Retail business: Thailand ranked 6th in top 10 target markets

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RETAIL BUSINESS
Thailand ranked 6th in top 10 target markets
The Nation


Thailand is ranked 6th in terms of retail industry potential

BANGKOK: -- Asia Pacific-based retailers see significant potential in Asia Pacific and Thailand is ranked in the 6th position as a target for 29 per cent of Asia Pacific-based retailers, according to a recent global report by CBRE Research.

The research, entitled "How Active Are Retailers Globally?", showed that China is the most sought-after market (58 per cent), followed by Vietnam (48 per cent), Malaysia (42 per cent), Indonesia (39 per cent), and Singapore (35 per cent).

"The relatively lower levels of interest by Asia Pacific retailers in expanding in American and European markets reflect a cautious attitude to expanding out of their core markets, but that said we are beginning to see a number of Asia-based brands working on strategies for global markets. For example, Chinese brand Bosideng opening on Oxford Street in London and a number of other Chinese brands looking to launch New York and Australia," commented Mr. Sebastian Skiff, Executive Director of CBRE Retail.

Around 14 million square metres (149 million square feet) of new retail space is currently under construction in Asia Pacific. Half of the new supply is in China, mostly in Shenzhen and Guangzhou. The bulk of the remainder is in Southeast Asian markets including Bangkok and Kuala Lumpur.

"In the fourth quarter of 2013, four new retail projects opened in Bangkok providing around 40,000 square metres of new space. The total retail supply in Bangkok at the end of 2013 stood at 6.32 million square metres, consisting of shopping malls, which shared 61% of the total market and can be categorized into three main types; community mall, enclosed mall and on-site retail facilities," reports James Pitchon, Executive Director - Head of CBRE Research and Consulting in Thailand.

Global Retailers' Targets

The report found that retailers globally are predominantly targeting countries with mature retail sectors, although a number of emerging markets in Asia Pacific also feature strongly. Retailers originating from Europe have shown a strong bias towards their own region with less than 15 per cent of retailers targeting markets outside the region. Retailers from the Americas are biased towards the US, but are also targeting European markets, and in particular Germany.

China leads the way for Asia Pacific, ranking as the fifth most popular destination for global retailers, with 22 per cent of surveyed retailers targeting the market in 2014. The importance of China globally cannot be underestimated, in part because of the impact having a presence there has on sales in other regions.

In Thailand, "International brands which expanded their business lines in the Thai market in Q4 2013 include Sephora and Victoria’s Secret Beauty & Accessories at Siam Center, Pull & Bear at Siam Center, Brioni's first store at Gaysorn Plaza. Mid-range fashion brand openings included Carhartt, Pedro, and Kenneth Cole at CentralWorld Plaza," Jariya Thumtrongkitkul, Senior Manager of Retail Services at CBRE Thailand said.

In Vietnam, middle class consumers with rising incomes and a hunger for style continue to draw retailers' interest. Ho Chi Minh City and Hanoi were both ranked in the top 10 cities of most new retailer entrants in 2012 and 2013, according to CBRE's Retail Hotspots in Asia Pacific report. The liberation of Foreign Direct Investment (FDI) on wholly-owned retail businesses from 2015 is expected to further stimulate this trend.

Meanwhile, the economies of Malaysia and Singapore are strengthening and as a result consumer sentiment is expected to improve in both markets. In Malaysia an influx of new supply is due over the next few years. The resulting increase in available space, and expected lower rental levels in these new venues, should provide an added incentive for international retailers wanting to expand there. In Singapore, stability in the economy and the employment market has laid a sound foundation for domestic consumption. Retail spending has also been boosted by the growth in international tourists, especially affluent ones, following the opening of major new visitor attractions. Singapore has since become one of the gateway cities for brands new to Asia. Of some concern though for retailers in Singapore is the availability of qualified sales floor staff.

-- The Nation 2014-04-09