Thailand's retail industry saw its sales slip during the first half of this year because of a combination of negative effects, notably uncertainty leading up to the war in Iraq, followed by the impact of the Sars outbreak. In the first case, the result was less money being spent and in the second, there were fewer people spending.Retailers in prime locations in Bangkok saw their business drop sharply in April with some seeing sales fall as much as 50%, due to disappearance of foreign tourists. Among the victims were The Emporium, Siam Discovery, Gaysorn, Central Chidlom, Mahboonkrong Shopping Centre and World Trade Center.

The situation began improving in May after many retailers hunkered down and adjusted marketing strategies to focus on Thais who chose to stay home and suspend overseas trips.

The major retailers increased their promotional budgets by 8-10% in the first two weeks of April and added more activities at their stores. The offerings included discounts, contests, concerts and prize draws.

Given the added impetus in the face of unforeseen challenges, total sales in the department store and shopping mall market were predicted to grow by 10% to 367.26 billion baht in the first half, compared with 13-14% in the same period last year.

Piyawat Titasattaworakul, president of C.P. Seven Eleven Plc, said that although the war was over and the spread of Sars had slowed in May, the impact from the two factors would continue to be felt in the Thai economy for a while.

Tourism and related businesses, which affect retail sales, would not recover in short term while the threat of terrorist attacks would shake travellers' confidence, he said.

Chamnarn Maypreechakul, vice-president for marketing at The Mall Group, said that there were few positive factors to stimulate the shopping atmosphere in the first half of this year, unlike the World Cup football tournament in 2002.

However, several retail firms have expanded steadily with investments totalling nearly 17 billion baht injected into hypermarkets, department stores, supermarkets, convenience and specialty stores.

But the spending may not help generate additional revenue for the sector right away. Hypermarkets and cash-and-carry stores have moved to open smaller-size formats in Bangkok and upcountry as they face difficulties finding big land plots in good locations. For example, Tesco-Lotus will open two new stores in Phrae and Nong Khai, while Makro will debut in Chiang Rai and Nakhon Si Thammarat.

Big C Supercenter also plans to introduce its compact size outlet of about 6,000 square metres for the first time. As well, it opened its first upscale, trendy outlet on Ratchadamri Road in central Bangkok in May. CenCar Co, meanwhile, will open a Carrefour hypermarket in Hat Yai.

Only one major department store, Central Phuket Festival, is being constructed this year with a cost of 1.5 billion baht. Robinson Department Store and The Mall have spent their budgets on store renovation.

Central-Watson Co, the operator of Watsons health and personal-care stores has introduced a new price policy, offering discounts of about 20-50% on 1,000 selected items at all outlets nationwide.

It plans to open new seven stores across the country after closing six poor performance outlets at the skytrain stations in the first half of this year.

Similarly, Boots, its arch-rival, will move to open outlets in smaller sizes this year and expand its distribution channels, moving to open Boots corners at Robinson Ratchada and some branches of Central department stores, in order to attract new customers. At the same time, it would introduce more own-brand goods both imported and locally made.

It is expected that at least 500 convenience stores will be opened this year. About 300 will come from 7-Eleven, bringing its total to 2,300, and the emainder will belong to Family-Mart, V-Shop and others.

Central Pattana Plc, the operator of Central Plaza shopping complexes, shored up its financial strength by agreeing to sell an 8.2% stake in the company to the Thailand Equity Fund. The new institutional shareholder will spend one billon baht to help renovate the World Trade Center, which Central acquired earlier in the year from its struggling owners, and will rename Central World Plaza in July.

Market analysts expect turnover in the overall modern retail trade will rise to 1.5 trillion baht by the end of this year, about a 12% increase from 1.36 trillion baht last year.

Major retailers in each sector have been predicting growth rates ranging from 8% to 25% by the end of this year with corporate strategies being adjusted in the second half.

Chamnarn Maytapreechakul, senior vice-president for marketing at The Mall group, said sales in the first six months of this year were expected to grow by 8%, compared with the same period last year that its sales grew by 10%.

``Given unexpected external factors such as Sars, we are satisfied with such growth. Though there seems to be no special factor to stimulate purchasing power in the second half of this year, with our special marketing events, we expect our growth rate this year will continue at the same rate as in the first half,'' said Mr Chamnarn.

To deal with the impact of Sars and the loss of many tourist shoppers, The Mall turned the crisis into opportunity by tapping into the ``Unseen Thailand'' campaign, a government initiative to stimulate travelling in Thailand. As a result, the number of visitors at The Mall picked up in the middle of April.

``Sars had a serious impact to us only one week in April,'' said Mr Chamnarn. ``Though the situation has almost recovered now and we are gaining more revenue from local shoppers, it can offset only some of the declines in sales because local purchasing power is not as high as last year.''

Consequently, the company will stage more special events this year with each focusing on loyal customers as well as customer relationship marketing to keep its existing target groups.

``Introducing special events for each target group will make it easier for us to know their behaviour, augmented by our research, and design services and products to match customers' needs,'' said Mr Chamnarn.

By : SUKANYA JITPLEECHEEP
Source : The Bangkok Post