Thai retailers hit as spending tightens

Thai retailers hit as spending tightens

Rising household debts and falling agricultural product prices are pinching the purchasing power of lower to middle income consumers, while dying demand has sapped the sales of a wide range of local businesses from retail to property.

"We have seen a plunge in the purchasing power of grassroots people caused by the big slash in crop prices," Chatchai Tuangrattanapan, director of the Thai Retailers Association, said last week.

The association has revised down the growth forecast of modern retail sales from 12 per cent to only 8-10 per cent in line with the bearish signs of a spending slowdown, particularly in the grassroots segment, witnessed since May, he said.

Retailers selling non-durable goods, such as convenience stores, hypermarkets and supermarkets, were hurting the most.

The Thailand Development Research Institute (TDRI) recently revealed that those stores' sales would likely drop by 0.7 per cent this year, he said.

"We ourselves have projected this year's sales by modern retailers selling non-durable goods to increase by only 3-5 per cent," he said.

Just recently 7-Eleven cut its sales target to 5-10 per cent for this year from 15 per cent.

The TDRI estimates department store sales to increase 2.7 per cent this year and 2.7 per cent next year, while the association sees department store sales surging 5-8 per cent.

Kudatara Nagaviroj, director of corporate affairs at Big C Supercenter, said purchasing power this quarter will depend on several factors.

The key domestic factors are the impact of the first-car campaign on spending, consumer confidence index, stock market conditions, effect of the government's rice-pledging scheme and political stability.

Externally, the factors are the fiscal policies and economic situations of major markets such as the US, EU, Japan and China and demand for Thai merchandise from main trading partners.

"It is very important for the government to ensure that the economy is constantly stimulated through public and private investment and domestic consumption," he said.

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