Retailers eye B300 bn expansion
AEC expected to lure more foreign shoppers
Buoyed by a more upbeat economy and regional economic integration, Thai retailers are set to invest more than 300 billion baht in the next five years to tap a growing customer base.
The investment plans come mainly from beverage tycoon Charoen Sirivadhanabhakdi and retail giants Central Group, The Mall Group and Siam Piwat Co.
The expansion will see more outlets of strong retail brands in various formats, from shopping complexes to convenience stores, with the construction of at least 30 community malls.
Economists estimate the expansion will help to drive the economic value of the retail industry to 1.6 trillion baht by 2019 from 1.5 trillion in 2013.
Some 200 billion baht alone will by invested by Central Group, which plans to spend 40 billion baht a year to expand its retail business.
The Mall Group has set aside 60 billion baht to develop five projects between now and 2019.
Siam Piwat, the operator of Siam Paragon and Siam Discovery shopping centres, will spend 55 billion baht on the Iconsiam project, which it is co-developing with Charoen Pokphand Group on the banks of the Chao Phraya River.
Supaluck Umpujh, a vice-president of The Mall Group, believes Thailand’s entry into the Asean Economic Community (AEC) late this year will not only promote regional cooperation but attract tourists from around the globe to benefit retail businesses.
The group’s investment will focus on the domestic market in selective locations, as quantity is not the group’s policy, she said.
“The branch that we build must sit in the best location. Although Harrods has only one branch in London, no one can beat it,” Ms Supaluck said.
She is one of three women dubbed “Thailand’s retail queens” who are playing a significant role in developing the retail industry. The others are Yuwadee Chirathivat of Central Group and Chadatip Chutrakul of Siam Piwat.
Ms Supaluck said t he new i nvestment was also aimed at maintaining the group’s market share.
“If our rival [Central Group] generates 200 billion baht in sales revenue, The Mall must have at least 50 billion or onefourth of it,” she said.
Whisky tycoon Mr Charoen, owner of Thai Beverage Group, will spend 10 billion baht on the next phase of the Asiatique project on the Chao Phraya River.
Central Group chief executive Tos Chirathivat said Thailand would benefit largely from the AEC due to its strategic location near Myanmar, Laos, Cambodia, Vietnam and China.
“We’ll no longer be doing business with only the 70 million people in Thailand but connecting with millions more people nearby, so a more offensive strategy must be taken,” he said.
A study by the University of the Thai Chamber of Commerce’s research centre shows the AEC should boost the regional economy and consumer consumption.
With t he government’s policy of promoting tourism, these conditions should push the retail sector to grow by 7-8% per year from 2015-19 compared with 5% annual growth over the past five years.
Investment could boost the retail sector and create job opportunities, the study said. In 2013, employment in the retail sector was high at more than 4 million employees out of a total workforce of 38 million, while the value of the retail sector accounted for 13.4% of the economy.
Operators of convenience stores and supermarkets are also active.
Suwit Kingkaew, a senior vice-president of CP All Plc, operator of the 7-Eleven convenience store chain, said the company would use a small-store format due to space limitations and city planning laws. The concept will also be adopted by hypermarket operators such as Tesco Lotus and Big C.
The number of 7-Eleven outlets is expected to reach 10,000 by 2018 from 8,200 now, while FamilyMart outlets will number 3,000 in the next two years.
Thai Retailers Association director Chatchai Tuangrattanapan foresees the expansion following along with the country’s infrastructure development and growth in the number of middleincome earners.
“The government’s strategy of promoting border areas as special economic zones in several provinces could be a plus for the retail sector,” he said.
Mr Chatchai said foreign retailers also saw plenty of room to grow here.
Japan’s Aeon Group recently announced it would resume investment in Thailand after withdrawing more than 10 years ago, while Takashimaya, a luxury department store from Japan, will open its first Thai branch in Iconsiam in 2017.
Mr Chatchai believes competition in the retail sector will be fiercer, but the trend will be towards premium quality in terms of products, design and services.