Retailers tackle slow spending

New sales events, wider distribution planned

Manufacturers and retailers plan to launch offensive sales strategies in the second half of this year to pry open consumers' pockets after their spending was projected to be worse than earlier projections.

Shoppers flock to purchase low-priced consumer goods at the 17th Saha Group Fair, which runs until tomorrow at the Queen Sirikit National Convention Center. PATTANAPONG HIRUNARD

They blame the state's first-time car buyer policy as a major reason for the decline, as it leaves people with little to spend.

As well, they said shoppers have changed their behaviour, tending now to buy goods in smaller portions and closer to home to avoid heavy traffic around shopping complexes.

These conditions have led to declining retail sales in the first half, and many operators are expected to miss their full-year sales projections.

To cope with these negative factors, manufacturers and retailers must reduce costs, improve stock inventory management and arrange more sales events to near customers' workplace, suggests a Saha Group executive.

Boonchai Chokwatana, chairman of Saha Pathanapibul Plc, the distributor of Mama instant noodles, said first-half sales are expected to grow by only 8% compared with more than 10% it saw in recent years.

Even Mama instant noodles, a low-cost dish, showed only 6% growth, the same level the firm saw in crisis-hit 1997.

"Of the 10 stores we surveyed, nine said their sales in the first half were sluggish," he said.

But Mr Boonchai said Saha Pathanapibul will not cut prices to boost second-half sales, as the tactic does not work.

Signs of slow consumption have been seen since March, and competition among retailers will intensify over the rest of the year.

To improve sales, Mr Boonchai said Saha will expand its product distribution network, a strategy he believes could boost sales revenue by 10% to 29 billion baht this year, still short of the previous projection of 30 billion baht.

The Mall Group will use several strategies to make consumers spend more in the second half in its bid for full-year revenue of 50 billion baht.

"Organising marketing events and promotion campaigns, as well as exploring new markets and customer groups while managing customer relationships are our tasks," said executive vice-president Chamnarn Maytaprechakul.

"About 30 marketing events will be held in the second half of this year."

Unlike most retailers, The Mall found that spending at its branches did not decline much.

First-half sales at all branches grew by only 4%, a slight year-on-year decline.

"But it's true shoppers are spending more cautiously and need more value products and services," he said.

He added that with the first-time car buyer scheme worsening traffic, more consumers are choosing to shop at community malls close to home.

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Writer: Pitsinee Jitpleecheep
Position: Business Reporter