consumers are more eager to access
Retail Asia June / July 2018 53