Expansion plans back with hopes of rebound
Big retailers in Thailand are expected to resume their expansion plans in the second half of this year after pausing their activities in the first half because of unfavourable economic conditions.
Confidence has been rising after the government’s promise to speed up approvals for key infrastructure projects this year and kick-start the construction next year, according to a research house run by Asia Plus Securities Plc.
The research piece underlines that the start of the joint investment in mass transit for the Green, Blue, Orange, Yellow and Pink lines could somewhat spur the economy and the growth of purchasing power.
It also notes that the growth of same store sales of big retailers has dropped since the start of the year and continued to fall through April to May.
But it is expected that economic recovery in the second half of this year will be faster than the first half due to increased state spending and different transport projects that have started to materialise.
“We expect improved spending power. Our only major concern for the second half of the year is rising household debt, which is about 79% of GDP, which would result in consumers being more cautious in their spending,” said the report released last week.
With the better economic outlook, leading retailers such as Big C Supercenter, Tesco Lotus, Makro and HomePro have said they will open new stores in the second half. Most of the stores will be small-scale in order to reduce operating costs and access customers easily, according to a researcher at Asia Plus Securities.
Home Pro recently opened its new store concept called “HomePro S”, covering an area of 1,200 square metres — six times smaller than its original store. The first HomePro S store was opened at Gateway Ekamai, eyeing urban customers. HomePro had originally opened as a standalone concept.
Siam Makro Plc, the operator of Makro cash-and-carry store, plans to add three small Makro stores and one medium-size store in the second half of this year.
Berli Jucker Plc will also focus on opening 200 Mini Big C stores this year on top of its plan to add seven Big C Supercenters in the second half this year. The company has allocated about 12 billion baht for store expansion locally and abroad this year.
Wuttikiat Techamongklapiwat, executive vice president-property and lifestyle mall of Robinson Plc, said Robinson will open one department store in Maha Chai, Samut Sakhon and a Robinson Lifestyle Centre in Kamphaeng Phet province this year.
It has shifted its focus to develop the Robinson Lifestyle Centre concept because the company aims to gain more profits from rental space, which accounts about 60-70% of the total store, higher than the rental space of only 20-30% carried by conventional Robinson Department stores.
“Various services that will be provided at our lifestyle centres will draw new customer groups and increase the frequency of existing customers shopping at our stores,” he said.
With the plan, Robinson expects sales to grow by 5% this year from the 30.2 billion baht last year.
Meanwhile, Pakorn Parthanapat, chief operating officer at Central Pattana Plc (CPN), a developer arm of Central Group, said CPN will open CentralPlaza in Maha Chai in Samut Sakhon province and also one in Nakhon Ratchasima province in the fourth quarter of this year.
The company will continue to develop new projects according to its long-term investment plan with about 15 billion baht allocated for each year.
“Considering the rapidly changing consumer behaviour, we may create new shopping mall concepts that fit such changes. We want our complexes to become a third home for customers,” Mr Pakorn said.
Meanwhile, Gaysorn Property Co, an operator of luxury malls, has adjusted its strategy by enlarging the space for food services to 30% of the total complex space in order to increase traffic in the store, which sits at the Ratchaprasong intersection.
Under the plan, the number of dining restaurants will increase to 18 by year-end, up from the current eight outlets.
Kriengsak Tantipipop, chief executive at The Emporium shopping complex said the company will soon announce its new approach at its two luxury complexes — The Emporium and The EmQuartier. Mr Kriengsak said he is optimistic about the retail outlook this year, particularly for the luxury market.