The Korat Mall - How do the shops survive

[SpokaneAl]

is is not Just a Thai phenomena.  Take a look at everyone's favorite e-commerce site like Amazon or  Lazada. 100's of sellers all offering the exact same item, at the exact same price.
I run an e-commerce consulting business and the first question the newbies ask is, "What are the most popular items I can sell"?  I'm sure it is similar here too.  The new guys don't know enough about business and the major name stores want to make sure their brand name is represented in all markets.
 
It is not a big deal when you are a little mom and pop type operation and you make 2 or 3 hundred extra Baht each day when you have a low overhead.  It does get to be a major problem at the large malls when mall management wants a fixed rent and utilities payment every month.

One problem with on line selling is that there are no barriers to entry. Years ago, actually a decade or so, I was offering my services as a resume writer on Ebay. Things were going pretty well until more and more competitors entered the picture, driving the price down to virtually free and where it was not worth my while nor my efforts.


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[blazes]

I once came across a series of pomelo stands up in the hills above Chiang Mai.  About 10 all side by side.  Same pomelos exactly.  My gf got out and bought 2.  I said, when she got back in the truck: " how did you know which stand to buy the pomelo from when they were all the same".   

She replied: "I bought from the pooying who smiles the most kindly."

[mick220675]

37 minutes ago, impulse said:

 

If you've ever bought glasses in Thailand, you'd quickly figure out they only need to sell a pair or two a day to pay the rent and the cuties' salaries.  They can look dead empty for 7 hours out of an 8 hour day and still do okay.

 

I have bought a couple of pairs of glasses in thailand and you are right they a very expensive, but my local Top charoen optician would be lucky to sell a pair a week. 

[impulse]

6 minutes ago, mick220675 said:

I have bought a couple of pairs of glasses in thailand and you are right they a very expensive, but my local Top charoen optician would be lucky to sell a pair a week. 

 

Gotta figure they have a lock on it (since they seem to have a shop on every block in Thailand), but I wonder what would happen if someone were to set up a shop, hire an optometrist (short skirt and all), order the custom glasses from Zenni and sell them for a small fraction of the Thai price?

 

Hmmmmm....

[Grubster]

Money laundering. Steal billions from the people, or sell drugs and claim that all your riches come from selling glasses. Simple but effective. Easy to fudge books here.

[impulse]

1 minute ago, Grubster said:

Money laundering. Steal billions from the people, or sell drugs and claim that all your riches come from selling glasses. Simple but effective. Easy to fudge books here.

 

I don't doubt that it happens.  But they wouldn't need 1/4 of their locations to launder $$$ billions.  It's gotta be more insidious.

[Grubster]

2 minutes ago, impulse said:

 

I don't doubt that it happens.  But they wouldn't need 1/4 of their locations to launder $$$ billions.  It's gotta be more insidious.

It happens constantly everywhere and is too obvious when you look at it as there is no way they could stay afloat selling three pairs of glasses per day. I guess most of us know that high government officials are involved in these crimes in most countries so there is little interest in investigating these stores.

[impulse]

17 minutes ago, Grubster said:

It happens constantly everywhere and is too obvious when you look at it as there is no way they could stay afloat selling three pairs of glasses per day. I guess most of us know that high government officials are involved in these crimes in most countries so there is little interest in investigating these stores.

 

My plain vanilla reading glasses that I could order from Zenni for $20-30 cost me 7500 baht at Top Ch.  That's almost 6500 baht gross margin.  Figure 2 cuties at 12,000 per month each and rent at 50,000 per month and they'd need to sell about 12 pairs a month to pay the salaries and rent.  Hopefully, the cuties get a bonus for selling more than 12 a month.

 

If they sold just 2 pairs a day, they'd gross around 450,000 baht a month against shop expenses of 75,000 and COGS of 60,000.  Take out some corporate overhead and advertising and they'd have a decent business if they had hundreds of those shops.  Even better if they sold 3 pairs a day.  I'm not saying they aren't in the laundry business.  Just that it's possible they're not.

 

(BTW, I left my reading glasses in a taxi my first month in BKK and needed a replacement quickly- or I'd have gone the Zenni route.)

