Retailing has significantly played an of import function in Thailand economic system since 1981. Retail concern both traditional and modern retailing are linkages between manufacturers and consumers. Most of merchandises can be distributed from manufacturers to consumer through many types of retail mercantile establishment.
In the last 30 old ages, agricultural sector had played major function in economic development as major export merchandises and domestic merchandises. Agriculture sector contributed approximately 20 % of Thai Gross Domestic Product ( GDP ) in 1981, the 2nd largest sector followed by sweeping and retail trade with 18 % of GDP. At present, while agribusiness had been diminishing its function in GDP due to economic structural changing, sweeping and retail trade has been taking over agribusiness sector. In 2008, non agricultural sector accounted 91 % of GDP, while agribusiness sector accounted merely 9 % from entire value 9,105 billion ticals ( market value ) . In this sector, fabrication and sweeping and retail trade were major sectors with 40 % and 14 % severally.
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As increasing its function in Thai economic, sweeping and retail trade sector has stepped up their value from 800 billion ticals in 1999 to accomplish 1,100 billion ticals in 2009 with about 400,000 shops both sweeping and retail ( Department of Internal Trade, Ministry of Commerce, 2008 ) . In Asia, Thailand is one of the fastest turning nutrient retailing. ( Shannon, 2009 ) . Figure 4.1 and table 4.1. show historical information of GDP part.
Figure 4.1: Contribution of major sector in Gross Domestic Merchandises
Table 4.1: Contribution of major sectors in Gross Domestic Product
GDP 1 ( billion tical )
Contribution to GDP
Sweeping and retail trade
Transport & A ; communicating
Sweeping and retail trade
Transport & A ; communicating
Sweeping and retail trade
Transport & A ; communicating
Note: 1 GDP at changeless monetary value ( twelvemonth 1988 )
Beginning: Office of the National and Economic Development Board, Thailand
4.2 Type of Retail mercantile establishment
Retail mercantile establishment can be classified in assorted facets. Food and Non Food mercantile establishments are classified base on sort of merchandise sold. Outlet format and managerial manner are besides used to sort as Traditional and Modern mercantile establishment. Type of retail mercantile establishments can be classified as figure 4.2
Ma and Pop Shop
( Tesco Lotus, Big C )
( Tops, Villa )
Cash and Carry
( Makro )
( Power Buy, HomePro )
( Central, The Mall )
( 7-Eleven, 108shop )
( Boots, Watson )
Booth, Kiosk, Stall
Remark: name in cover is illustration of shop.
Beginning: Adapt from Kitiveshpokawat, P. ( 2008 ) , Wongsakul, T. ( 2004 ) and Chirathiwat, S. ( 1998 )
Figure 4.2: Structure of Thailand Retailing
Retail sector of Thailand can be classified into 2 major classs ; Traditional trade and Modern Trade.
4.2.1. Traditional trade comprises of several characteristics and has been long with Thai society. As showed in figure 4.2, it can be classified in to 4 major formats.
18.104.22.168 Mom and Pop store are traditional characteristics of Thai food market shop. They operated at lower operational costs, no professional directors are hired. Most lack entree to recognition from fiscal establishments. ( Wiboonpongs et al, 2004 )
22.214.171.124 Fresh Market is by and large an unfastened nutrient market. Some of the common names include “ Cultural Markets ” and “ traditional markets ” . Fresh markets chiefly sell fresh veggie, fruit, flower meat and other food market merchandises.
126.96.36.199 Periodic Market or flea market has many retail sellers offering a scope of merchandises at price reduction monetary values in apparent milieus. It is rooted in the centuries-old tradition of street selling-shoppers touch and haggling over the monetary values of points.
188.8.131.52 Kiosk/ Stall
4.2.2. Modern Trade comprises of 7 classs. Characteristic of each modern retail format are varied among states. Characteristic of Thailand modern retail mercantile establishment can be describe as table 4.2.
184.108.40.206 Department shop is a big retail unit with an extended mixture ( width and deepness ) of goods and service that is organized into separate sections for intents of purchasing, publicity, client service, and control. It has the greatest choice of any general ware retail merchant frequently serves as the ground tackle shop in a shopping centre or territory, has strong recognition card incursion, and is normally portion of a concatenation.
