Traditional Thai Retailers Face Imminent Shutdown Unless More Aid Is Given

A NUMBER of traditional retail stores in Thailand are staring at closure in the face this year as they feel the heat of intensifying competition from larger foreign players.

A recent study by the Sripatum University’s International Retail and Franchise Business R&D Centre found 40% of a sample size of 400 out of over 50,000 small retailers were prepared to shut down their stores under growing pressure from larger multinational companies and 24-hour convenience stores.

According to the research centre, the shops’ combined annual sales value totalled around 100 billion baht (US$2.89 billion). The survey showed their revenues declined to 700,000 baht per store per annum from the previous 1.4 million baht as a result of losing their customers to more modern stores.

It found customers at modern convenience outlets and large-format foreign retail set-ups spending about 150-200 baht each per visit, while purchases at smaller retail shops averaged a mere 50 baht per customer.

Peerapong Kittiveshpokawat, director of the centre, foresees modern retailers accounting for 80% of the retail industry in the next three to five years.

These large outlets, he said, would probably force traditional retail stores within 1km radius out of business.

While the Thai government has been setting regulations to curb the expansion of mega-retail outlets to help traditional businesses, Peerapong felt that more could be done.
Source:RetailAsia, February 2007