Kantar: Spending will recover
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Kantar: Spending will recover

A shopper uses an escalator at a supermarket in Bangkok. Analysts expect Thailand’s consumer spending will start improving markedly in the second half of this year after months of stagnation. (Photo by Patipat Janthong)
A shopper uses an escalator at a supermarket in Bangkok. Analysts expect Thailand’s consumer spending will start improving markedly in the second half of this year after months of stagnation. (Photo by Patipat Janthong)

Consumer spending began showing positive signs of recovery in February, and a sharp rebound is expected in the second half, says London-based research house Kantar Worldpanel Thailand.

The optimistic view contrasts with a survey by the University of the Thai Chamber of Commerce that found consumer confidence fell for a third straight month in March, hitting a nine-month low.

Kantar said a slowdown in consumer spending had been seen in many Asian countries since last year, particularly China, the Philippines, Vietnam, Malaysia and South Korea.

Higher product prices meant the consumer goods sector had single-digit growth across the region. The Thai sector rose by 3% to 500 billion baht in 2014.

Project director Duangrutai Lapnarongchai said spending by urban residents rose thanks to annual bonuses and festive purchasing sentiment, but rural residents suffered from declining agricultural product prices and a 6.1% export slump in February.

The sluggish economy has an impact on consumer behaviour, she said. They shop less at hypermarkets and move to convenience stores, with visitor frequency at leading hypermarket chains falling by 12%.

They also cut back on non-essential items such as ready-to-drink products, mouthwash, biscuits, facial cleanser, ice cream, snacks and fruit juices.

Consumers were keen to buy bigger products with higher value.

Luxury categories such as fashion and expensive restaurants suffered falling sales as consumers became more cautious about spending.

Ms Duangrutai said despite the Bank of Thailand's economic growth forecast remaining low at 3.5% this year, consumers remained positive about the future.

With better economic prospects, the government is trying to drive the economy, but rising household debt remains a long-term challenge.

However, household debt is expected to ease by year-end, when many people who used the first-time car buyer scheme will finish paying instalments.

Teeradet Dumrongbhalasirt, head of Connect Media at Dunhumby (Thailand), said huge retail growth was taking place worldwide including Thailand.

Online grocery categories such as frozen meat, baby foods and canned foods are still enjoying significant growth globally, with average annual growth of 21%.

In Thailand, baked goods and stationery products saw huge growth of 416% and 619%, respectively, as the public became more aware and knowledgeable about online sales.

"A multichannel strategy is vital for brands," Mr Teeradet added.

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