220.127.116.11 Hypermarket or Superstore is a retail self-service constitution offering a wide scope of nutrient and non-food merchandises, with auto parking installations and with a scope of floor infinite depending on state such as Belgium, Denmark, Spain, France, Greece, Italy, Luxembourg, Netherlands, Portugal 2,500 square metres or more ; Germany 1,500 square metres to 5,000 square metres and Ireland, United Kingdom 2,323 square metres or more. These superstores have a much reduced non-food subdivision compared with Continental hypermarkets. ( Euro stat, 1993, “ Retailing in the European Single Market ” , Office for Official Publications of the European Communities, Luxembourg. )
18.104.22.168 Cash and Carry or Wholesale nine is a bare-bones type of retail merchant. Merchandise is by and large displayed on unfastened palettes, with boxes cut unfastened for show. Customers must purchase ranks in order to shop in a Sweeping nine. Makro is merely one sweeping nine or hard currency and carry shop in Thailand. ( Sternquist, 2007. )
22.214.171.124 Supermarket is a departmentalized nutrient shop with a broad scope of nutrient and related merchandises ; gross revenues of general ware are instead limited. ( Berman, 2001 ) . At the beginning of 1990 century, the supermarket became the dominant type of retail nutrient mercantile establishment. Stressing low monetary values and self-service. ( Morgenstein et al, 1992 ) .
126.96.36.199 Convenience shop is normally a food-oriented retail merchant that is good located, is unfastened long hours and carries a moderate figure of points. This type of retail merchant is little, has mean to above-average monetary values, and norm atmosphere and client service. ( Berman et al, 2001 ) 7-Eleven is the largest food-based convenience shop ironss in Thailand.
188.8.131.52 Category Killer is an particularly big shop. There is an tremendous choice in its merchandise class, and it features comparatively low monetary values. There is an hypertrophied trading country with clients drawn from greater geographic location. Crown books and Home Depot are
Table 4.2: Comparison of retail type feature
Type of retail
Cash and Carry
Non nutrient merchandise and luxury goods
Food and Non Food
Food and non nutrient
Focus on Fresh nutrient and food market merchandises
Health, Beauty and accoutrements ( HBA ) and drugs
Depend on class of shop i.e. athletic wear, place merchandise, electric contraption
Ready to Eat, Drink, Food, Grocery and Books
Central, The Mall, Zen, The Emporium, Robinson
Tesco Lotus, Big C, Carrefour, Tesco Lotus Value, Mini Big C
Tops, Home Fresh Mart, Villa, Food Land
Power Buy, Super Sport, Home Pro, Home Work
7-11, 108 store, Family Mart, Tesco Lotus Express, CP Fresh Mart
Average to above-average
Competitive to above-average
Average to above-average
Cardinal Business District ( CBD )
Community country ( Urban and Rural )
Community country ( Urban and Rural )
CBD and Community
Department shop, Shopping composite
Shoping complex, stand entirely
Salable country ( Esq. )
No. of shop ( 2008 )
6,272Source: Adapt from Thailand Research Development Institute ( 2002 )
illustrations of class slayer shops. For Thailand, Homework, Home Pro and Boontavorn are illustrations of class slayer shops for place betterment merchandises. Some states call this type of shop as “ Large Box Shop ” . ( Retailing victory and bloopers, Ronald D. Michman, Alan James Greco )
184.108.40.206 Specialty shop dressed ores on selling one goods or service line, such as dress and accoutrements, playthings, furniture, or silencer fix. In contrast to a mass selling attack, forte shops normally carry a narrow, but deep, mixture in their chosen class and orient the scheme to selective market sections. ( Berman et al, 2001 ) . Boots and Watson are illustration in this classs for specialize in personal attention merchandise line.
4.3. Development and development of Thailand retailing sectors
The traditional Thai retail shops take the signifier of a shop-house and are a household concern. ( Feeny et al, 1996 ) . While the first major measure in the modernisation of Thai retailing emerged over 40 old ages ago. Harmonizing to TDRI ( 2002 ) , the development of retailing sector of Thailand was divided into four distinguishable phases. At present, the development could be updated to five phases as followers.
Phase 1: Incubation of Department shop ( 1956-1982 )
After, Central section shop opened its first shop, Wang Burapa subdivision in 1956. Then the first entry of a foreign section shop, Nipponese retail group Daimaru opened “ Thai Daimaru ” on Rajdamri route in 1964. In this period, 2nd subdivision of Central section shop was established on Silom route in 1968. The 3rd section shop, Robinson, opened its first subdivision at Victory Monument in 1979. Followed by The Mall section shop opened on Rajdamri route in 1981. Furthermore, there was many little and average size of Thai section shop opened in this period such as Pata, Cathey, Merry King, Banglampoo. These section shops targeted to capture center to take down income clients.
