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Baht/$ 33.51/56
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14,350
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Despite higher oil prices and inflation, retail businesses in the first half performed better than in 2007. This was largely because of the election in December 2007, which lifted consumer confidence in the first quarter. Fashion, food, furniture and electrical appliance sellers reported better sales at major retail outlets as well. Likit Fahpyochon, executive vice-president for business development at Central Retail Corporation (CRC) and a former president of the Thai Retailers Association, said retail sales increased month-by-month, leading to average growth of 7-10% for the retail sector in the first three months. Sales from department stores rose by 7% and discount stores 10%.
However, the picture changed when fuel prices skyrocketed in April and inflation peaked at 7.6% in May. People now have less money, and are more cautious about spending. The strong baht and political uncertainties have also dragged down confidence and some retailers saw consumer purchasing power fall. This led to slower business growth in April and May of only 3-7%.
''Retailers don't see any benefit from this government. We have to help ourselves,'' said an executive of one giant retail chain.
Since it took office in February, the Samak-led government has been busy tackling the rice and sugar problems as well as the stronger oil prices.
Retailers have slashed advertising and promotional budgets, shifting to marketing events and focusing on cost-management efficiency and energy saving. Some stores have offered discounts, contests, concerts and draws.
Other retailers see the downturn as an opportunity to speed up store expansion. The new government did not follow up on the proposed retail law after the draft was rejected by the previous cabinet.
Central Pattana Plc and foreign retail chains are spending heavily on expansion.
CPN, the SET-listed property arm of Central Group, is pouring about nine billion baht into expanding new retail complexes and renovating existing sites this year. It includes the new five-billion baht Central Plaza mall in Chiang Mai on the northern city's superhighway next to Doi Saket Road. Construction will start in the second half of this year on 70 rai of land. It would have gross space of 250,000 square metres and a net sales area of 100,000 sq m.
''We believe that the Thai economy will grow in the long term. Thai consumers will learn how to adjust to cope with [inflation]. The situation in the first five months of this year has been better than during the Tom Yum Kung crisis in 1997,'' said CPN president Kobchai Chirathivat.
Big C Supercenter Plc and its rival, Ek-Chai Distribution System Co Ltd, the operator of Tesco Lotus, plan to open about 12 outlets each this year.
Sakesan Trai-Ukos, the business development manager of CenCar Co, the operator of the Carrefour hypermarket chain, said his company would open five outlets this year. Two have been already opened including the new mini-hypermarket in Suan Luang. The mini-hypermarket has retail space of 2,000 sq m, aimed at serving customers within a 5-15 kilometre radius. The company will open two mini-hypermarket outlets in the second half of this year.
Tesco Lotus has diversified beyond its hypermarkets by introducing its first community mall at the Nichada Thani housing estate on Samakki Road in Nonthaburi. This is to respond to changing urban economic demographics, consumers' lifestyles and high petrol prices. The other two formats are The P
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