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Thailand Distribution Channels and Entry Strategies: Fashion and Watches

Since the end of a year-long mourning period for King Bhumibol Adulyadej in late October 2017, Thai consumers have begun looking for brighter coloured fashion and accessories. Following the mourning period’s end double-digit retail value growth has been seen in the apparel category.

Chart: Retail Sales
Chart: Retail Sales

Over the medium to long term, the growing empowerment of Thai women is expected to drive the fashion and accessories market. Currently, about 65% of Thai women aged 15-64 are employed, significantly more than both the averages of Asia-Pacific region (59%) and the world (58%).

According to the ASEAN Consumer Survey conducted by HKTDC Research, ASEAN consumers, including those in Thailand, are willing to spend more on better quality products and have a strong sense of personal style. As Thai shoppers become more sophisticated and fashion-conscious, this is expected to generate opportunities for Hong Kong fashion and watch exporters.

For international brands, Thailand is a key market among the developing Asian countries, not only because of its growing demand from the emerging middle-income class, but also the country’s flourishing tourism sector. In 2017, tourist arrivals in Thailand increased by 8.8% to 35 million, with the majority coming from China, other ASEAN countries and Europe.

Foreign Brands and Unique Designs Targeting the Mid Segment

Given a wide variety of brands and styles in the local fashion and accessories market, Thai consumers have lower brand loyalty in general, and focus more on quality and design. However, unlike shopping for clothing, Thai consumers are brand-conscious when it comes to buying watches. In terms of the designs, they favour watches that reflect their own character or personal style, particularly among the youth and the young adults. With rising health-consciousness among Thai consumers, smart watches and wearable activity trackers are also gaining popularity.

Many foreign mid segment watches brands are keen to develop a presence in Thailand. Local importers and distributors are also actively bringing in new fashion and watch brands, to improve retailers’ portfolios and meet more sophisticated consumer demand. For example, the Swedish brand Daniel Wellington (DW) and the Japanese brand Knot were brought to the Thai market recently by Ronny Inter Group, an imported fashion accessories distributor.

Photo: GPS multisport watches displayed in a department store.
GPS multisport watches displayed in a department store.
Photo: GPS multisport watches displayed in a department store.
GPS multisport watches displayed in a department store.
Photo: Men’s watches with advanced functionality.
Men’s watches with advanced functionality.
Photo: Men’s watches with advanced functionality.
Men’s watches with advanced functionality.

Breaking into the Thai Fashion and Accessories Market

Market Entry

Department store purchasing managers typically source new products at trade fairs, and work with their existing distributors to bring new foreign brands into the country. Apart from exhibiting at trade fairs, Hong Kong watch exporters may find suitable distributors through local industry magazines, such as World of Watches, GM Watch, or Bangkok Gems & Jewellery Magazine, then work with the selected distributor to identify retailers matching their brand positioning.

When approaching buyers or retailers, Hong Kong suppliers should be prepared to demonstrate a good track record. For instance, Thai buyers may be convinced by the product having sold well in other markets, in particular mainland China, as Thailand is a popular destination for Chinese tourists.

When importing foreign products, multi-brand retailers in Thailand tend to partner with their existing distributors or agents to handle customs and logistics. Hong Kong exporters are advised to build working partnerships and understand the needs of those distributors assigned by the local retailers. 

Sales and Distribution Channels

For Hong Kong fashion and watch exporters looking to test their products in Thailand, department stores could be an ideal point of entry. Among the numerous department store chains in Thailand, Central Department Store, The Mall Department Store and Robinson Department Store have relatively strong distribution networks. However, it should be noted that Central and The Mall are positioned in the mid to high-end segment while Robinson targets the lower-end to mid market.

Hong Kong suppliers may consider joining exhibitions and international fashion shows to showcase their products to potential Thai buyers. According to HKTDC Research interviews with the major apparel distributors in Thailand, attending exhibitions and fashion shows is the main channel for finding new brands. For apparel items selling on consignment, department stores usually share about 20% to 40% of the sales revenue.

Table: Major Department Stores (% Share of Retail Value)
Table: Major Department Stores (% Share of Retail Value)

Omni-channel Strategies

Hong Kong fashion and watch companies are advised to use the online channel to boost sales and brand awareness in Thailand. The country has the highest e-commerce penetration rate in Southeast Asia, with an estimated 62% of the population shopping online.

According to Euromonitor International, internet retail sales in Thailand grew by an average of 17% annually during 2012-17 and are forecasted to expand by more than 27% from 2018 to 2020.

