More than 40 per cent of traditional retail shops in Bangkok will shut down this year due to higher competition, according to Sripatum University's International Retail and Franchise Business R&D Centre.

The centre said the shops' combined sales value was about Bt100 billion.

Peerapong Kittiveshpokawat, director of the centre, yesterday said a survey of 400 samples from over 50,000 small retailers had shown that over 40 per cent were prepared to shut their businesses.

"Their business has been largely affected by multinational companies' expansion, as well as 24-hour convenience stores," he said.

Meanwhile, the survey showed these retailers' sales revenue has tended to decline from Bt1.4 million to Bt700,000 per annum, as consumers prefer to shop more at modern trade venues. The modern trade outlets' sales value per visitor is about Bt150-Bt200, against Bt50 at small retailers.

"In the next three to five years, modern trade outlets' market share will be 80 per cent while small retailers' will have only 20 per cent," Peerapong said.

He said a huge retail outlet would force all small retailers operating within a one-kilometre radius to close their businesses, including those operating clothes, photo and hairdressing outlets. Worse, in the provinces, the opening of a modern trade outlet would have a more severe impact on small retailers.

He said that if the situation were allowed to persist, the Thai retail business would eventually be dominated by foreign retailers.

"The government has been trying to help the local retailers by setting regulations to control the expansion of mega-retail outlets, which has been talked about since 2000, but that's not the key solution," Peerapong said.

Instead, the government should think of setting national retail strategies to increase the competitiveness of the local stores against the giant outlets. It should also set up a committee especially to take care of local retailers.

"National retail strategies are necessary, particularly on the wholesale network as well as the supply of low-interest funds, with appropriate loans to small retailers who want to upgrade their shops and services. Universities should also be encouraged to provide retail-business administration courses. Lastly, the government should help build a good image for the traditional retail shops as they don't have one now," he said.

Meanwhile, the small retailers themselves have to adjust. Urgent tasks include improving the layout of their shops and better product displays.

They should also change their shops from the current "pick goods for customers" operations into self-service shops like many modern trade operators, he said.

They should also encourage regular local custom up to 600 people per shop. Specific clusters are also needed, such as one containing specific suppliers, wholesalers and retailers.

Nitida Asawanipont

The Nation