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Industry update: Commerce

SCBS event: Commerce Day

We hosted a Corporate Access Day for local institutional clients with the Thai Retailers Association and three of the sector's leading companies: Robinson Department Store PLC (ROBINS TB), Home Product Center PLC (HMPRO TB) and Berli Jucker PLC (BJC TB).

Thai Retailers Association

Presented by Dr. Chatrchai Tuongratanaphan, Director of Thai Retailers Association.

The NESBD forecasts 2014 Thai GDP growth of 2.6% (vs. 2.9% in 2013 and -0.6% in 1Q14) with growth of 2.2percent for the wholesale and retail segment (vs. 3.2% in 2013 and 0.2% in 1Q14). The association expects Thailand's retail and wholesale industry to grow 6-7% in 2014 (vs. 6.3% in 2013 and 2.5% in 1Q14).

The recent slump in consumption was caused, in the association's view, by slowed agricultural and labor segments. With the current government fiscal budget now being disbursed more rapidly, a greater chance that some of the stalled large infrastructure projects will actually get going plus the Bt92bn being paid to farmers, more money will be injected into the economy, brightening the picture for 2H14.

In 2011-13, Thailand's retail and wholesale industry grew 9.6% on average. Of this, convenience stores grew most (15.6%), followed by specialty stores (12.3%), department stores (8.8%), supermarkets (8.8%), and hypermarket and supercenter stores (7.7%).

The association's view of the long-term trend for the industry is summarized below:

- The convenience store segment will continue to exhibit the greatest growth, backed by Thai consumer preference for buying frequently and in small quantities and for shopping close to home in the heat. New arrivals on the convenience store scene will have to expand rapidly to achieve economies of scale.

- Growth will be seen in the health and beauty store format, backed by the greater health consciousness of Thai consumers, in line with those in developed countries.

- Products will increasingly lean towards convenience, time-saving and ease of use, especially for working families.

- Promotions, notably in-store, will be key to stimulate sales.

- Grocery purchases will increasingly take place on line. The market size for Thai online grocery purchases was Bt90bn in 2013 (3% of Thai retail sales), and is set to grow to Bt100bn or +20% p.a. from the low base within the next 3-5 years.

- Thai online shopping will increasingly shift to e-retailing (electronic retailing) in which services are provided by retailers themselves rather than an electronic marketplace (e-marketplace) where services are provided by intermediaries.

- Thai retailers will engage in greater expansion upcountry, with contribution from the provinces to rise to 72% in 2017 from 58% now.

- There will be new international specialty retailers.

- The home improvement segment will grow, backed by high purchasing power in the middle class and the growth of residential property in Bangkok and large provinces outside Bangkok.

- Communication will morph into multi-channel, connecting all devices, from the brick-and-mortar stores to websites, online catalogs, social media, smart mobiles and computers.




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