By Chayut Setboonsarng
BANGKOK (Reuters) - Thailand's new ultra-luxurious Iconsiam shopping complex opens its doors on Saturday, shrugging off a decline in tourist arrivals and political uncertainty ahead of next year's elections.
"I wanted to build something that would tell the million stories of 'Thainess'," says Chadatip Chutrakul, chief executive of Siam Piwat, the firm behind Iconsiam, a half-million-square meter (sqm) complex sits on the banks of Bangkok's Chao Praya River.
The retail sector is a rare bright spot in Thailand where the economy lags regional peers, even while growing at 4.6 percent.
Retail sales growth reached a five-year high in August this year, up 17 percent from a year ago, much of it in malls.
Thai retail sales growth https://reut.rs/2DuCBD6
Siam Piwat's malls at the centre of Bangkok's shopping district were closed off at the height of civil unrest that ultimately led to Thailand's 2014 military coup.
"There were mobs in front of our shopping centres...we closed for three months - I survived," she said in an interview with Reuters. "We announced [Iconsiam] three weeks after the coup."
New retail projects are being planned even as Thailand prepares for elections that senior government officials have said would likely be on Feb. 24.
The elections will pit supporters of the military and royalist establishment against populist political forces led by the Puea Thai Party that was ousted by the military in a 2014 coup.
Thailand's political turmoil discouraged tourism growth, which also slowed after a boat accident killed dozens of Chinese tourists in July, but these concerns have not deterred developers.
Siam Piwat's Chadatip says she believes there are good opportunities in Thailand and tourism will recover.
Thailand tourist arrivals by month https://reut.rs/2Du8dZp
MORE CLICKS WITH BRICKS
"We found that some customers didn't feel comfortable making their first purchase online, but liked our products."
The Bangkok-based startup, which has its fifth store in Iconsiam, where e-commerce is growing, says physical stores familiarise customers with products before they place digital orders.
Shops create brand recognition and double as a pick-up point for online orders, simplifying logistics, he said.
SHOPPING BUT NOT SPENDING
But with mammoth retail developments going up and Thai household debt at 77.6 percent of GDP, some are questioning the sustainability of recreational shopping.
This breakneck expansion risks creating a supply glut such as seen in Kuala Lumpur and when foot traffic through malls doesn't lead to sales, Thai retailers and developers are already working together to boost spending.
Pomelo is looking into partnerships with stores to tap into customer loyalty programs.
There must be data-sharing on footfall and spending between landlords and tenants, which will require big investments in data analytics, says James Pitchon, Executive Director of real estate consulting firm CBRE in Bangkok, noting that "retail's not dead, but it's very complicated".
CHANGING UP THE MIX
Another retail approach is to harness the convenience of the mixed-use project.
One Bangkok, a venture of Thai billionaire Charoen Sirivadhanabhakdi's Fraser Property and TCC Asset's $3.5 billion, will devote half of its 1.83 million sqm development to offices, a quarter for retail, and the remainder for hotels and attractions.
Infrastructure investments and a government policy that draws in foreign investors will also benefit the project, which is expected to complete its first phase in 2022, Soon adds.
The challenge to Thailand's retail success is keeping shopping centre visits engaging and fresh, says CBRE's Pitchon."You need a reason to go...and it has to be a unique experience. Is it instagram-able?"
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(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)