The retail industry is undergoing one of the most profound periods of technological transformation in history.

The evolving retail landscape and consumers’ changing behaviour has led to the emergence of new retail formats and adoption of new technologies. Traditional retailers are continuously being forced to evolve and invest in digital transformation. 

The growing future supply in Bangkok will put more pressure on older centres to renovate and upgrade in order to remain competitive

As of Q1 2019, the total retail supply in Bangkok was almost 7.8 million square metres according to CBRE Thailand, increasing by 3.70% Y-o-Y. The total new retail supply in the whole year 2019 will be one third higher than total new supply last year.

And by the end of 2021, we expect that the total retail supply will exceed 8 million square metres, with the majority of the increase being in large mixed-use developments in the downtown area. 

To survive, big retail players are venturing into new retail formats such as mixed-use development and outlet malls to diversify their portfolio. However, smaller players who are unable to reinvent themselves have been struggling.

E-commerce is having a significant influence on consumers’ behaviour

Electronic Transactions Development Agency (ETDA), value of Thai e-commerce
According to the Electronic Transactions Development Agency (ETDA), the value of Thai e-commerce grew by 14% in 2018 to about THB 3.2 trillion

The impact is increasing as it provides the consumer with choices and convenience which malls cannot fulfil. According to the Electronic Transactions Development Agency (ETDA), the value of Thai e-commerce grew by 14% in 2018 to about THB 3.2 trillion and the growth is expected to reach 20% this year. While the retail sales only grew by 3-4% Y-o-Y. 

According to Ministry of Digital Economy and Society, Thailand’s digital economy will play a critical role in every industry and is expected to reach 25% of total GDP by 2027. The country’s four largest banks have all dropped digital transaction fees since April last year to retain retail customers. 

Customers are more demanding than ever, forcing retailers to invest heavily in digital transformation. According to Gartner, global retail tech spending will increase by 3.65%, to USD 203.6 billion this year. Leading Thai retail players are shifting investments towards (1) Data analytics (2) Omnichannel (3) Artificial Intelligence (4) Digitalised in-store experience and (5) Personalisation/Customization. 

Thai retail giant like the Central Group are focusing on building cloud-based consumer data, personalized loyalty platforms and omnichannel experiences.

While 7-Eleven who just expanded to over 11,000 stores, have been expanding into banking and embracing artificial intelligence to gain customer insights and create personalized in-store experiences.

Globally, China’s largest tech giants, Alibaba and Tencent, have been spending billions of dollars on an omnichannel ecosystem to create seamless a customer journey across online and offline channels.

Despite the surge in e-commerce and other technology, the majority of consumers still value the personal experience in a physical store

A study conducted by IBM and the National Retail Federation validates that 98% of Gen-Z shoppers still prefer to make their purchase in bricks-and-mortar stores. Another recent Retail Customer Research by Accenture also found that by 2020, there will be Gen-Z population of 2.56 billion and 98% will own a smartphone.

This means retailers need to constantly adopt new technologies and innovative strategies for both online and offline channels to remain relevant to ever-changing consumer demand. The retail industry is signalling a tipping point where retailers must reinvent themselves to survive. The wining retailers are the ones who are ready to move away from the traditional retail models and rethink their strategies in alignment with customer expectations.

An article written by Pichamon Chomanan, an analyst at Research & Consulting, CBRE Thailand for Bangkok Post dated 12 June 2019.

Source link

About the author

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Sign Up for Our Newsletter

Get notified of our weekly selection of news

You May Also Like

Establishing a Representative Office in Malaysia

Establishing a representative office (RO) in Malaysia is often the fastest and most cost-effective way to have a legal entity and study the local market before determining viable opportunities.

How can emerging economies navigate the mobility transition?

Some of the ASEAN countries have a growing auto industry. The sector accounts for around 10% of GDP in Thailand and Indonesia, which indicates there is room for growth in India, where it accounts for 7.2% of GDP.

Vietnam’s Opportunities and Challenges for Investors

For years, Vietnam has aimed to reduce its direct ownership in key state companies and promote private ownership. Nevertheless, equitization and divestment have not yet taken place as scheduled and have experienced constant delays.