Modern trade sentiment at 3-year low

Modern trade sentiment at 3-year low

A lone customer makes purchases at a Lotus hypermarket in Bangkok during the Covid-19 pandemic.  Varuth Hirunyatheb
A lone customer makes purchases at a Lotus hypermarket in Bangkok during the Covid-19 pandemic.  Varuth Hirunyatheb

Modern trade sentiment fell to a three-year low due to the prolonged Covid-19 outbreaks, while operators were increasingly concerned about their liquidity and supply chains, according to a quarterly survey.

The University of the Thai Chamber of Commerce (UTCC) on Monday reported that the modern trade sentiment index stood at 45.3 points (out of 100) in the second quarter, down from 46.3 points in the first quarter of 2021.

The fall came after 47.3 points in last year's fourth quarter, 47.4 points in last year's third quarter, 46.4 in last year's second quarter and 47.2 points in last year's first quarter.

This is the lowest level that has been recorded ever since the index began in the third quarter of 2018.

Thanavath Phonvichai, president of UTCC, said the bearish sentiment was attributed mainly to rising household debt, and their sales and profit decline after the country has been ravaged by the Covid-19 outbreaks.

"The overall retail business is one of the sectors harshly affected by the outbreaks," said Mr Thanavath.

"The latest lockdown and curfew measures covering 29 maximum-risk or dark red provinces which account for up to 78% of GDP are making the situation worse for retailers, with a loss estimated at about 400-500 billion baht a month. From the beginning of this year, the overall loss is likely to reach as much as 800 billion baht," he said.

Mr Thanavath said the prospects in the third quarter are expected to further drop now that almost all operators are not confident about the government's ability to contain the Covid-19 outbreak and a delay in vaccine distribution.

According to Mr Thanavath, escalating anti-government protests will also affect consumer confidence and these will weaken the government's efficiency in tackling Covid-19 infections.

"From now on, we have to closely monitor the situation in the country," he said. "But we still hope that the economy could pick up in the fourth quarter if control of infections improves in the third quarter."

Chalida Jansiripong, director of Corporate Communications of Central Group, said the government's recent announcement to add 16 provinces to the dark red zones has taken a heavy toll on modern trade, causing around 270 billion baht worth of damage to the industry.

Last year, the modern trade market was worth about 3.8 trillion baht, down by 13.63% from 4.4 trillion baht in 2019.

According to Ms Chalida, rising infections among workers in factories and the logistics sector have started affecting the overall food supply chains.

If the retail business is yet to recover, the impact will definitely fall on small and medium enterprises because around 1.2 million are related to the retail industry, she said.

Ms Chalida said if the government remains slow in action to provide financial support or soft loans to small-scale business operators, as many as 100,000 of them are likely to close their businesses.

Surong Bulkul, vice-chairman of the Thai Chamber of Commerce, said the impact on business operators in retail and modern trade is widespread and affects the overall supply chains.

The government should support the co-payment scheme for the modern trade and small retailers as well in order maintain their employees, he proposed.

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