The Bankok retail market is now the most competitive it has ever been, with the expansion by retail developers in the central business district (CBD) and suburban areas.
The entry of new local and international retailers, combined with a challenging economic outlook and weak consumer sentiment is all adding up to the mix.
Bankok retail market to reach 8 million sqm by 2017
Despite a slowdown in retail sales, there is currently 1.1 million sq.m. of retail space under construction in Bangkok, which will bring the total completed supply in 2017 close to 8 million sq.m.
Within the CBD, the latest major retail developments to open are EmQuartier and Central Embassy, intensifying competition for existing malls such as Siam Paragon, Gaysorn and CentralWorld.
In addition, big developers continue to renovate their downtown retail centres such as Siam Discovery and MBK.
As the major retail centres are chasing after the same group of consumers, retail events and promotions have become ubiquitous leading to a cut-throat competition and heighted promotion campaigns, particularly gearing up to the festive season where consumer spending typically peaks.
The expansion by major retail developers to suburban areas may also in part draw consumers away from CBD malls, although the impact may be limited.
Bangkok’s suburban areas today are well served by quality retail centres, reducing the need for consumers to travel into the CBD.
To the North, Zpell@Future Park has just opened on 27th November. Opened on the same day in Eastern Bangkok on Ekamai-Ram Intra is Central EastVille, adding competition to existing malls in the area such as Crystal Park and Crystal Design Centre.
The Mall Group is also currently planning The Bangkok Mall on Bangna-Trad which is expected to be completed in 2017. To the West, CentralPlaza WestGate recently opened in August in the Bang Yai area, adding a major retail centre to an area where there have been limited retail developments.
The Riverside will also get its own luxury shopping complex in 2017 with the opening of IconSiam which will comprise a 500,000 sq.m. retail and entertainment complex, part of which includes a 36,000 sq.m. 7-floor Takashimaya department store from Japan which will be Thailand’s first.Amidst this competition, the segment that will find most challenging is community malls.
Community malls will be forced to adjust their strategies and have clear unique selling points and propositions to draw in consumers; otherwise they are likely to be overshadowed by major retail developments that have a bigger events and promotions budget.
It is essential for community mall developers to understand their target consumers’ needs and retain anchor tenants in order to compete in the long-term.
The plus side of the retail expansion is that it will create room for both domestic and international retailers to expand to suburban areas.
International fashion brands such as H&M, Uniqlo, Aldo and Charles & Keith have already expanded to CentralPlaza WestGate.
Bangkok falls 19 places to 49th most expensive location worldwide
Locations reliant on international tourism have seen their rental markets hit especially hard during the pandemic, resulting in some major drops in the rankings. Bangkok has fallen 19 places to 49th, while Hanoi saw a similar drop of 12 places to 81st.
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