By  on August 1, 2007

BANGKOK — Retailers are mounting aggressive promotions here this summer in an attempt to squeeze profits out of 2007, which has been marred by political unrest and low consumer confidence.

Major malls are touting discounts of as much as 70 percent and a car raffle, among other things, in an attempt to lure shoppers.

"Compared to sales in 2006, the first and second quarters of 2007 [were] down by 5 percent to 6 percent," said Thanapon Tangkanan, president of the Thai Retail Association.

First-quarter sales fell 30 percent at many of Bangkok's major malls after New Year's Day bombings, and have been slow to rebound, he said. Consumer confidence is at a five-year low, and the Central Bank has reduced its economic growth forecast for this year to 3.8 to 4.8 percent from 4 to 5 percent. A 3.8 percent growth rate would be the lowest since 2.2 percent in 2001.

"Everyone is experiencing a downturn," said Satima Tanabe, marketing director of G.S. Property Management Co., which runs the upscale Gaysorn shopping center in Bangkok's retail district.

The biggest challenge confronting retailers has been political turmoil after the September military coup, said Somphols Manarangsan, a political economist at Chulalongkorn University in Bangkok. Thousands of supporters of deposed Prime Minister Thaksin Shinawatra and democracy advocates have staged daily protests against the military government outside shopping malls and in a central park in Bangkok. The military imposes weekend roadblocks on highways leading into the city to keep out protestors.

The generals have made a series of missteps as they've tried to steer Thailand's economy, contain escalating violence in the Muslim-dominated south and squelch the opposition party. Their rule has shaken public confidence and ignited a frenzy among many superstitious Thais who are wearing amulets that are said to bring quick riches and good luck. In addition, considerable weight has been given to predictions by a panel of soothsayers that Thailand would have two years of unrest marked by political assassinations and an economic crisis in 2008.

As a result, tourism has suffered, said Richard Brouwer, chief operating officer of Diethelm Travel, which operates in nine Asian countries. Visitors from Japan, Singapore, Hong Kong, South Korea and China are going elsewhere and their changed travel habits have hurt retailing in Bangkok.Business leaders are hoping promised elections lead to economic recovery, but, like everything else since the coup, the date is uncertain.

Manarangsan said the sooner elections are held the sooner Thailand's economy can heal.

"There are unqualified people involved in Thailand's political circles and that has caused a retreat from democracy," he said. "If we can get a more appropriate government, things will calm down."

At Central Pattana, Thailand's largest retail property management and development company, which runs the CentralWorld shopping complex, among others, 70 percent discount promotions are geared to increase retail traffic by 20 percent, said Nattakit Tangpoonsinthana, executive vice president.

"We are making this significant investment to provide marketing support for our tenants and partners, and putting our plans and teams into action to woo visitors and boost consumer spending," he said in a statement.

The newly renovated CentralWorld initially was projected in April to have 150,000 daily visitors, which has been downsized to hit 120,000 by the end of this month when an adjacent convention center is opened.

Central Pattana said it plans to spend almost $1 million on third-quarter marketing to increase traffic.

To boost visits this year, an exhibit of the new Seven Wonders of the World is on display at CentralWorld. Tangpoonsinthana touted the exhibit as a photo opportunity for tourists in a recent press conference. A lucky draw for a Mazda and a trip for Thai residents only were also scheduled, he said.

At the nearby upscale Siam Paragon center, discounts were offered on purchases made with local credit cards. More than 50 mall retailers participated in a 70 percent discount. A photo exhibition of gardens of Tuscany is on display, and Thai arts and cultural performances have been staged at the mall every weekend. Kriengsak Tantiphipop, chief operating officer of Siam Paragon, predicted the discounts would increase the number of visitors by as much as 15 percent and generate almost $1 million in additional sales.

Charn Srivikorn, director of Gaysorn Holding Co., said it will take time for Thailand's economy to be revived. Meanwhile, he said in a statement that he is investing in Bangkok retail space in need of renovation and basing his optimism on future tourism. Srivikorn said he is investing almost $600,000 in a closed-circuit TV security system at the mall.Gaysorn Holding made a deal to buy the Amarin Plaza, a more than 300,000-square-foot retail center across from the Gaysorn shopping center.

It's too early to say whether a campaign to reach younger shoppers begun earlier this year at Gaysorn has been successful, Tanabe said. The center has launched a promotion with nearby five-star hotels to provide shopping companions for visitors.

"We can't force people to shop," she said. "So we're trying to stimulate the market through niche marketing. Our center offers luxury goods and they spend with us when they're in the mood and happy. People aren't happy now."

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