That represents an increase from last year of 17.65 per cent in number of stores and 10 per cent in turnover despite dismal domestic consumption figures.

As of the end of last year, the country had 6,800 convenience stores operated by six separate companies, the biggest being CP Seven Eleven and Tesco Lotus Express.

"It is a market with few players, but the competition is fierce, because all want to control a greater market share," the research house said.

It said competition was driving sales increases by 10 per cent, while growth across the entire retail sector was expected to fall below 10 per cent on the assumption that gross domestic product would expand only 3.5-4.5 per cent this year.

Convenience stores are the most prosperous segment, KResearch said. Larger stores have difficulty expanding as a result of state controls, city planning laws and other regulations.

Despite competition, the segment boasts high growth potential. In Japan and Taiwan, there is one convenience store for every 2,000-3,000 people against 9,000 in Thailand. KResearch said this revealed lots of room for growth.

In addition, people in this country are familiar with purchasing at convenience stores, as evidenced by continual increases in transactions from 2003-06.

KResearch believes chain-store transactions this year will total at least Bt90 billion, up 10 per cent from last year.

Government controls on mega-stores will drive large retail companies to enter the convenience-store segment.

However, this will pose risks to the sector if existing operators cannot improve services to maintain market share.

Other risks include lower consumer confidence reducing purchasing power and therefore sales revenues.

KResearch foresees more convenience stores in prime locations. Operators will try to distinguish themselves through products and services.

They are expected to work with suppliers to offer special promotions. Personnel training will be improved, and owners will pay more attention to distribution, in order to reduce operating costs and ensure timely delivery, KResearch said.