Cardinal factors of development of section shops were successful in economic development since 1957 and quickly increased of urban per capita income. In add-on, new installations and services provided in the shops such as escalator and fixed monetary value offering besides attract immense clients.
Presently, all of mentioned section shops were terminated and closed.
Phase 2: Expansion of section shops to localities ( 1983-1989 )
Get downing around mid of 1970s, Bangkok population had immigrated to localities country. Lack of public transit service linkage, at that clip, drove people to have their autos. In a effect, section shop expanded to localities country to function these people. The first section shop in shopping promenade, Central Lard Prao, was established in northern Bangkok country in 1983. This promenade created tendency of shopping centre which combined a section shop, eating houses, and stores in one shopping centre. In add-on, The Mall besides expanded its 2nd subdivision to Ramkamhaeng route, eastern Bangkok country same twelvemonth. After that, The Mall had continuously expanded their localities subdivisions such as Ramkamhaeng 2nd subdivision ( 1986 ) and Ta Phra subdivision in southwesterly Bangkok ( 1989 ) . Nowadays, these section shop have operate to function clients in Bangkok suburb country.
Phase 3: Rise of new retail class and over investing ( 1989-1996 )
Two digit growing rate during 1987-1989 and fiscal liberalisation had resulted in tremendous enlargement of Thai retail concern. In this period, the first convenience shop, Central Minimart, had been originated by Central group. Followed by 7-Eleven, Nipponese convenience shop franchise held by Charoen Pokpand ( CP ) group in 1989, AM-PM in the following twelvemonth and Family Mart in 1991. These convenience shops were located in community and crowded country such as coach halt. Aggressive enlargement of 7-Eleven and AM-PM resulted in terminate of Central minimart. Cash and Carry was another new retail format initiated in 1988. Makro was the first hard currency and carry, joint venture of CP group and SHV Holdings N.V. of the Netherlands. Department shop expanded their concern to capture high-end clients for avoid high competition with other new format. Consequently, Zen at World Trade Center by the Central group and The Department store on Sukumvit route by the Mall group were opened in 1992.
Furthermore, the first shop of hypermarket, forte shop and shopping promenade had been launched in this period. The CP group and Central group launched their first hypermarket, “ Lotus ” and “ Large Degree centigrade ” severally.
Phase 4: Pickings over by transnational hypermarkets ( 1997-2003 )
Fiscal crisis in 1997 had tremendous impact on Thai retail concern. Bubble of economic and devaluation of Baht resulted in ability of debt payment. This twelvemonth was get downing point of transnational retail concatenation crawling into Thailand. The CP group was the first Thai retail concern that sold its “ Lotus ” hypermarket to Tesco, taking hypermarket of United Kingdom. Big C by the Central group was sold to Casino group from France. Changing during this period has drastically impact on Thai retail construction and stakeholders. The form of retail trade switched from traditional trade to modern trade. Furthermore, “ private label or house trade names ” was introduced by hypermarket. House brands tend to offer low monetary values merchandises for clients due to its low selling cost.
Phase 5: Transformation of shop format ( 2004- nowadays )
As rapid growing of modern retail shop specific on hypermarkets, many authorities policies and actions had been applied to protect local and traditional retail merchant, jobber and provider. Town planning ordinances were used to command enlargement of transnational hypermarkets such as merely 300 sq.m. saleable country shop can be opened within municipality country. These resulted in shop format transmutation of hypermarket to convenience shop. Therefore, Tesco Lotus and Big C transformed its hypermarket shop, over 8,000 sq.m. , to under 300 sq.m. convenience shop named Tesco Lotus Express and Mini Big C. Furthermore, large hypermarkets transformed their formats to accommodate with mark client and seek to shut their clients. Shanon ( 2008 ) noted that with the aim of gap as stopping point to shoppers as possible, CP group opened CP Fresh Mart which offer fresh meats, in add-on to fresh and stop dead nutrient.
