Connect with us
The clever new way to send money abroad

Economics

The next chapter of modern grocery store

During 2006 to 2013, this market used to grow by 8-9% per annum However, In the last 3-4 years, the growth decelerated to 5% per annum

Published

on

Modern grocery retailers in Thailand are still growing but the sign of an impending slowdown is becoming more evident through increased competition. This trend can be observed in the overall picture of the modern grocery retailer market.

The proportion of modern grocery to total grocery market in Thailand is only 46%. Meanwhile, the value in Japan, South Korea, and Singapore is over 70-80%. This gap shows that there are still opportunities for modern grocery retailers in Thailand to grow, especially through opening new stores in the newly developed area of the country.

Highlight

  • Modern grocery retailing has been a star sector due to its continued growth in market value and the number of stores. In the previous 2-3 years, however, the trend of store closure in modern grocery retailing internationally marked a stark contrast to the previous fortune.
  • This raised several important questions: Are modern grocery retailers in Thailand likely to follow suit? Are there opportunities for expansion in the number of stores, and how do retailers handle the competition in the market?
  • EIC views that modern grocery retailers in Thailand can still achieve considerable growth. Nonetheless, they must face intense competition which is likely to result in a careful selection of store location.
  • Retailers also need to develop their storefronts to accommodate the need of local consumers and introduce new services to create customer engagement. Additionally, the development of online retail channel alongside physical store (Omni-channel) is an important strategy for modern grocery retailers.
  • To remain competitive, modern grocery retailers must adapt to innovative technologies to differentiate and create capabilities and competitiveness for the future.

 

During 2006 to 2013, this market used to grow by 8-9% per annum However, In the last 3-4 years, the growth decelerated to 5% per annum. This is attributed to the recent economic slowdown as well as the increasing in competition that can be observed from the reduced figures in the same store sales growth (SSSG) statistics.

These statistics reveal that growth in the past occurred through the increase in the number of stores. In addition, the arrival of e-commerce and the introduction of new business models contributed to an increasing competitiveness.

EIC analysis shows that modern grocery retailer market in Thailand can still grow but increasing competition means that the level of growth will not reach the previous height, with 4% becoming the new normal over the next 3 years. This is because retailers will become more cautious in the selection of a store location and the changing business models.

Despite the sign of slowing growth in the modern grocery market, penetration of the modern grocery in Thailand remains low compared with the developed economies in Asia.

The proportion of modern grocery to total grocery market in Thailand is only 46%. Meanwhile, the value in Japan, South Korea, and Singapore is over 70-80%. This gap shows that there are still opportunities for modern grocery retailers in Thailand to grow, especially through opening new stores in the newly developed area of the country.

Based on World Bank’s information, the urbanisation rate in Thailand has further room to grow with the current rate of 50% in contrast to 80-90% in South Korea and Japan.

Furthermore, data on modern grocery penetration highlights that the number of stores in Thailand can still grow especially in the form of convenience store and supermarket.

Currently, there are 200 modern grocery stores to 1 million people, 3-4 times lower than Japan and South Korea. In any case, major players in the Thai market already have a plan to increase the number of stores focusing on a small format.

It is expected there will be an increase of convenient stores and supermarkets by 10% and 7% respectively in 2018. In contrast, the growth in the number of hypermarkets is likely to slow down because of several factors including changes in consumer behaviour, restrictions due to town and country planning law, and the difficulty in finding larger space for new stores. The smaller store format also means faster expansion. Consequently, smaller store format is more appropriate for the modern consumers who have a smaller family and crave convenience.

There are rooms for modern grocery retailers in Thailand to expand but…

Author: Puripat Sophonkeereerat

Source link

Click to comment

Leave a Reply

Economics

Thailand’s economic growth expected to return to 2019 levels in mid-2023

Although the economy would recover next year, the recovery is still substantially below potential level resulting in a large output loss and could affect Thailand’s potential economic growth in the future with the economy expected to return to 2019 levels in mid-2023.

Published

on

The Siam Commercial Bank (SCB), one of Thailand’s largest commercial banks, said in its latest economic outlook report that the country’s economy may wait until the second semester of 2023 to return to 2019 growth levels.

(more…)
Continue Reading

Economics

World Bank cuts Thailand’s GDP growth outlook to 1% in 2021

The World Bank has said that Thailand’s economy is forecast to grow 1% this year, down from the 2.2% projected in July, hit by a spike in COVID-19 cases and a delayed reopening to visitors.

Published

on

The World Bank has said that Thailand’s economy is forecast to grow 1% this year, down from the 2.2% projected in July, hit by a spike in COVID-19 cases and a delayed reopening to visitors.

(more…)
Continue Reading

Most Read

Recent