Inside King Power, Thailand’s Largest Duty-Free Chain

Earlier this year, Thailand projected that tourist numbers will rise six percent in 2018. That’s a decent step up from last year’s base of 35 million, and a crucial one given travel makes up 12 percent of the Southeast Asian monarchy’s economy. Supporting this impressive number is the growth of Chinese visitors, who account for 27 percent of Thailand’s tourism revenue. But Thailand is betting on the quality of visitors, not the quantity. Ever since the crackdown on Chinese zero-dollar tours last year, Thai authorities have been seeking wealthier, Free Independent Travelers (FITs), as they represent higher per capita spending. And the performance of high-end duty-free shop is closely linked with the achievement of the goal. The largest duty-free retailer in Thailand is King Power International Group, which has nine stores located in Thai airports and major tourist venues. Its duty-free shopping mall in Bangkok’s central business district is vast, covering over 12,000 square meters. More importantly, half of its sales volume comes from Chinese shoppers. To find out how King Power accommodates this important segment of customers, I took a tour to its biggest duty-free store in Bangkok, the downtown complex. Contrary to the government’s goal of attracting FITs, I found myself surrounded by Chinese tour groups. They added luxury items to their shopping carts in the blink of an eye, completing payments just as rapidly using Alipay and WeChat. Several big advertising boards inside the store captured my attention. “Don’t go home with regrets. Our price is lower than in your country,” was written in bold Chinese characters, above all other languages. The store also has posters describing the “must have top 20” product recommendations, along with ads for Alipay and Tmall, whom King Power partners with. King Power formed an official partnership with Tmall back in 2015, allowing customers to shop for duty free goods from home. But how did customers respond to this collaboration? I approached several Chinese tourists in the store and asked if they were aware of the partnership or interested in shopping on Tmall. They said they would be interested only if Tmall offers a discounted price. They trust the quality of goods bought at the local store where they can touch and feel them, but would consider using Tmall to research product prices next time. Chinese travelers are known to be avid researchers when they travel. King Power partnered with TripAdvisor in July last year, hoping to catch their attention during the process with information on promotions, recommendations, and guides. King Power’s newly renovated store, the Bangkok Rangnam complex, which opened to the public on January 19, is a 74m facility, 22,000 square meter site that aims to “revolutionize the image of downtown duty-free retail”. One of the new initiatives is the launch of an updated King Power app, which offers shopping information and allows customers to place orders ahead of time. “People use their phones everywhere so this solution is needed,” said King Power International Group CEO Aiyawatt Srivaddhanaprabha. “Pre-order is for airport pick-up, so that makes the journey more seamless, and in general it makes buying or finding what you want in advance much easier.” “I hope in future that we can generate 10 percent of our business online,” he said.

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Inside King Power, Thailand’s Largest Duty-Free Chain