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Big retailers expect solid final quarter


SALES at the nation’s big retailers posted growth of between 2.8 and 3 per cent for the first nine months of |the year, said the Thai Retail Association (TRA), boosting optimism for continued growth to close out the final quarter.

There are more signs of recovery in spending power, the TRA said, noting that there is talk about the government and the Bank of Thailand introducing further stimulatory measures to boost employment and the broader economy.
TRA president Jariya Chirathivat said that since 2013, retail growth has fallen off. The main factor has been the restructuring of the macro-economy, for which the results will not be felt for many years. Base consumer spending power has still not improved and household debt is still high. Sales of fast-moving consumer goods (FMCG) have also dropped, the association’s figures show.
 The TRA represents the big department stores and supermarkets along with chain stores – collectively dubbed modern retailers – that account for about 30 per cent of the country’s retail sales.
Among households, middle level consumers still have large credit card debts, and private investment has still not recovered. Meanwhile, farm prices have not been doing as well as expected, the association said.
While growth in retail sales for the fist nine months of 2017 was clear across all product categories, spending was clustered in Bangkok and other large cities. Fast growing categories included supermarkets aimed at middle-high level consumers, and the health and beauty segment, which is split into beauty stores, pharmacies and health and personal goods shops.
Department store products remained impacted by a shopping atmosphere which is still not normal, while prices do not encourage tourist spending because of import duties on luxury brands. These are still high compared to other countries that have a policy of reducing luxury taxes to entice tourists to their shopping destinations.
The home improvement and home appliance and electronics categories did not register the expected growth because of a slump in the construction and real estate sectors.
As for the food category (hypermarkets and convenience stores) targeting middle-low consumers, this has faced growth problems as spending in this group is still weak. Measures to get spending budgets to the grassroots is starting to become more efficient and have started to stimulate spending, but slowly.
After the great national loss of 2016, most Thais slowed down spending until last month, when there were signs of a recovery in spending power. This was partly from improved sentiment and partly from government efforts to stimulate the base with budgets, as well as the New Year spending season. The result should be a fourth quarter recovery in 2017 compared to the same quarter of 2016.
The government’s “Shop Chuay Chart” measures will be implemented in November this year, but the project tends to assist consumers in the middle to high bracket who have started shopping in anticipation of receiving tax rebates.
The Ministry of Commerce is launching a campaign called “Ruam Jai Perm Suk Shop Sanuk Lod Rub Pi Mai” from December 14 to January 4, involving cooperation from manufacturers, distributors, retailers and wholesalers nationwide to stimulate consumption and affect buying power in every sector.
The TRA believes the economy in the last quarter of 2017 will become brighter, whether from a lack of spending sentiment for over a year, the Pracha Rat Welfare Card that has given cash to the grassroots to stimulate spending or the state projects “Shop Chuay Chart” and “Ruam Jai Perm Suk Shop Sanuk Lod Rub Pi Mai”.
This is on top of private sector promotions and sales activities throughout the long holiday until January, which will increase money in circulation and result in a retail index that is improved on expectations at the start of the year. Growth is forecast at about 3.2 to 3.4 per cent (on projected national GDP growth for 2017 of 3.9 per cent).
Gross domestic product grew 4.3 per cent in the third quarter compared to the same period last year, with projections that GDP growth for the whole year will be as high as 3.9 per cent. 
The TRA projects 2018 growth in the retail index should be in the range of 3.8 to 4 per cent.
 

Published : December 11, 2017

By : THE NATION

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