The Oriental Mall in Phetkasem Soi 6769 is aiming for medium to highend shoppers.

The competition in Thailand's retail market in the first half of 2005 heated up as retailers added more product offerings and readjusted store formats to deal with the enforcement of planning regulations and negative factors such as surging fuel costs, inflation and declining purchasing power.

Despite some unfavourable economic factors, retailers are poised to go ahead with the investment plans they made in the first half of the year, estimated at 40 billion baht higher than the previous year's total.

Most of the budgeted amount is for the construction of new stores, installation of IT systems to improve management efficiency, opening of distribution centres to reduce transport costs, store facelifts and marketing.

Retailers have clearly shifted their focus to develop new, smaller projects with novel and innovative designs in downtown areas, with largescale construction projects shifting to suburban and upcountry locations.

One industry executive pointed out that in the current economic environment, it is less risky to develop smallscale retail projects because they require smaller budgets and the breakeven period is shorter.

A host of new store concepts with slimmeddown formats and more novel designs are now planned by SUKANYA JITPLEECHEEP

Higher living costs have forced consumers to shop closer to their homes, cut their expenditures on entertainment and dine out less often. These are the major factors behind the increased competition among smaller retail formats.

Discount stores, supermarkets and convenience store operators are the biggest players in this latest trend.

At least three and possibly up to five new smallscale concept stores will be launched this year. Two will come from Central Food Retail, the operator of Tops supermarkets.
Cencar Co, the operator of Carrefour discount stores, also conducted a feasibility study to open its "hard discount store", a cross between a supermarket and convenience store.

It also plans to open a new store concept at Jungceylon, a lifestyle shopping centre in Phuket. The 6,000squaremetre outlet, will be a smaller version of its discount stores.
As well, new retail ventures by property developers are helping to change the landscape of the sector. The developments are based on two business goals _ looking to generate a new source of revenue from nonresidential property through a dualuse approach that will incorporate commercial space at housing sites ,and to serve the needs and styles of unique target groups.

For example, Noble Development Plc introduced the 7,000squaremetre Playground, the Inspiration Store, on Soi Thong Lo in front of its Noble Ora condominium. The 400millionbaht site was developed under the same concept as that of Colette, a famous mall in Paris, and Comme des Garcons in Tokyo.

Also, Sinthoranee Property Co, a subsidiary of Thai Rung Union Car Co, the country's largest vehicle modifier, is diversifying into retailing by opening the 200millionbaht, threestorey Oriental Mall in Phetkasem Soi 6769, in the southeastern suburbs of Bangkok, eyeing medium to highend shoppers.

Other new projects planned this year are Centerpoint in Pin Klao by Pornpailin Development Co, and a second Pantip Plaza IT supercentre, being created from the Bang Lamphu department store in the Ngam Wong Wan area.

EkChai Distribution Co, the operator of Tesco Lotus hypermarts, is also thinking smaller. It launched a new store format called Talad Lotus earlier this year, directly challenging Tops.

The expansion of Talad Lotus and Tesco Lotus Express, available at petrol stations and shophouses, is likely to be fast as the company has a strategy of renting space from existing operators who have been struggling.

The new formats have spurred the giant convenience store chain 7Eleven to increase its expansion plans to 450 outlets per year, up from 300350 last year, in order to occupy the best locations It also has budgeted almost one billion baht for its new distribution centre.

"Though consumers have lower purchasing power, we are benefiting from the current situation because consumers are tending to shop more at stores nearby their homes to save on transport costs. To better deal with this, we are looking at adjusting our merchandise mix by adding cheaper goods," said Pittaya Jearavisitkul, deputy chief executive of C.P. Seven Eleven Plc.

The chain will also give shoppers access to new products and services. For example, shoppers at 7Eleven stores can go right next door to buy books from Book Smile and buy bakery goods at the Yuuri chain.

Piyawat Titasattavorakul, president of C.P. Seven Eleven, said the company saw huge potential in the convenience store business despite increased competition.

"We spent a massive amount of money to install online machines for monitoring fastmoving items and to customise our product items in each location. Some product items available at our stores are similar to those in discount store but there are clear differences in terms of product size," Mr Piyawat said.

Similar to this is the Spot Rewards card programme used by Tops Supermarket, which analyses customers' profiles in order to offer the right promotions for particular outlets.

While concepts built on smallness have caught fire, largescale projects for the most part were stagnant in the first half of this year.

Exceptions were the planned opening of a Robinson department store in the Rattanathibet area in the middle of June, and Siam Paragon, codeveloped by The Mall Group and Siam Piwat Co next to Siam Center, which will be opened in November.

The imminent arrival of the 14billionbaht Siam Paragon has forced several retailers in the area such as Isetan, Gaysorn, Central Chidlom, Ploenchit Centre and The Emporium to undergo major facelifts.

About six billion baht is expected to be spent to redesign stores in 2005. Of the total, 2.4 billion will be spent on 7Eleven outlets, 580 million baht at Siam Discovery and Siam Center, 500 million at Future Park Rangsit, and 400 million each at The Emporium and Carrefour.

All told, retail sales are forecast to expand 5% this year from 400 billion baht last year. The number was recently revised down from 810% because of tightening economic conditions.