Rapid growing of nutrient retail concatenation showed in figure 4.3 and table 4.3. In November 2008, there were 205 hypermarkets, 293 supermarkets and 6,272 convenience shops. Tesco Lotus is the largest concatenation in Thailand with entire 538 shops. Hypermarket in Thailand was aggressively growing in last 10 old ages with 400 % growing. Among supermarket type, Tops supermarket is the largest supermarket with entire 159 shops capturing every category of clients.
Figure 4.3a: Number of modern retail shop by type of shop, twelvemonth 1997-2008
Beginning: Applied from AC Nielsen, November 2008
Figure 4.3b: Number of convenience shops, twelvemonth 2002-2008
Beginning: Applied from AC Nielsen, November 2008
Table 4.3: Number of Food Retailing Store in Thailand, as of November 2008
Large Degree centigrade
Cash and Carry
Home Fresh Mart
Tesco Nelumbo nucifera Supermarket
Jiffy ( Conoco )
Mini Big C
PETRONAS ( Suria )
Select ( Shell )
Star mart ( Caltex )
Tesco Nelumbo nucifera Express
Tiger mart ( Esso )
Beginning: AC Nielsen, November 2008
4.4. Standards and ordinance related to modern retail merchant enlargement
4.4.1 Expansion Standards
Since more than 90 % of retail gross revenues are made at shops, the choice of a shop location is one of the most important scheme determinations a typical retail merchant makes. ( Berman et al, 2001 ) . In history, location of retail and service activity was described by “ Christaller ‘s cardinal topographic point theory ” ( Lee and McCracken, 1980 ) . At present, all of location theory has been applied for realistic environments. Thailand retail concatenation had applied the analysis of retail site, trade country and location scheme technique from foreign retail concatenation who taking over Thai retail concern such as Tesco, Carrefour and Casino. The procedure of site acquisition, location and market analysis of those ironss are different in item, but overall procedures are similar. The figure 4.4 shows overall procedure of modern retail concatenation ‘s determination procedure for opening each shop.
Real Estate/ Property subdivision
Market and fiscal Analysis
( Board Approval )
Figure 4.4: Shop location analysis procedure
( beginning: from interview )
Phase I: Property Acquisition
Most of modern retail formulates their enlargement scheme for a period. Normally, standards for precedence the scheme location are demographic informations ( population, family ) , income and outgo and competition state of affairs. Real Estate or Property subdivision of each concatenation will seek for the location followed the enlargement scheme. Broker, who is intermediary between land proprietor and retail concatenation, normally involves in this phase. The agent can be both securities firm house and single individual. They will provide lands harmonizing to enlargement scheme of each concatenation. Occasionally, sites are straight offered by land proprietor.
Phase II: Site Analysis
Then, strategic site with its description such as size, form, location will be passed to Analysis subdivision. For introductory of analysis, preliminary study will be conducted for a few yearss to acquire initial determination from executives. If the site is possible, it will be passed to Market Survey for in-depth analysis. Following are cardinal countries of analysis in market study.
Site analysis is focus on site description ( type of location, size, current use, frontage, form ) , comfortss ( such as rival, hotel, infirmary, instruction institute, fresh market ) , handiness ( transit installation, route, future substructure )
Isochrones driving analysis
Isochrones is equal thrust clip catchments which show everyplace that can be reached within specified clip from a specified point or points. Isochrones is one method for specifying catchment country based on pulling a line environing country at a given drive clip from the mark location. Within Isochrones country, market potency, market size, available hypermarket size, direct and indirect rivals within catchment country are analyzed. Figure 4.5 shows illustration of handiness isochrones travel clip in different clip.
Figure 4.5: Example of handiness isochrones travel clip
( Beginning: GIS Bureau, www.mds-mottmac.com accessed on 2 September 2009 )
Based on Isochrones driving clip, rival analysis will be analyzed in each catchment country. Rivals will be clarified in each type such as hypermarket, supermarket, section shop, fresh market. Strength and failing of each rival are considered with their information such as turnover, saleable country and type of client. The aim of this analysis is to measure competition state of affairs and fight of site.
SWOT analysis is used to analyse overall factors of site. Strengths ( S ) and Weaknesses ( W ) are internal factors. Opportunities ( O ) and Threats ( T ) are external factors.
