Retail sales are expected to improve in the second half and show 6-7% full-year growth from 1 trillion baht last year as consumers regain confidence, says a trade group.
Discounts and promotions have popped up at many stores. Retailers are upbeat about full-year sales growth under policies put in place by the military regime. THANARAK KHUNTON
Busaba Chirathivat, president of the Thai Retailers Association (TRA), said retail business slowed in the first half on domestic uncertainty, resulting in a lacklustre environment for consumer spending.
First-half retail sales grew by 4.6%.
Unfavourable economic and political factors in the first few months led to a sales decline of 4.5% in durable goods, 3% in semi-durable goods and 5% in non-durable or consumable goods.
This reflected the reduced spending power of low-income consumers and farmers in the first half.
Family debt also reached a relatively high level.
TRA adviser Chatrchai Tuongratanaphan said retail growth in the first half came mostly from the convenience and specialty store sectors, which grew by 7% and 4.5% respectively in terms of store count.
The number of hypermarkets and supermarkets rose by 3.5%, while department stores saw 3% growth.
"Although domestic demand was adversely affected by significantly low consumer spending, retail businesses are expected to see 6-7% sales growth for the whole of 2014," Ms Busaba said.
In her view, retail growth will improve in the second half on the back of an injection of investment spending by the military regime to stimulate demand beginning in October.
Moreover, the TRA has proposed the junta consider several economic stimulus measures to propel the economy and retail business.
The ideas include lowering the cost of living for Thais in areas such as food, transport and fuel.
A trade promotion scheme on the table would open more border trade zones and improve logistics and transport efficiency by expanding and modernising the road network.
Furthermore, the TRA wants the junta to improve investor confidence and identify urgent measures to assist small and medium-sized enterprises (SMEs), especially those experiencing cash-flow problems and limited liquidity amid higher labour and energy costs.
Ms Busaba said the government should set up a dedicated ministry for SMEs and trade development.
This could be done by combining all the relevant agencies.
These agencies include the Office of Small and Medium Enterprises Promotion, the Small and Medium Enterprise Development Bank of Thailand, the Thai Credit Guarantee Corporation and the Commerce Ministry.
This would lead to a clearer picture of an organisation responsible for the systematic and effective development and support of SMEs, which account for 99% of the Thai industrial sector.