BANGKOK — To get a glimpse of this city’s growing demand for luxury goods, there is no need to look farther than the new Siam Paragon shopping mall, a 5.4 million-square-foot monolith in the city center where shoppers can buy Pucci dresses and Porsche sports cars.
The mall’s main floor reads like a Who’s Who of leading luxury brands. A walk along the lengthy corridor shows labels such as Chanel and Gucci, Cartier and Hermès, Tod’s and Mulberry. Jimmy Choo, Chloé and Giorgio Armani are among the brands that have chosen the site to launch their first Thailand stores. (Not all of them are open yet, though most should be by the end of April.)
And then there’s the foot traffic. The mall’s management claims more than 100,000 visitors per day to the nine-story complex, which also houses a cinema, an aquarium and a bowling alley. Even recent political turmoil in Bangkok hasn’t thinned the crowds: Since opening in December, the mall’s escalators and entranceways have been packed, a distinct difference from many of Asia’s other luxury malls, where a quiet, upscale ambience prevails. Mall representatives have said they expect the complex to bring in about $250 million in sales this year.
But beyond its profit-generating potential, Siam Paragon’s arrival has helped set the foundation for Thailand’s growing role in Asia’s luxury retail scene. Because of government efforts over the past few years, the Thai capital has been ramping up its retail appeal, both for its local luxury shoppers and also for the 15 million tourists expected to visit the country this year, according to the Tourism Authority of Thailand.
Such activity has helped Bangkok rise to the top of Asia’s small markets, which include cities like Kuala Lumpur in Malaysia and Jakarta in Indonesia, and primed it to compete, potentially, with the big ones.
“Bangkok is now being perceived in the same way as other Asian destinations, like Hong Kong or Tokyo, as a location for luxury retail,” said Robert Triefus, executive vice president of worldwide communications at Giorgio Armani SpA, which — with the opening of Giorgio Armani and Emporio Armani in Siam Paragon — will now have five outposts in the city.
Sebastian Suhl, chief executive officer of Prada Asia Pacific, said, “Compared to any of the smaller Asia markets, [Bangkok is] really the only one where we can think big.”
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One major effort to build on that buzz will be the city’s new Suvarnabhumi Airport, which is expected to open this summer and which, like other regional travel hubs Hong Kong and Singapore, will provide significant space for luxury retailers.
“There are so many tourists coming through Bangkok — some of whom go into the city, many of whom don’t and just use Bangkok to make their connection to [another part of Thailand or Asia],” Suhl said. “If they have a beautiful airport and a few hours to kill there, there’s a great potential [for sales].”
Prada, which already has stores in Hong Kong’s and Singapore’s airports, is among the brands considering opening in the Bangkok airport. The company has two other locations in downtown Bangkok: a flagship at the leading luxury mall Gaysorn Plaza, and a second location at upscale mall The Emporium.
In addition to the new retail locations, Thailand’s government is tapping into its other assets in hopes of making brands pay attention. “There’s a real political will to make Bangkok a shopping haven,” said Maxime Elgue, managing director for Cartier Far East.
At the top of the city’s strengths is its tourism appeal, which lures potential customers from all over Asia, the Middle East and beyond. Most brands report that about 40 to 50 percent of sales in Bangkok are to tourists, and recent Thailand tourism campaigns — particularly in other countries in Asia — have helped keep sales in that area strong.
“Tourism is really booming in Bangkok, and that’s a benefit to the retailers in the city,” said Jaclyn Ng, regional general manager for Salvatore Ferragamo. “Two years ago, [the Thai government] threw a big fashion event, which got a lot of regional media coverage. It left a strong impression on tourists around the area that Bangkok was a good place for fashion and shopping, as well as eating and sightseeing. It generated a lot more awareness as a whole, and more people started planning trips there because of that.”
In the past year, Ferragamo has also seen a significant increase in tourists from the Middle East shopping for luxury goods in Bangkok, Ng said.
Brands are also seeing a growth trend in the numbers of local Thai customers. That wasn’t always the case: The country was hit hard in the late Nineties by the Asian financial crisis, which left many consumers cautious about spending.
“The overall economic situation is much improved,” said Sabine Brunner-Franzosi, general manager of Asia Pacific for Tod’s. “People are feeling more confident, and that has helped make the local market strong.” Brunner said more than half of Tod’s sales in their two Bangkok stores are to Thai shoppers.
Thailand’s varied economic demographic is also promising. “Thailand has more of a middle class than what you’d see in Indonesia or another market like this,” said Suhl of Prada. “It’s an important aspect about the Thai market — it’s not just about the very rich or the very poor. You really do perceive a much more developed country in terms of a middle class.”
And unlike other areas of Asia, where personal style is still developing, the Thai have long had a strong fashion sense that has been bolstered by the growth of its highly developed local design scene.
“The Thais are very fashion-forward, and you see that reflected in the local Thai brands,” Suhl said. “There are these funky, trendy brands that exist in Thailand that you don’t see [in any other Asian market] outside of Japan. Markets that have strong local designers also have, rather logically, good local customers. It proves that there’s an interest in fashion and a market for it.”
At this point, some said, what is really holding back Bangkok from competing with the bigger markets is the country’s duties of 30 percent on imported luxury goods. Other regional shopping hubs like Hong Kong and Singapore have become virtually duty-free, so pricing in Thailand is much less competitive.
There has been a recent increase in efforts to reduce duties on luxury goods or establish downtown duty-free shopping areas. Siam Paragon and several other central malls have applied for duty-free status, though representatives say it’s unlikely to be resolved while the political situation remains unstable.
“If Bangkok really wants to compete with all the other countries in this region, the only real way to do so is to bring down the duties,” Ng said. “There needs to be price competitiveness for a market to be strong. If the duties come down, then more people will start shopping.”