All over the world, e-commerce is challenging traditional retail stores and Thailand is no exception. Currently, e-commerce only forms a small percentage of total retail sales in Thailand, but CBRE expects that this will grow rapidly. In the UK, 18% of retail sales are now online rather than buying from traditional stores.
Globally, retail tenants are having to pursue an omni-channel approach with both online e-commerce sales and offline traditional sales in stores. In many cases, this has led to a rationalization of their retail portfolio and a reduction in the number of stores.
In Bangkok, the threat to retail landlords is not just from the rise of e-commerce, but also from the increase in supply.
Based on the latest survey by CBRE Research, there is over 600,000 square metres of space under construction due for completion by 2023 mainly in large-scale shopping malls like EmSphere, Bangkok Mall and One Bangkok. There are also new malls being planned where construction will start soon such as the redevelopment of the Dusit Thani Hotel.
The landlord along with the tenant will benefit if business is good, but suffer if business is bad, with the landlord not only taking a risk on the ability of the mall to attract customers but also on the success of tenant’s business.
Tenants now want landlords to collect, analyse and share data on how many people come to the mall, how often and what they are spending their money on along with many other details.
Tenants are going to be increasingly demanding about the quantity and quality of information that they get from the landlord so they can best match their products and services to the mall’s customers.
In the era, e-commerce landlords have to give people a reason to visit their mall and not just to buy online.
Increasing the volume of food outlets providing “retailtainment” is one option but restaurants cannot pay the same rents as luxury brand retailers.
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