RETAIL COMEBACK
Refusing to believe that e-commerce will harm their business, shopping malls hope that adaptations to changing consumer tastes will continue to increase foot traffic, writes Pitsinee Jitpleecheep
Shopping malls adapt to changing consumer tastes to fight disruptive e-commerce.
Digital disruption has clearly affected traditional retail business formats, but this doesn’t mean brick-and-mortar is over in Thailand. Recognising that the rapid transformation of the retail landscape is driven by changing consumer behaviour and digital influence, retail developers are busy embracing the changes and adapting their business models.
Chain retailers are looking to relieve crammed malls, freeing up space in pursuit of a new theme focused on lifestyle and consumer experience.
More retail space is now be dedicated to beauty, wellness, food and services, altering the conventional store concept. For example, there are athletic tracks and training equipment provided in front of a retail complex for free, along with a properly designed washroom and an international football competition on an artificial grass pitch provided with cool air.
These are a few of the new experiences offered in the first half of the year by retailers, with novel services expected later this year to lure customers to visit retailers on a sustainable basis.
Meeting customer needs has become even more difficult as e-commerce disrupts traditional infrastructure. But local retailers say they can cope with the fast pace of change.
FOOD AS AN ANCHOR
Mall developers have adapted their shopping complexes, offering experiences that technology cannot.
Central redesigned its Ratchaprasong, Rama III and Bang Na branches with anchors to match targeted customers.
CentralWorld aims to become Asean’s largest food destination. A Starbucks billed as the second largest on earth, with space of about 600 square metres, recently opened on the ground floor. The mall’s space concerned with food totals 48,000 sq m.
“We are making CentralWorld’s sixth and seventh floors a food heaven, ranging from food court options to fine dining restaurants that are only found at luxury hotels,” said Nattakit Tangpoonsinthana, executive vicepresident for marketing at Central Pattana Plc (CPN), operator of the mall.
CPN has already renovated some restaurants on the third, sixth and seventh floors of CentralWorld and is beginning a facelift to add a supermarket soon. The renovation of food services is scheduled to be completed next year.
CentralPlaza Rama III also wants to become a food destination.
“Food is the main anchor that retailers focus on, because it is the key element that draws people to meet one another,” Mr Nattakit said. “In addition to our various food offerings, customers can enjoy a touch more fun, as service time will be extended at some branches such as Pattaya.”
The Rama III mall also provides co-working space on all floors to serve residents of condominiums and students in the area.
CentralPlaza Ladprao recently adjusted its focus, updating facilities, products and services to serve as a gathering for school and university students. The company is in the process of designing its mall to link with an upcoming skytrain route.
Despite the digital disruption in retail, foot traffic at all Central malls never declined, according to Mr Nattakit. The number of visitors at existing stores increased by an average of 3-5% a year, with new shopping complexes growing at a double-digit rate.
“This is because we learned to adjust our retail complexes from places to buy things to the centre of our customers’ lives,” Mr Nattakit said.
SEEKING A BALANCE
At Future Park Rangsit, the goal is to keep its focus as a sports destination.
“Sport is a global trend, and its popularity will continue to grow in Thailand, as indicated by the opening of new sports complexes and gyms across the country,” said Pimpaka Wanglee, chief executive of Rangsit Plaza Co, the operator of Future Park Rangsit.
Future Park provides 10 kinds of sports at its complex, including football, skiing, badminton, ice skating, bowling, yoga and futsal.
Apart from sports, new anchors in the food, fashion and service sectors will be added soon to change the experience at the mall, Ms Pimpaka said.
“Future Park is a hub for taxis, vans and buses to pick up and drop off millions of commuters at our complex every year,” she said. “We are extending more services to our customers next year.”
She is talking with the Accor international hotel chain about developing 200 rooms for a three- or four-star hotel near Future Park. The plan is awaiting an environmental impact assessment.