Trading country or Catchment country Analysis
Trading country is a geographical country incorporating the clients of a peculiar house or group of house for specific goods or service. Evaluation of merchandising countries in footings of demographic and socioeconomic features of mark clients is good for retail merchant such in turnover prediction and promotional activity planning. Trading country can be classified in 3 parts, primary, secondary and 3rd or periphery. The primary trading country is the country closest to the shop and histories 50-80 % of a shop ‘s client. The secondary trading country is located outside the primary country and history and extra 15-25 % of shop ‘s client. The 3rd or fringe trading country includes all the staying clients and some out shoppers, who are willing to go greater distances. In this phase, analysis subdivision will sketch trade country and explicate feature of trade country. Interviewing client within trade country is used to formalize decision. Then turnover is estimated by computation of family and/or population with ingestion outgo in each defined trade country. Figure 6 shows illustration of merchandising country of four sites.
Figure 4.6: illustration of merchandising country of four sites.
( Beginning: www.mappinganalytics.com/trade-area-analysis/ … Accessed on 2 September 2009 )
Fiscal analysis is to analyse entire costs, including land cost, building and operating disbursals based on type and size of shop, and possible revenue/turnover that derived from merchandising country analysis.
Phase Three: Decision Making
After market analysis had been done, the study will be submitted to executive for consideration. If site is possible but non executable in fiscal, the alteration of turnover or cost would be considered. When undertaking is approved, shop design and construction design will be processed by related subdivision and/or professional houses. Shop layout and installations will be designed based on recommendation from analysis subdivision to fulfill mark clients.
4.4.2 Rule and Regulation related to hive away enlargement
Tai Government has attempt to command an aggressive enlargement of modern retail merchants particularly transnational hypermarkets. ( Euromonitor, 2006 ) . Major accountants are Acts of the Apostless, ordinances and undertakings issued by both Ministry of Interior ( MOI ) and Ministry of Commerce ( MOC ) , which are different aims of control. MOI aims to optimise the usage of land for each country, while MOC purpose to advance just and free trade for all stakeholders.
220.127.116.11 Regulation by Ministry of Interior
As usual with other building, retail shop is restricted by districting limitation called “ Town Planning Act B.E.2518 ( 1975 ) ” . The Town planning Act enforces on usage of land to run into the intent of each zoning, such as commercial country ( ruddy zone ) , authorities office country ( bluish zone ) and agriculture country ( green zone ) . Maestro Plan under Town Planning Act is different in each country. Together with the Building Control Act, B.E. 2522 ( 1979 ) , and the Environmental Impact Assessment ordinance, developing a new retail shop is required to run into the ordinance under these Torahs. For case, commercial edifice with a merchandising infinite over 1,000 sq.m. can non set up within 15 kilometres of metropolis centre, the edifice is spaced at least 15 metres off from neighbouring land or public roads and the 10-metre-high edifice must be at more than 500 metres off from authorities offices, temples, archeological sites and educational institutes. Under many conditions, the possible location is outside the community given the fact that the monetary value of the land in town is really high and building little commercial edifice is non worthwhile.
The execution of metropolis planning to command retail shops does non forbid their enlargement but helps optimise the usage of land in towns every bit good as alleviate business district traffic congestion. As immense retail shops and sweeping shops usually gain huge popularity due to all comfortss they offer, a suburban location with good conveyance web would be therefore more appropriate.
18.104.22.168. Regulation by Ministry of Commerce
Ministry of Commerce ( MOC ) enacted Trade Competition Act B.E.2542 ( 1999 ) and a Goods and Services Price Control Act to command all sweeping and retail concern in position of just trade.
Furthermore, MOC to advance just covering between modern retail concatenation and providers and advance Thai enterprisers to develop their ain trade names, new statute law called “ Retail and Wholesale Act ” which is drafted and brought for parliamentary argument since few old ages ago. This bill of exchange is more likely to impact foreign retail ironss. Therefore, for forestalling any struggles following execution, MOC organizes public hearings aimed at guaranting just conditions for concerns covered under the jurisprudence. The hearings will concentrate on types of concerns to be controlled, the bureau authorized to O.K. new concerns, support for little retail merchants, and penalty of lawbreakers. The bill of exchange will put a cardinal organic structure called “ The Retail and Wholesale Supervision Committee ” , which will be charged with modulating retail nationwide. The commission will put guidelines associating to retail shop operation such as the size and propinquity to metropolis centre, country of placement, operating hours. In position of traditional and local little retail store, the bill of exchange provinces to supply experts to give them suggestions on how to better their services. Under the bill of exchange, bing modern retail concatenation can spread out but must follow with new ordinances to go forth room for local retail concern.