With fast-growing internet retail sales, many fashion brands and retailers are actively developing online sales channels to cater for Thai consumers’ busy lifestyles. Many department stores have also launched their own websites, offering online shopping with exclusive offers and discounts.

Chart: E-commerce Penetration
Chart: E-commerce Penetration

As more digitally savvy consumers do online research before making purchases (whether online or offline), Thai fashion and watch retailers have increasingly adopted omni-channel strategies.

For example, in addition to its online shopping website, Central Department Store has launched the “Central on Demand” service through the Whatsapp and LINE mobile applications. This enables customers to make inquiries, purchase through various online payment options and either pick up in store or deliver at home. Also, in March 2017, Zara launched online sales and a mobile app in Thailand, providing a pick-up service and return in-store for online purchases.

Moreover, some retailers use social media platforms to gain higher customer footfall. For instance, customers are given in-store discounts and product trials when they like and share on Facebook. Despite the online focus, in-store experience is still important for Thai consumers who regard bricks-and-mortar shopping as a leisure activity. Particularly for watch retailers, offering recommendations, in-person interactions and after-sales services are crucial. 

Photo: Designer clothing in an upscale shopping mall – EmQuartier.
Designer clothing in an upscale shopping mall – EmQuartier.
Photo: Designer clothing in an upscale shopping mall – EmQuartier.
Designer clothing in an upscale shopping mall – EmQuartier.
Photo: Women’s fashion in Robinson Department Store.
Women’s fashion in Robinson Department Store.
Photo: Women’s fashion in Robinson Department Store.
Women’s fashion in Robinson Department Store.

Marketing Through Online Channels

Thanks to the discounts and promotions offered by online marketplaces providing access to international brands, online shopping is becoming popular among Thai consumers, especially teenagers and young working adults, with e-commerce playing a significant role for fashion industry in Thailand. According to a survey conducted by Siam Commercial Bank, clothing and footwear is one of the most popular product categories bought online in Thailand. Although online buying remains small compared physical store sales, the internet has become a key reference channel where consumers research for product information, comparisons and reviews. 

Fashion and accessories is a competitive market segment in the online channel. In Thailand, there are many B2C marketplaces, including local platforms such as Pomelo and WearYouWant, as well as regional players like Lazada, 11street, Zalora and Zilingo. Hong Kong companies may test the water by listing products in the regional marketplaces, which generally require low upfront fees, so as to leverage the platforms’ customer bases and supporting services, including cross-border logistics, customs clearance and last-mile delivery.   

Given the low credit card penetration in Thailand, online marketplaces provide alternative payment options, including over the counter (OTC), cash on delivery (COD) and ATM bank transfer. According to ecommerceIQ, COD is the most prevalent payment method among online shoppers in Thailand, accounting for about 60% of orders.

To manage deliveries efficiently, online merchants may consider partnering with local e-commerce solutions providers. For example, aCommerce and SHIPPOP provide platforms which help online merchants to match their customer orders with the third-party logistics providers offering the best delivery fees.

Social Media as a New Promotion Channel

Thailand has a high mobile internet and social media usage, creating a favourable environment for the rapid growth of social commerce. In Thailand, there are about 51 million Facebook users and 11 million Instagram users. Many foreign and local fashion brands and retailers have set up official pages on these platforms, posting photos and details of products, while consumers can leave comments and make inquiries.

Social media applications are also used by local sellers for one-on-one communication with the customers to build trust. For Hong Kong exporters wishing to develop the Thai market, social media would be a cost-effective marketing channel, particularly for targeting millennials and young professionals.

According to the Total Retail survey conducted by PwC, about half of the surveyed online shoppers in Thailand buy directly from merchants through social media, while reading product reviews and comments on social media has influenced 53% of the Thai online shoppers’ purchase decisions.

Chart: Time Spent on Mobile Internet (World’s Top 10 Countries)
Chart: Time Spent on Mobile Internet (World’s Top 10 Countries)
Chart: Time Spent on Social Media (World’s Top 10 Countries)
Chart: Time Spent on Social Media (World’s Top 10 Countries)

Thailand: Second Largest Market for LINE after Japan

According to industry sources, the Japanese mobile application, Line, is the most popular messaging platform in Thailand with about 41 million users, the second largest after Japan. Many fashion brands and retailers, such as JASPAL, Levi's, G2000 and UNIQLO, have launched official Line accounts to engage target consumers along with Facebook and Instagram. Through Line official business accounts, companies can send promotional messages to all users who have followed their account, allowing companies to reach and engage a wide range of users.

Content provided by Picture: Jacqueline Yuen
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