Stores eye alternatives to zero-rate plans

Stores eye alternatives to zero-rate plans

People walk past an advertising board promoting zero-rate deals for credit cards. Thanarak Khunton
People walk past an advertising board promoting zero-rate deals for credit cards. Thanarak Khunton

Modern retailers expect their sales to be slightly affected if zero-rate marketing campaigns are banned.

Most say they have already prepared alternative marketing plans.

Narathip Wirunechatapant, chief executive of Jaymart Mobile, the handset distribution arm of SET-listed Jay Mart Plc, said 40-50% of consumers buy mobile phones via zero-rate schemes, with 20-30% capable of paying in cash even without such schemes.

"About 20% of buyers may delay their purchase if the campaigns are scrapped," he said. "However, we believe that with our reserve promotion plans, our sales will be similar because this is not our largest customer segment."

Mounting concerns about swelling household debt prompted the Bank of Thailand to call a joint meeting with financial institutions on Monday to discuss their zero-interest instalment campaigns, especially zero rates for credit cards targeted at vulnerable groups, such as first-time workers.

The central bank has blamed zero-rate marketing campaigns and online shopping for the ballooning debt, saying these could affect consumers' debt-servicing ability.

Mr Narathip said such campaigns have both a positive and negative impact on the mobile phone industry. Without them, mobile phone distributors would earn a better profit and not spend as much time managing their operating costs.

A person walks pass an advertisement board promoting zero-interest rate for monthly instalment. Pattarachai Preechapanich

"Banning these marketing campaigns is not the right way to tackle household debt," he said. "If they are banned, another payment scheme will pop up."

Jay Mart has measures to maintain sales growth, such as a promotional campaign to draw consumers with high spending power to buy mobile phones using cash. It will also allow customers to buy phones via hire purchase through a subsidiary company, Mr Narathip said.

Kittipong Kanokvilairat, chief executive of SET-listed Singer Thailand Plc, the country's largest hire-purchase firm, said the marketing game is likely to shift to pricing competition if the zero-rate campaigns are scrapped. The trend would benefit Singer's hire purchase in which products come with an interest rate.

Voralak Tulaphorn, chief marketing officer of The Mall Group, said it's too early to comment on the impact of banning zero-rate campaigns, given that the policy is still unclear.

Up to 7% of The Mall's customers regularly buy products via zero-rate marketing programmes. The top two categories by popularity are mobile phones and appliances, representing 50% of total products sold via such schemes.

Ms Voralak said the campaigns are a good sales model for both buyers and retailers: they help stimulate spending, and with fixed monthly payments the customers can manage their monthly budget and become more financially disciplined.

"I don't think that the abolition of the campaigns will help solve household debt," she said. "Regardless of the zero-rate campaign, people who intend to shop are still willing to shop. And we are ready to offer them alternative promotions."

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