Edited January 13, 2017 by impulse

[seancbk]

1 hour ago, impulse said:

 

If you've ever bought glasses in Thailand, you'd quickly figure out they only need to sell a pair or two a day to pay the rent and the cuties' salaries.  They can look dead empty for 7 hours out of an 8 hour day and still do okay.

Population of Bangkok around 8 million. 

Let's assume 10% of the population wear glasses or contact lenses.   That would be 800,000 people (+/-)

 

Let's just talk about the contact lens wearers and for the purposes of this discussion say its 50% of the above number.   That give us 400,000 people (+/-)

 

OK so that it is 400,000 people who need to buy lens fluid and replacement (disposable lenses) regularly.   Lets say once a month.

400,000 people shopping once a month, but spread over the month is 400,000 / 30 = 13,300 customers a day in Bangkok.  

I know there are a lot of places they can buy their lens fluid and lenses, but 13,300 customers a day in Bangkok alone is still huge sales.   

Figure average customer purchase of 300 THB a month (actually I'd guess much more but we'll keep it low for now)   400,000 x 300 THB = 120 Million THB per month on contact lens fluid and lenses.


120 million THB in revenue is a conservative estimate for the business volume of contact lens related business in Bangkok during a single month.

So yeah I wonder how they stay in business.


 

[impulse]

53 minutes ago, seancbk said:

So yeah I wonder how they stay in business.

 

Agreed, but have you ever actually seen anyone in one of their shops buying anything?  I can't recall ever seeing anyone.  Not that I pay attention beyond the cuties staring out the window...

 

I totally forgot contacts and the necessaries.   But can't you get those (necessaries) at Boots and other skin whitening stores, reducing their ability to gouge their customers?

[bentarm44]

Feels a bit like some kind of attempt at mass hypnosis/indoctrination, or another version of "The Emperors New Clothes".

Thailand likes to tell itself how well it's doing, and how everything's going to keep getting better; so lets all go shopping all the time.

I live 70 km east of Korat town, near Phimai; and the locals round here have LESS disposable income now than 5 years ago. I guess the inhabitants of Korat Town are wealthier; but when I visit the Mall, or T21, I see mostly family groups shuffling round huddled close together looking over-awed; and if they do stop to spend any money it'll be on food or drink to consume on the spot.

So, to hell with education, health care etc; go get that new smart (sic) phone that your neighbor just borrowed money to buy.

You can always sell it off at a loss when no ones looking. 

[lungbing]

On 1/12/2017 at 10:56 AM, thehelmsman said:

There has to be more to it than just bad business sense. Take all the home improvement places as another example, the employees outnumber the customers. It's a mystery.

Until you get to the checkout desk, where's there's one young girl, and a large queue of frustrated farangs 

[geisha]

Such a shame that there is no individuality in Thailand. As everyone has said, all shops/ businesses sell the same things. But the question is , why ? If you go to Bali, for example , or Singapore/Malaysia , you will find so many shops selling great fashion , art, jewellery etc , that you have to curb yourself from buying  everything. This never happens to me in Thailand, I go to the malls , and if I see something nice, generally they only have tiny sizes ! So wouldn't you think that in Bangkok,  Pattaya  and Phuket ,  they would  cater to tourists  a bit bigger than their Thai counterparts? Well no, they haven't caught on yet! Which is why you see huge stocks of slightly expensive clothes hanging on their rails gathering dust. So it must be a lack of experience in the retail buisness that brings this about, plus un inventiveness, and laziness , as personally, i get a bit fed up,of seeing salesgirls sleeping in a corner, and who get annoyed when you dare ask them for something. Terminal,21 in Bangkok do have original stuff, and there aren't any international shops there, so there's proof that some can make a success of it . 

[Eric1949]

4 hours ago, impulse said:

 

If you've ever bought glasses in Thailand, you'd quickly figure out they only need to sell a pair or two a day to pay the rent and the cuties' salaries.  They can look dead empty for 7 hours out of an 8 hour day and still do okay.

My glasses only cost about 80 baht, when they break I just buy a new pair,  so if they sell a pair a day, the rent must be very cheap.

[impulse]

50 minutes ago, Eric1949 said:

My glasses only cost about 80 baht, when they break I just buy a new pair,  so if they sell a pair a day, the rent must be very cheap.

