Unrest could halve first-quarter growth, retailers say

Economy January 13, 2014 00:00

By Kwanchai Rungfapaisarn


4,372 Viewed

THE retail industry looks for business to drift down to 4-5 per cent this quarter under the worst-case scenario of political unrest, according to the Thai Retailers Association.

First-quarter growth had been running at 8-10 per cent in the past 10 years.

The mass supporters of the anti-government People’s Democratic Reform Committee, led by Suthep Thaugsuban, will today launch their Bangkok Shutdown campaign. Huge demonstrations will be held to seal off seven major locations, especially the intersections of the inner sites of the capital, comprising Lat Phrao, Chaeng Wattana, Victory Monument, Pathum Wan, Ratchaprasong, Lumpini Park and Asok.

Chatrchai Tuongratanaphan, a director of the TRA, said yesterday that 65-70 per cent of retail sales come from non-durable products mainly at hypermarkets, supermarkets and convenience stores.

Those non-durable goods would not be hit hard by the Bangkok Shutdown as people are still buying essential for their daily lives. However, some hard-line or durable products, such as fashion apparel, would be hurt. The retail industry was expected to expand by only 6-7.5 per cent last year. The industry had managed growth of 8-12 per cent in difficult years such as at the height of the global financial crisis in 2008 and the massive flood in 2011.

Retail sales are anticipated to rise by a modest 7-8 per cent this year amid huge concern over the sluggish increase in consumer purchasing power, especially among lower-income earners.

Busaba Chirathivat, president of the Thai Retailers Association, said the prolonged anti-government demonstration had resulted in the slowdown of the retail industry last year by discouraging consumer spending and driving tourists away from the Kingdom.

"The political uncertainty in Thailand has a strong psychological impact on shoppers. The retail industry languished, especially in the fourth quarter of last year, which was the peak period, and many modern retailers missed their sales target for the period," she said.

However, many retailers with stores in the suburbs and upcountry enjoyed healthy sales amid the mass protests in Bangkok.

"We, the TRA, would like to ask the government and protestors, led by the People’s Democratic Reform Committee, to discuss and find an agreement and solution together by realising the country’s peaceful benefit as a priority. As the private sector, we would like to see politicians, who are in charge in managing the country, keep the national and personal benefit in mind, and bring peace back to the country," she said.

Buppa Lapawattanaphun, a strategic communications lecturer at the University of the Thai Chamber of Commerce, said that from the business point of view, there are players who stand to gain and lose from today’s Bangkok Shutdown.

The losers, which have been taking the brunt of the biggest demonstration ever in the capital, are logistics service providers, especially those with medium-sized and big vehicles, as many main roads and junctions in Bangkok have been blocked.

Other losers are tourism operators. Many countries have issued warnings to their citizens who prepared trips to Bangkok. Many carriers, including Singapore Airlines, have cancelled flights to Bangkok during the demonstration period.

The winners include footwear manufacturers, cellular network operators, convenience stores and quick-service restaurants.

Many people will participate in the anti-government marches during the Bangkok Shutdown campaign, and they will need to use footwear, such as canvas and health shoes, as a major accessory in walking from one rally site to another.

Social networks, such as Facebook and Line, would be a key online activity preferred by demonstrators to share pictures and information gathered from the Bangkok Shutdown events. They will use the service enhanced by small retailers, such as convenience stores, in reaching necessary goods. Quick-service restaurants are also expected to benefit from the Bangkok Shutdown rallies as they can deliver food to people who decide not to come out but watch the situation at home.

Businesses should adjust their communication and business strategy to deal with the situation and advise customers of changes such as new office hours, alternative communications channels, new ways of ordering products and delivery services. They also should provide online communications with individual customers as well as use small vehicles, such as motorcycles, and post offices, to deliver products to their customers.