2019 is a year for historical technological transformations in the retail industry. Retailers across Thailand are called upon to change with the changing times if they want to grow and remain relevant in this digital age.
This change in the retail landscape is brought about by consumers' changing behavior. New retail formats and technologies have emerged in the process and retailers have little choice but to adapt to the zeitgeist of the times. The only way for traditional retailers to survive is to evolve and partake in digital transformations.
For older centres to remain competitive and contribute to Bangkok’s future supply, they need to renovate and upgrade their services. A report by CBRE Thailand claims that Bangkok’s total retail supply in the first quarter of 2019 was approximately 7.8 million square metres, which continues to grow by 3.70 per cent year-on-year.
The overall new retail supply this year will be one third higher than 2018’s total new supply. Towards the conclusion of 2021, the total retail supply will likely reach 8 million square metres or more. Large mixed-use developments in the central business district of Bangkok will comprise a great chunk of the retail industry.
Embracing new retail formats like mixed-use properties and franchise malls helps big retailers expand and diversify their portfolio. But much to the detriment of smaller enterprises who lack the means to invest in new technology or “reinvent themselves.”
E-commerce continues to be a force to be reckoned with, influencing consumer behavior in a number of ways. E-commerce platforms like Shopee and Lazada provide consumers with choices and the kind of buying convenience that malls cannot address.
As reported by the Electronic Transactions Development Agency (ETDA), Thai e-commerce has exponentially grown by 14 per cent last year (approximately 3.2 trillion baht). Such impressive growth rate is expected to reach 20 per cent by the end of 2019. Retail sales, on one hand, only had a 3 to 4 year-on-year growth rate. The industry is far from dying but growth trails behind local e-commerce stats.
The digital economy of Thailand will have a crucial role in the industry. By 2027, its gross domestic product (GDP) may reach 25 per cent, according to a forecast by the Digital Economy and Society Ministry. The four largest banks in the country have reduced digital transaction fees since April 2018 in a bit to retain existing retail customer base and attract more of the same.
Despite the good news, consumers have become more demanding. And retailers have no choice but to be a part of the digital transformation or they will lose their business. Gartner foresees global retail technology expenditure to grow by 3.65 per cent to 203.6 billion USD in 2019. Leading stakeholders in Thailand’s retail industry are moving their investments with artificial intelligence, data analytics, omnichannel, virtual in-store experience and customised user experience seriously being considered.