Thai Retailers Association predicts retail rebound

Thai Retailers Association predicts retail rebound

A year-end pickup in retail spending is on the cards after the subdued mourning period. (Photo by Wichan Charoenkiartpakun)
A year-end pickup in retail spending is on the cards after the subdued mourning period. (Photo by Wichan Charoenkiartpakun)

Thailand's retail industry is expected to continue expanding over the next several years, driven by a growing economy, infrastructure investment, stable politics and high farm prices, says the head of the Thai Retailers Association (TRA).

President Jariya Chirathivat said the retail industry is expected to grow 4.5% in 2019 and 3.8-4% in 2018 from an estimated 3.2-3.4% this year.

Thailand's retail and whole trade is estimated at 3.6 trillion baht by the National Economic and Social Development Board, with retail alone earlier estimated at 1.55 trillion, the TRA said.

"The long-lasting economic slowdown that started in 2014 has bottomed out and stabilised. The economy is now recovering slowly," Ms Jariya said. "If economic variables such as politics, infrastructure investment and farm prices remain positive for a period, the economy will affect every sector of the base, which should result in a clear recovery of spending power for the middle class from the second to the third quarter of 2019."

For the first nine months of 2017, the retail industry reported stable growth of 2.8-3% year-on-year, the TRA said. While growth was clear across all product categories, spending was clustered in Bangkok and other large cities.

Fast-growing categories included supermarkets and health and beauty, which is divided into beauty stores, drugstores, and health and personal care stores.

Department store products are still affected by a lukewarm atmosphere, while prices did not encourage tourist spending because of import duties on luxury brands, still high compared with those in other countries that reduce luxury taxes to entice tourists, the TRA said.

Home improvement products, home appliances and electronics also failed to register expected growth because of a slump in the construction and property sectors. As for the food category, stores targeting middle- and low-income consumers have faced growth problems because spending remains weak.

But measures to shift state funds to lower-income people are becoming more efficient and have stimulated spending, albeit slowly. The TRA said there were signs of a recovery in spending power in November after most Thais had slowed spending during the mourning period.

This was partly from improved sentiment and partly from government subsidy efforts, on top of the New Year shopping season. The result should be a fourth-quarter recovery in 2017 compared with the same quarter of 2016.

The government's Shop Chuay Chart tax break measures were enacted in November, but the project tends to assist consumers in middle and higher brackets who have started shopping in anticipation of receiving tax rebates.

The Commerce Ministry is running the Ruam Jai Perm Suk Shop Sanuk Lod Rub Pi Mai campaign from Dec 14 to Jan 4, involving cooperation from manufacturers, distributors, retailers and wholesalers nationwide to stimulate consumption and boost buying power in every sector.

"The TRA has the opinion that the economy in the last quarter of 2017 will become brighter, after a lack of spending sentiment for over a year, aided by the Pracha Rat welfare card, which has given cash to stimulate spending, and state projects like Shop Chuay Chart and Ruam Jai Perm Suk Shop Sanuk Lod Rub Pi Mai," Ms Jariya said.

"That is on top of private sector promotions and sales activities throughout the long holiday season until January next year, which will put more money in circulation, resulting in a retail index that improves on expectations at the start of the year."

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