Srettha Thavisin Dissects Behavioural Changes in Sharing Economy

The idea of a sharing economy has been around for quite some time, but it has never been more tangible than it is now.

Now we have as many co-working spaces as coffee shops. Now we have ride-hailing services at our fingertips. Now we can order food right from the palm of our hand and wait for it at home without moving an inch. These online activities are only getting bigger and bigger.

Want to game with some friends? Just pick up your smartphone and open the gaming app of your choice. It is as simple as that.

All of the above are part of a sharing economy. Its prominence is why real-estate giants are pouring billions into smaller firms. The answer is to stay relevant in the sharing economy.

This major investment move has led Sansiri’s figurehead Srettha Thavisin to discuss behavioural changes amongst modern-day consumers and why his company, as well as others, need to keep up with the pace.

How much has consumer behaviour changed?

Consumer behaviour changes all the time, but it used to do so at a much slower rate, becoming noticeable after an extended period of time, like every 10 years. Now it changes every 10 days.

However, the most distinct change we see today and in the foreseeable future is the prominence of a sharing economy.

But what is it exactly? Sharing in this case goes beyond the general meaning. It refers to our co-existence. In fact, the concept of sharing has existed for as long as humanity itself. Examples include playing chess, playing football and playing card games together. We still do all of this today. But because our environment has changed a lot, there are simply more to do. Do we have time to kick some ball or play card games at night when the traffic has already taken much of our time?

Sharing economy or sharing activities are the answer. For instance, in Fantasy League Football, I compete online, choosing my own team and players. I compete in the league with some friends overseas, with my son who is in the US. At the end of the week I get my score. Hey! I’m leading this time! It’s a form of the sharing economy.

You don’t have to have a car. You use Uber, Lyft (Uber’s competitor in the US), Green Tomato or Grab. This is yet another form of the sharing economy. I use this car in the morning. You may use it later. And someone else will definitely use it after you.

There are many forms of a sharing economy?

Of course, there are. The trend is also very distinct in real estate. When you’re travelling, you used to have to check in to a hotel, but now you have Airbnb: someone is renting their house out to you. Co-working spaces are also part of the sharing economy. You don’t need to rent an office on Sri Ayutthaya anymore. You don’t need specific addresses either. Whether you are a freelancer or a small start-up of three to four people, now you can work anywhere. These are examples of things that are taking place in the sharing economy, which are defined by how our behaviour has changed.

I believe that people are becoming less materialistic as sharing experiences and activities is becoming more and more important. For example, you’re travelling with some friends: if you guys stay at the Sheraton or the Westin, it will cost you 5,000 a night per room. You’ll need four rooms for eight people. The next morning you come down for breakfast with three hundred other people. But now you have an option of finding accommodation on Airbnb. Renting a three-bedroom apartment and dividing the cost is cheaper for all of you. It’s also more intimate. The next morning you don’t have to wash your face, comb your hair or brush your teeth before making your way into the kitchen to cook some eggs, fried or omelettes, together with your friends.

When we talk about sharing, in this very instance, we are not simply talking about sleeping in the same place or watching TV together. Instead we are talking about really living in the moment together. Doing so brings people happiness, albeit a different kind. Now as a business owner, you need to change the way you run your business or you won’t be able to keep up with the changes in consumer demand.

If people are becoming less materialistic, then what is it that they are holding on to?

Technology. Applications. iPhones. Samsung phones. Whatever supports technological growth.

Well, we need to take a step back to look at the typical wealthy individuals in every country. The economy is controlled by just a few families. The people from these families are high net-worth individuals. They are old families with well established businesses. They don’t need to think about how to make money because they are second, third or fourth generations already. Their parents have lots of money ready for them. When they find a beautiful H belt bucket from Hermes, they can just buy it without a thought. They are taught that this is good, that is beautiful, this is chic and that is fashionable. It’s a matter of status symbols. They were told that Patek Phillipe watches are coveted items. Whether it be a Rolex watch or a Lamborghini or Ferrari car, they simply just buy them as symbols of their status.

But wealth is distributed to a larger group of people, some of whom are new money. These are hardworking individuals who recently became rich from their very own efforts. They don’t care much for Chanel or Hermes products because they understand how hard money actually is to come by. They know that a bag doesn’t have to cost 300,000 baht. They understand that a 30,000-baht bag could do just as well if there is a meaningful story behind it to be discovered.

Does that mean brand name products are no longer relevant for the new generation?

The new generation don’t care much about names anymore; they prioritise the experience. They don’t have to take a trip to Paris or stay in a luxury hotel. They probably prefer trekking in Nepal. They prefer something new and exotic like visiting the Dead Sea, the Middle East or the Galapagos Islands, where they can appreciate unspoiled nature. The world has changed a lot. Communications are much improved, enabling us to travel with ease and discover new things. That’s why the emphasis has shifted to the experience a product or service provides.

People used to buy expensive tickets to go to concerts, where they could see famous artists, but now they’d rather go to musical festivals and discover new musical talents. There is plenty of food, plenty of interesting tunes at these festivals. They don’t have to try to find illegal resold tickets to see Madonna from the front row.

