Thailand’s Growing Luxury Goods Market
A combination of Thailand’s booming tourism industry as well as a growing aspirational middle class has paved the way for an increase in demand for luxury goods and services. Gone are the days where the country was known for being a budget shopper’s paradise (although such options still exist). We take a look at the industry as a whole, expanding on some factors that have propelled the country forward in the luxury sector:
- Affordability increasing among locals
- A shift in consumer sentiment
- Local brands stepping up
- Social media influencers helping the cause
Consumer purchasing power and attitudes
The consumer-spending outlook in Thailand remains optimistic as real household spending is expected to average 4.0% over the next 5 years, a significant increase from the 3.1% average in 2012 to 2016.
Aside from an increase in purchasing power, Thai consumers are also becoming more sophisticated in terms of their tastes for luxury goods. Thai society on a whole places an emphasis on products with higher degrees of differentiation and uniqueness. The is apparent across almost all areas, especially when it comes to designer apparel and footwear, luxury leather goods and super premium beauty and personal care.
The luxury goods industry has also experienced growth over the last several years – according to a report by Deloitte, it has been on an upward trajectory, growing at a rate of 8% from 2015-2016 to reach USD 1.6 billion. This has been partly due to the affluent expatriates living and working in Bangkok who make up a dynamic, international community; a vital ingredient for the fast-moving luxury goods market.
This trend is predicted to continue with sale of luxury goods in Thailand expected to reach a retail value of US$2.2 billion by 2019. This will be on the back of improved economic and political conditions, also owing to greater expansion in luxury outlets and dedicated luxury shopping locations. Central Embassy (mall), Siam Paragon and EmQuartier in Bangkok, for example, have introduced many luxury brands to Thailand with more to follow in the coming years.
Local shoppers have also begun to research luxury brands online, often finding out about the latest trends through their smartphones, providing them with considerable exposure to the industry before they even enter the country.
Local players making it big
The last decade or so has seen a meteoric rise in the number of Thai brands that have gathered global acclaim. One example of this is the 2006 founded Boyy that opened its flagship shop in 2013 in Bangkok. The label has since stamped its presence in New York, Italy and Paris. Their Slash bag (Bangkok’s best-seller) blends exotic skins, and gets an update every season – a further representation of its popularity.
Another example would be Thailand’s Greyhound Fashion Café. Started in 1980, the fashion brand has grown from strength to strength, headlining Bangkok Fashion Week, and opening outlets in Indonesia, Vietnam, Singapore, South Korea, Japan, Russia, Israel and Switzerland.
Social media influencers
The Thai luxury scene has also gained much momentum from the growing number of influencers who champion local brands. Social media is growing at exponential rates across the country, with the public extremely receptive to this form of creative advertising. Japanese influencer network Withfluence (with offices in Thailand and Bangkok), for example, has several campaigns in Thailand connecting Thai influencers with Japanese brands. The company engages those in the industry who have a minimum of 3,000 followers on social-network channels with considerable engagement rates.
Bolstered by strong tourism figures and the government’s push for an emphasis on retail to strengthen the economy, Thailand has seen luxury malls, department stores and hypermarkets all opening new outlets over the last decade. The industry is showing no signs of slowing down, the country will continue to maintain its position of being one of Southeast Asia’s largest luxury markets.