The hotel will require an investment of 800 million baht and will target customers in the seminar, wedding and meeting sectors. Construction is expected to start this year, with a scheduled open in 2020.
With some of the leases with tenants ending in 3-4 years, Future Park plans to add new retail anchors.
“We have never abandoned our traditional retail business models in favour of disruptive tech only,” Ms Pimpaka said. “It is impossible for shoppers to do all their shopping online. We are seeking a balance between online and offline.”
Prasert Sriuranpong, president of Siam Retail Development Co, the operator of Fashion Island and Terminal 21, said the company has renovated its food and entertainment options with a new theme and space totalling 25,000 sq m.
“It is the first of its kind in terms of product display, decoration and merchandise,” Mr Prasert said. “The renovation, now 80% complete, is scheduled to finish this year. We believe customers will be excited about it and the ambience they will be offered.”
He said foot traffic at Fashion Island is still growing at 5% a year despite the digital wave. Some 26,000 cars enter the complex on weekdays and 33,000 on weekends, so the company is adding 2,000 more parking spaces.
Siam Retail Development will open a Terminal 21 in Pattaya this October. The store design and decoration will differentiate it from other stores, including an aeroplane parked on a runway in front of the store.
“Technology cannot completely implode Thailand’s physical retail stores if we stay alert to customer preferences,” Mr Prasert said. “Even in the US, many stores have closed, but a few are still thriving.”
Meanwhile, Salinla Seehaphan, corporate affairs director for Ek-Chai Distribution System Co, the operator of Tesco Lotus and Plus Mall, said her company has introduced several new initiatives to better serve customers in the 4.0 era of retail.
“Customers expect great-quality products at affordable prices and great shopping experiences across all touch points,” Ms Salinla said.
The company’s innovations will focus on three main areas: products, services and digital tools.
Ek-Chai has introduced a variety of new products to cater to changes in customer tastes, such as healthier food choices including reduced-sugar carbonated soft drinks and a trans-fat-free bakery. Tesco-branded soft drinks were some of the first products in Thailand to receive the healthier choice badge.
“We are the first to eliminate trans fat from all of our bakery items ahead of government regulations,” Ms Salinla said. “Soon we will introduce single-serve trans-fat-free bakery products across Tesco Lotus Express stores nationwide, providing greater convenience and access for customers looking to grab a healthier snack on the go.”
For services, Tesco Lotus introduced a new-look produce department at its Sukhumvit Soi 50 store in 2017 and has continued to upgrade several other stores, adding services such as a “You Shop We Cook” counter offering freshly cooked meals and in-store dining at nine stores.
Voralak Tulaphorn, chief marketing officer
AIMING YOUNG
of The Mall Group, said the proportion of restaurants has increased to 25-30% of total space at the group’s malls in response to millennials, who often choose restaurants as a meeting point. Some 24 new stores for food and fashion are to be added at the group’s shopping complexes this year, with almost half already opened, including Match Box fashion. “Beauty Playground” recently opened at The Mall Bangkapi, spanning 600 sq m and carrying more than 500 leading brands. The hub for cosmetics and beauty targets customers aged 18-25 who are attentive to fashion and beauty products.
“Cosmetics sales have grown among this age group as they follow beauty trends and techniques online,” Ms Voralak said.
The group aims for Beauty Playground to help cultivate a customer base within the younger generation.
The Mall also built an automated car parking system for 500-800 cars at The Mall Bangkae. Payment can be made by QR code.
Smart tax refund machines are available for foreign tourists at The Mall branches, as well as The Emporium, The EmQuartier, Paragon and Bluport in Hua Hin.
A shop for pet lovers is planned for the basement of The Mall Bangkae. The company expects to spend at least 500 million baht on new facilities at its complexes this year.
Food is the main anchor that retailers focus on, because it is the key element that draws people to meet one another. NATTAKIT TANGPOONSINTHANA Executive vice-president, Central Pattana