 

You don't have a very complicated prescription if you can buy your glasses for 80 baht.  My single cut reading glasses cost 7500 at Top Ch.  And my progressive lenses cost 14,500- not at Top Ch.  And my prescription diving mask (with progressive lenses) cost 17,000- again, not at Top Ch.  Wouldn't take too many sales like that to pay the rent.

 

I don't think they even let you walk into Top Ch for 80 baht.

Edited January 13, 2017 by impulse

[kiniyow]

The Som Tam shops seem to stay busy

[Khon Kaen Dave]

It seems that Thai people are under the "build it and they will come" notion.Its like years ago the darkside was a very popular area.But as tourism declined in that area and bar owners had to depend upon the residents,that were,in the majority living on pensions.There used to be a few bars that always had customers,and were able to pay their bills.Then a huge bar,called the Booze Lounge opened,with the idea that they were going to put all the other bars out of business.It was too big,the bills were enormous,the air con was not able to cope with the amount of smokers in the bar. It was the sister bar to the Booze lounge on Soi Bukhouw.It was very poular when it first opened,but the drinks were too expensive and the girls were on on wages that were far above the normal salary.There was two managers and several cashiers.This was not a bar for the dark side.I was on the dark side a few months ago,and several new Thai bars had opened.They were all empty,the long standing bars had the usual suspects inside.I used to live there and on having a word with a couple of the owners i know,i learnt that most of the owners are now subsidizing their bars with their own money,yet a new bar was opening as we spoke.The Thais are under the impression that they can open a bar and make 20.000 a day,because all the others are(thats how they see it)I dont know if the dark Side will ever come back,but i think some of the bars will be long gone before it does.

[Chongalulu]

16 hours ago, bentarm44 said:

Feels a bit like some kind of attempt at mass hypnosis/indoctrination, or another version of "The Emperors New Clothes".

Thailand likes to tell itself how well it's doing, and how everything's going to keep getting better; so lets all go shopping all the time.

I live 70 km east of Korat town, near Phimai; and the locals round here have LESS disposable income now than 5 years ago. I guess the inhabitants of Korat Town are wealthier; but when I visit the Mall, or T21, I see mostly family groups shuffling round huddled close together looking over-awed; and if they do stop to spend any money it'll be on food or drink to consume on the spot.

So, to hell with education, health care etc; go get that new smart (sic) phone that your neighbor just borrowed money to buy.

You can always sell it off at a loss when no ones looking. 

We must be near neighbours. I thought the town was crying out for the new Tesco mall ,but after the initial opening I still see people in there but very little volume at the tills and virtually no sales at the concessions.bar the 10 baht ice cream and food court. The other aspect that surprises me is the value of land in the area even outside the town. Given the almost impossibility of making money by commercially growing rice,as opposed to own consumption, I'd have expected a collapse. I'm still not convinced it isn't a debt fuelled bubble. Normal business acumen and principles just don't seem to apply. 

[JSixpack]

You've merely become another victim of TVF Poster Mall Bewilderment Syndrome (TVFPMBS). It's incurable. Best console yourself that it's just one o' them Mysteries Of The Orient and try to carry on normally.

[bentarm44]

4 hours ago, nchuckle said:

We must be near neighbours. I thought the town was crying out for the new Tesco mall ,but after the initial opening I still see people in there but very little volume at the tills and virtually no sales at the concessions.bar the 10 baht ice cream and food court. The other aspect that surprises me is the value of land in the area even outside the town. Given the almost impossibility of making money by commercially growing rice,as opposed to own consumption, I'd have expected a collapse. I'm still not convinced it isn't a debt fuelled bubble. Normal business acumen and principles just don't seem to apply. 

 

I've heard that the locals enjoyed going to the Tesco-Lotus initially for the novelty and air con; and the night and monday markets suffered. However, it's not possible to negotiate a "rounding down" of the checkout total at T-L so some are drifting back to the traditional food sellers.

The attraction of a few baht off overrides the poor quality and "faulty" scales it seems.

Land prices round here rose considerably after the last round of floods round Bangkok; correctly so as it's hardly rained here at all in the last 4 years !!

The local small rice growers are still being punished, but have little or no alternative to obtain cash it seems; apart from the increasing number turning to drug dealing; sigh.

