Today, as regional tourism in Southeast Asia continues to be bolstered by price insensitive high-net-worth individuals (HNWIs), Bangkok is an increasingly critical market for luxury brands.
For more than 18 years, Siam Piwat has played an integral role in developing the luxury industry in Thailand, building a series of world-class retail destinations in Bangkok boasting an impeccable brand mix, 2 million square metres of retail space and playing host to major brands, like the Louis Vuitton x Yayoi Kusama collaboration in 2023.
The newest opening for the group, Iconsiam, is located on the banks of the Chao Phraya River and boasts 525,000 square metres of retail space, alongside luxury apartments, including Mandarin Oriental Residences. Iconsiam is planning to double the space allocated to luxury brands to strengthen its position as a leading shopping destination for global luxury brands.
Indeed, luxury retail and tourism have remained a bright spot in an otherwise sluggish economic outlook for the country. In 2018, Thailand was investing more in retail than any other country in Southeast Asia. Other retail destinations in the Siam Piwat portfolio include Siam Center, Siam Discovery, Siam Premium Outlets Bangkok and Siam Paragon, a landmark in the heart of downtown Bangkok, which houses the likes of Dior, Hermès, Loewe, Chanel, Cartier, Burberry, Celine and Balenciaga – and has just undergone a major renovation.
BoF sits down with Siam Piwat’s president of sales and business relations, Caroline Murphy, to discover how best to engage the evolving Asian luxury consumer, the consumer trends driving “hyper-growth of 400 percent,” and the cultural forces influencing the region.
How is Thailand’s luxury market evolving?
Emerging out of the Covid-19 pandemic, we have seen fundamental changes in luxury spending from Thai consumers. It was the first time we have actually been able to understand their consolidated spend. Previously, the spend was fragmented globally. We didn’t know, and neither did our brand partners, how big that spend was. So, this has resulted in what brands call “hypergrowth”. We have had up to 400 percent aggregate growth of the luxury sector over the last three years.
It has really moved Thailand from being a nice, but relatively small market into a significant market for the luxury sector. Now, Thailand is on everyone’s radar, to expand into or enter if they are not already here — but most of them already have some presence. Many of the brands were also with distributors in the past, again, because of a lack of scale. But that has all changed.
So, it is fundamentally a huge shift. It’s a paradigm shift in the market. Thailand is now a bigger fish in the ocean — and that really comes down to the Thai consumer’s love of luxury across its different verticals.
What are some of the most compelling consumer behaviour trends in the Thai luxury Market?
I think it is quite similar to what you see globally. People have saved a lot of money from not being able to travel. You definitely see that, “I want to reward myself with whatever it may be,” mentality and they are resilient to any changes in the market globally or domestically. They are still very hungry for luxury goods.
Interestingly, in Thailand, a high percentage of top management or top executives are female. A lot of companies across all sectors have female leaders. What this means is we see a lot of women buying for themselves — jewellery, watches, things that traditionally perhaps a spouse would buy for them. Here, women are shopping for themselves.
The other key growth factor is that more and more Thai consumers are buying luxury from a much earlier age. Of course, Millennials and Gen-Z are engaging in this category, but even the eldest Gen Alphas, who are 15 or 16 years old, are already buying their first luxury handbag. Yes, it’s sponsored by their parents, but they want that first foray into luxury. They have that desire for luxury, and a lot of that is driven by Korea and K-pop.
K-pop is a huge driver. Now, the newest thing is T-pop — Thai actors and singers are now becoming significant regional stars. We are seeing young Thai consumers want to emulate their style, the way they dress, adopt the things that they like. As these consumers age, that behaviour doesn’t show any signs of subsiding.
How is touristic expenditure performing in the region?
Tourists are back, but with a slightly different profile from before. Pre-pandemic, we had over 40 million tourists annually. This year we should end up with about 25 to 28 million. We are at 20 million now with a couple more months to go. We are always constrained by airport capacity and frequency of flights, which are still building up as we emerge out of Covid-19.
The number of Chinese tourists is still not at pre-pandemic levels. We anticipate that taking more time to rebound, but we are seeing a lot of traction in Cambodia, Laos, Vietnam, Myanmar (CLMV). They are big customers for us because there is very little luxury presence in their market and they have a significant discretionary spend.
Ultra-luxury brands very much remain the megabrands in the minds of consumers. What we want to do is give them the space and physical footprint to bring those collections — be it haute couture or high jewellery — into Thailand.
It’s primarily Asian tourists who are visiting Thailand, not just to shop, but also for experience-driven moments. Food, for instance, becomes an integral part of where they choose to shop, and tourists are also looking for uniquely Thai experiences. It’s why we prioritise offering unique concepts like Sook Siam at Iconsiam, where you can experience every variety of Thai cuisine from all 77 provinces of Thailand under one 10,000 square metre concept. Offers like this are very important to attracting the tourists back to our properties.
What brand mix is connecting with your highest-value consumer cohort?
Ultra-luxury brands very much remain the megabrands in the minds of consumers. What we want to do is give them the space and physical footprint to bring those collections — be it haute couture or high jewellery — into Thailand. We are moving towards that in both of our shopping centres: Siam Paragon and Iconsiam.
We want the best representation of megabrands with us. Our very important clients (VICs) would prefer an elevated shopping experience. They are buying in a different manner and want those exclusive pieces. Some Thai consumers are also now moving beyond the most established megabrands. Understated, quiet luxury is coming into play, for instance, brands like Loro Piana, who opened with us in October. We are particularly excited about the unveiling of our new Luxe Hall at Siam Paragon, with 20 new luxury brands coming in.
There is a core market that really craves this type of luxury signifier. They don’t want logomania anymore. I believe the ultra-luxury consumer in Thailand is moving towards that. If we brought in these brands five years ago, it probably wouldn’t have worked. There is a level of sophistication now among the consumers here — Loro Piana is just one example.
How are you approaching space-making and experiential strategies as you continue to renovate and expand your retail footprint?
We are undertaking our biggest renovation in our 18-year history of Siam Paragon. We are number one in the market, but we believe that we can go above and beyond what we are offering to our customers now. We are looking at the global stage, not just the local stage.
The architecture of our properties is quite spectacular and it is really our passion to push the envelope when it comes to design. In terms of place-making, we have just unveiled a new area that is particularly forward-thinking, creating a community of younger customers because our core customer is 18 years older than the day we opened.
We have created this cool community space called Siam Paragon: Next Tech. We have an amphitheatre in there currently, showcasing an architect with interactive visual art. We have talks there daily, about the metaverse and artificial intelligence (AI) innovations like ChatGPT. None of this has got anything to do with shopping — it’s about creating a community, allowing a space where a younger generation can congregate.
What is the new concept of Siam Paragon’s transformation?
In terms of how we speak to all our partners, everything that they do at Siam Paragon has to be one-of-a-kind. If they come to Siam Paragon, it must be the very best in terms of design, product offering and service. We are very privileged that all our partners want to reinvest with us and want to create something that is really the ultimate expression of their brand.
I think from a consumer point of view, they know if they come to Siam Paragon, they get the very best of Chanel, the very best of whoever it may be. There is no other store that’s like it. That’s how we approach everything that we are doing at Siam Paragon.
We have another new zone that we are going to start constructing next year that is going to focus on rooftop dining. We already have 140 restaurants and counting. The transformation is ongoing.
This is a sponsored feature paid for by Siam Piwat as part of a BoF partnership.