Supaluck Umpujh, Chairwoman, The Mall Group: Interview

Supaluck Umpujh, Chairwoman, The Mall Group

Interview: Supaluck Umpujh, Chairwoman, The Mall Group

What is the sector doing to embrace technology and innovation under Thailand 4.0?

SUPALUCK UMPUJH: The entire world, not only Thailand, recognises the importance of the new wave of technological change. In recent years, our government has tried to anticipate and stimulate the impact of digital technology on the economy. Nowadays, it is mobile and millennial consumers who are driving the country’s retail trends. Less than a decade ago we realised the importance of digitalisation. People knew this was coming, but did not anticipate its speed. Nonetheless, in China and Korea digitalisation occurs much faster because their retail platforms are very competitive, and they quickly shifted operations online. In Thailand we can still see the strength of offline platforms, in a different manner to elsewhere.

E-commerce may have only started around 2011 in Thailand, but growth has doubled or tripled since 2015. This has been driven by changes in consumer behaviour, particularly in more provincial areas of the country, where offline product offerings are limited. Currently, Bangkok only drives about 20% of e-commerce business, while the provinces drive the rest. The ongoing development of this segment will be driven by global players, rather than by local firms. While Thai consumers are mobile savvy, they currently are price sensitive with a cost-cutting mindset. That being said, the country is a centre for trade within the ASEAN region, particularly in terms of Cambodia, Laos, Myanmar and Vietnam. Therefore, the government needs to find ways of benefitting from its location by fostering entrepreneurship and supporting small and medium-sized enterprises in e-commerce. The government is now realising that globalisation and digitalisation go hand in hand, and that, as retail shifts online, selling goods in an international market is inevitable.

The ministries are all working together to use this shift in technology to build alliances with global players to help local retailers to establish themselves. Nevertheless, online platforms are not easy to build, the costs are high and the margins are initially low. On top of that, Thai consumer culture is not yet primarily orientated towards online purchasing, contrary to Western markets. Bangkok still provides both convenience and a retail experience for shoppers, and offline shopping will continue to play a major part in retail. However, e-commerce is expected to start at a 2-3% penetration rate and perhaps reach 10% over the medium term. The winning formula for retailers is therefore to provide both offline and online services. E-commerce should not be seen as a threat but as a business opportunity.

How important are the tourism and luxury segments to the development of the industry?

SUPALUCK: Digitalisation, globalisation and tourism are all important for the development of the retail industry. Thailand is a top travel destination in Asia, and Bangkok is a top tourist destination in the world. We expect to reach 40m visitors per year in the medium term, with Chinese travellers driving this growth. In order to bring this tourism traffic through the country’s malls, the concept of retail entertainment must be explored and further efforts should be made to incorporate attractions into the retail experience. Nevertheless, the government needs to reform the current taxation system in order to make the country a centre for retail in ASEAN.

The luxury shopping segment is not currently competitive in Thailand. In order to support its development we need to strengthen logistics and infrastructure investment and change some regulations. As we lack human resources, we need to get the Board of Investment to provide incentives to facilitate the flow of human capital. In addition, we must work with the government to amend the regulatory framework to become more competitive.

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The Report: Thailand 2018

Industry & Retail chapter from The Report: Thailand 2018

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