[kaorop]

On 13/1/2017 at 6:20 AM, sinbin said:

  'Monkey see, monkey do' .

Lol, an ex used that exact same line, when I was trying to explain something on the ph, even in English.

[Once Bitten]

Even with taking into consideration the fact that some of the larger shops in the Mall are under the direct control of well known brand / multi branch Thai run business , and these businesses should have in house departments analyzing / accounting experts to keep an eye on profitability and market trends , if you look at the over all picture of Thai retail businesses there still seems to be an underlying genetic flaw that must some how over ride common business practice .

 

On the way into Korat there is a large Home Pro store situated facing a set of traffic lights and directly opposite a Tesco Lotus store . The HP store is stocked to the brim on several floors with goods that all ways seem to be on sale at a higher price than many other retail outlets , the HP sales areas are over flowing with bored looking sales staff with their head downwards looking at their mobile phones and they all ways seem to out number actual customers  .

 

The last time I was in this store , as I wondered around I ended up with a gaggle of sales staff constantly following me around where ever I went . I felt a bit like the the pied piper of hamelin with his merry band of follower right behind him .
 

If you take into consideration the city land plot this HP store is built on even though it may be an out right land purchase or lease arrangement , we must be talking mega money , then you have the stores monthly overheads , again another head spinning factor . Yes this HP store may be getting some sort of help from the HP parent company , but surely continuing long term losses from any branch has to be taken seriously .

 

About a mile down the same road and further out of the city , a new large furniture store has been built , this stand alone store has no foot traffic passing by but it does have a large car parking area on the front of the building , my first though on seeing the commencement of the building was , why .

 

Why would you build such a large retail business so far from any where , there's no one walking by , there's no other retail attractions near by to draw in customers .  I have never ever seen more than a few vehicles on the car park , although ive never stepped inside the store ,  its vast front glass windows show only empty sales areas without customers . even in a short time since this store opened the out side facade has started to deteriorate and look shabby .

 

I know its difficult to get an over all general picture of these businesses and some people say that you are not able to stand in the shop day after day and see their supposedly busy periods , but just look at any Thai related internet forum board , its for ever full of the same posted comments about these same businesses being constantly devoid of customers .

 

There is some thing that does not make sense even to a layman like my self , there has to be some sort of magic Somchai Potter cloaking device that conceals the real facts .

 

[tracker]

This retail mystery will probably get a lot smaller once the thai figure out, in large numbers, that most items can be delivered at your doorstep for a lot lower price. Once the online business like lazada and aliexpress (growth very strong) are mainstream people will only want to go to the malls for the aircon it provides. Then only banks and phone shops will be left...

[Once Bitten]

48 minutes ago, tracker said:

This retail mystery will probably get a lot smaller once the thai figure out, in large numbers, that most items can be delivered at your doorstep for a lot lower price. Once the online business like lazada and aliexpress (growth very strong) are mainstream people will only want to go to the malls for the aircon it provides. Then only banks and phone shops will be left...

 

 

That's a good observation and one I had not thought about , but you have to say , surely if you were a business planning to invest large sums of money in bricks and mortar retail store outlets or shopping malls ,  with an eye on long term growth , you would be thinking about or at leased concerned at the possible impact of increasing internet online sales .

 

But then again may be Thai run retail businesses have a better way of planning for the future and just rely on the their resident fortune tellers and daily spirit house offerings .

 
 

Just a recent quote .......

 

More Thais are shopping online, with four out of five people surveyed admitting to making at least one online purchase in the last three months, according to credit provider MasterCard.

 

Home appliances and electronics (38.3%), airline travel (35%) and clothing and accessories (33.3%) were the top online purchases
 
The reason given for using online purchases was that buying online was more convenient.

 

[End quote]

Like you pointed out , soon the Malls will be over run with banks and phone shops , just go and count how many Samsung retail shops there are in the Korat Mall .

 

[meatboy]

over the last 10yrs.i have found the only place doing a brisk trade is the food hall.

now that terminal 21 has the same type BUT with a maximum price the mall are trying to compete.

well what i had at one was so bad i would not give it to my dog.the other one the wife brought me home a bag of my favourite nibbles that will be the last.so if this what is going to happen to the food hall SOMETHING SURELY HAS GOT TO GIVE.