In the art world, much has changed as well. The wealthy elites used to collect works of art by celebrated artists, such as Chagall and Picasso. These works cost millions or billions a piece. How many people do you think could afford them? Well, the new generation won’t fall for such things. To them, buying an expensive work of art is useless because it could either get stolen or just sits and collects dust. Now, the new generation of high net-worth individuals prefer visiting art shows, where they will see works of new artists. At these shows, they learn who the artists are, why they create certain forms of art, their personal backgrounds … If there is an interesting story behind a piece, it will be bought.

Is a status symbol no longer necessary?

In the past, people used to have personal offices: two-by-two for a manager; a three-by-three for a senior manager. A VP used to need a personal secretary in front of his office. People don’t really pay much attention to things like this nowadays. As long as their work has value, they don’t care much about what the title is.

If you have a chance to visit the headquarters of Facebook, Google or Apple, you won’t know who’s the VP, the director or the president. That’s because everyone is treated equally. They wear shorts. They wear sweatpants. They wear Adidas shoes. They wear caps. They have a backpack. And they walk into the canteen for the free food.

Can materialism really go away?

More and more people are becoming less materialistic, but of course people of the older generations still exist. For instance, our condominiums are built with premium materials, such as Italian marble that costs 50,000 baht a square metre. That’s exorbitantly expensive in the mind of the new generation. They say things like ‘Srettha, you bought a piece of a mountain. You helped destroy it. That’s not acceptable. I don’t want anything to do with it.’ This mind-set of our consumer base (gesturing from the bottom to the top) has made my business more difficult. When you tell the rich from the previous generation that you won’t use Italian marble, they will tell you that you’re being ridiculous with how you’re trying to make profit. We have to communicate to them, let them know what the market is like these days. If a condominium unit is expensive, you need to give consumers something that is worth the price tag.

But for the new generation, they may not see the value in marble that costs 50,000 baht a square metre. They may say things like ‘Is it softer when you put your face against it? I don’t want marble, but I have a shelf that lets me grow vegetables at home, that’ll allow me to grab some salad leaves and eat them right away.’

In the case of hot water, which every household has it, the new trend says you need to take an ice-cold shower. We’re developing that: ice-cold shower. Is it cheap? No, not at all. It’ll probably costing more than the 50,000-baht marble. But it’s a unique experience.

What are the new generation looking for?

The new generation are not stingy. They just don’t want you to tell them what’s good or bad. They know best what’s important or meaningful or suitable for them.

‘Does your condo have electric car charging stations? I don’t want to use cars that use petrol. Does your condo have a car for hire with an app for booking it? I want to be able to just tap my key card on it and drive off. However many hours I have used it, just charge my credit card. I don’t want to own a car. I don’t want a burden. I don’t want to hire a driver. I don’t want to change the tyres. I don’t want to pay for insurance. Bikes, too! I don’t want to buy one. I don’t want to pump air into the tyre.’

Things have changed. People looking to buy a condo used to ask how many cars we could accommodate. They still do, but not nearly as much. Now they ask about how convenient the public transport system is.

If you’re not in the condo business, you probably won’t know that the most annoying problem of the juristic office right now is not having enough storage space. People don’t go to shopping malls anymore. They just order things online. And packages pile up at the juristic office. We have to build find a larger storage solution. We have to innovate the delivery system.

You need to keep up with the pace, with how the world has changed and is changing.

What do you have to do to keep up?

For us, we look at the information from thousands of our development projects and analyse how consumer behaviour has changed. We get up close and personal with customers. We collect data from them. We study their behaviour. In the case of inadequate storage, for example, our juristic offices have noticed that residents order stuff online a lot and our space is beginning to overflow with their packages. They told us about it. We then passed on their feedback to, the design team, who came up with bigger storage room designs.

You need to have a good system, a good team and, most importantly, you need to keep your employees up to date.

It’s not big over small but fast over slow. You need to be fast or your competitor will launch whatever it is before you. At the same time, you need to do it right, not just fast. You need to cross check with the various teams. You need to have an IT development team with real experts. The good thing about technology is how it can be improved, updated and fixed. The important thing is you need to reap benefits from the data you have.

Ask yourself: ‘How can I use the data I have to develop products and services that best meet my customers’ demand?’

What advice do you have for other operators about the changes in consumer behaviour?

Data is very important. If you don’t have a way to store it and understand it, that’s bad. Big companies don’t always have the right data, either. It’s how you use it.

And you can’t rely on your own experience. It could be beneficial when you have lots of information that helps you better decide on something, but your brain can’t really compete with AI. No matter how smart you are, how many years of experience you have, you can’t compete with AI when it comes to data processing. You simply have to know how to use data to your benefit.

I think smaller companies will find it increasingly more difficult unless they are developing something new. Old economy companies, especially small ones, will find it hard to survive because they are not a self-sustainable ecosystem. They don’t have enough data.

Are there ways out for them?

They may need to merge. There are ways in which they can survive. Bigger fish don’t always have everything. They may find these smaller companies as partners. Small companies can then survive because they have partners and can meet the demands of their partners and clients.

All of these behavioural changes are based on the sharing economy, whether consumer to consumer or business to business. In a mutually beneficial relationship, bigger fish don’t always have to eat smaller ones, but depend on one another to create a self-sustainable ecosystem. If you know how to partner up, you can both survive.

This article was firstly published in Krungthep Turakij newspaper on January 2nd, 2018.