[louse1953]

On 1/12/2017 at 1:53 PM, mick220675 said:

I have always wondered how opticians shops all over Thailand stay open. They have at least two staff and very few customers.

And another one with the same name across the road.

[Once Bitten]

2 hours ago, meatboy said:

over the last 10yrs.i have found the only place doing a brisk trade is the food hall.

now that terminal 21 has the same type BUT with a maximum price the mall are trying to compete.

well what i had at one was so bad i would not give it to my dog.the other one the wife brought me home a bag of my favourite nibbles that will be the last.so if this what is going to happen to the food hall SOMETHING SURELY HAS GOT TO GIVE.

During the times ive been eating in the food court at the Korat Mall it can seem busy , but when I look around at the nearby tables , there all ways seems to be a large number of obvious Mall shop workers and resident office staff , on my last visit to the Korat Mall it was plainly obvious that in some areas there had been an attempt to spruce up and visually improve things , in the face of the now open T21 competition . On ordering my normal routine dish from the same food court kiosk I all ways use , I was surprised to find that it had gone up in price , Ah the old faithful Thai business practice of , when things are slowing down , just up the prices.

 

 

[Once Bitten]

41 minutes ago, louse1953 said:

And another one with the same name across the road.

 

No matter where the opticians shop is situated , Mall or small rural village the view is all ways the same , its empty . 

 

Here’s a thought  .......

 

Could a Thai small business owner be under such enormous personal pressure ( not loosing face ) that even if their shop is constantly not making a profit , or breaking even , they will keep the failing business afloat by any means , even if they have to keep paying out of their own pockets to keep the shops door open .

 

Makes you wonder

 

 

 

[impulse]

On 1/14/2017 at 1:30 PM, JSixpack said:

You've merely become another victim of TVF Poster Mall Bewilderment Syndrome (TVFPMBS). It's incurable. Best console yourself that it's just one o' them Mysteries Of The Orient and try to carry on normally.

 

 I just enjoy the scenery and the free air conditioning.  Makes me feel like a local.  Well, as close as I ever get, anyway.   I'd have to cut my walking speed in half...

[nisakiman]

38 minutes ago, Once Bitten said:

During the times ive been eating in the food court at the Korat Mall it can seem busy , but when I look around at the nearby tables , there all ways seems to be a large number of obvious Mall shop workers and resident office staff , on my last visit to the Korat Mall it was plainly obvious that in some areas there had been an attempt to spruce up and visually improve things , in the face of the now open T21 competition . On ordering my normal routine dish from the same food court kiosk I all ways use , I was surprised to find that it had gone up in price , Ah the old faithful Thai business practice of , when things are slowing down , just up the prices.

 

 

 

"Ah the old faithful Thai business practice of , when things are slowing down , just up the prices."

 

It's not just Thailand that has this mindset. I've lived in Greece for the past fifteen years, and until recently lived on an island which is predominantly tourist orientated. For years the place has been on a downward spiral because during the heady days of the eighties (I also lived there a couple of years back then) when everyone was making more money than they knew what to do with they failed to invest in the infrastructure, and as the comfort / value-for-money demands of the tourists rose, they didn't keep up. So to deal with falling trade, rather than lower prices and/or improve facilities, they just upped the prices in a vain attempt to keep their income stream the same. Naturally, this just exacerbated their problems, and yet they stubbornly continued down this path until their businesses folded.

 

Another example of this bone-headed attitude was epitomised by a situation which happened to a guy I knew a few years ago. He was a Brit, and ran a small bar that was frequented by expats. Everyone was struggling to survive in the area, and his bar was, quite literally, surrounded by empty shops with 'For Rent' signs in the window, but he was just about scraping a living. So then his landlord comes to him telling him that he was going to put up the rent, as what he was paying 'was too low for the area'. The Brit bar owner explained that he was barely surviving as it was, and if the rent was increased, then he'd have to shut down the business. But his landlord was adamant that the rent had to go up. So the guy closed the bar and moved out. That was about six or seven years ago, and his old bar is still empty with the forlorn and faded 'For Rent' posters on the window.

 

Stupidity writ large...