In extra, MOC promotes the strengthening of local retail stores by increasing their fight. Department of Business Development ( DBD ) had emphasized on a web creative activity and linkage of local wholesale and retail concern in each country. Business development and connexions between makers were besides pursued. At nowadayss, over 1,000 local shops in over 10 countries, for illustration located on Chonburi, Sakonnakon and Chanthaburi, joined this undertaking. Furthermore, the MOC besides provided them with cognition of retail concern direction accomplishment such as distribution system and human resource development.
In decision, the authorities can command an aggressive enlargement of modern retail concatenation through above Torahs and ordinances. However, those tools temporarily lessen impact of these aggressive enlargements. The new Retail and Wholesale act is still needed to publish.
4.5. Impact of transnational retail merchant enlargement
Many type of modern nutrient retail shop had impact to their stakeholders. Figure 4.7 shows general linkage between producer/farmer and consumer through retail system including of import stakeholders which are producer/farmer, distributer, retailer/wholesaler and consumers. Retail system by and large started by manufacturers and husbandmans. Goods both nutrient and non-food merchandises are normally handled by mediators which are distributers or providers. Both distributers and providers will provide merchandises and agricultural green goods, which they collected from manufacturers, to retail mercantile establishments both traditional and modern trade. From the yesteryear, merchandises were delivered from distributers to sweeping mercantile establishments, retail mercantile establishment and consumer severally. Nowadays, many traditional retail mercantile establishments buy goods from transnational retail ironss. This resulted in decreasing of power of distributers and providers. Otherwise, transnational retail ironss have more bargaining power. Furthermore, they export local merchandises to their concatenation in their place.
Since 1997, after Asiatic fiscal crisis, many surveies have been conducted by Thai to research the impact of transnational nutrient retail concatenation peculiar on consumer and traditional retail mercantile establishments in several part of Thailand. While, international research workers explored consequence of nutrient retail ironss on smallholder husbandman and how to entree their supply concatenation.
Figure 4.7: General Linkage in retail system
( beginning: Modified by writer )
4.5.1. Impact on Producer and Farmers
Stokke ( 2008 ) noted that husbandman providing supermarkets are comparatively more productive, but many husbandmans are excluded from the supermarket supply concatenation due to capacity restraints in production and selling. PricewaterhouseCooper ( 2005 ) besides suggested that husbandmans can profit by being integrated into the nutrient supply concatenation. Farmers and modern trade participants can research partnership theoretical accounts for common benefits. Advantage of smallholders can be drawn upon Gaiha and Thapa ( 2007 ) . The advantage is linked to production engineerings and associated labour demand. For illustration, Thai Fresh United has a portfolio of 140 herbs, spices, veggies and fruits, each of which has stringent quality demands. Smallholders, particularly adult females, are able to give the careful attending that such harvests require.
4.5.2. Impact on traditional retail
In Thailand, the high competition among modern trading ironss has had a big negative impact on traditional shops through cut downing manufacturers ‘ border. ( Wiboonpongs et al, 2004 ) . Negative impacts resulted in improving of traditional shop. It was noted that in Singapore, traditional moisture markets were get downing to contend back against competition from supermarkets by doing themselves more attractive topographic points to shop.
4.5.3. Impact on Consumer
Modern retail ironss seem to be benefit to consumer. PricewaterhouseCoopers ( 2005 ) pointed out that consumer in India to profit from widely available pick. Modern trade in India resulted in increased handiness of pick in merchandises and services, rationalisation and convergence of monetary values, better quality of nutrient and non-food merchandises and equalisation in the criterions of life available to consumers between states. As consequence of Thai consumers, TDRI ( 2002 ) summarized that transnational retail concatenation had positive impacts. Multinational retail concatenation offer more assortment of shopping which could response their demands and life styles. Thai consumers have been benefited from assortment of services and installations comparing to traditional shops such as inexpensive monetary value, bringing service, choice criterion of merchandises and more convenience parking.
4.5.4. Impact on Export
Most of large retail mercantile establishments in Thailand are transnational ironss which have many subdivisions and mercantile establishments around their parts ; Europe, Asia America and Latin America. With an offering assortment of merchandises to their clients, good quality merchandises of Thailand have been exported to their shops. This is one chance to increase export volume and value of Thai GDP. For case, Carrefour Sourcing Division played the function of exporters for Thai merchandises to international market since twelvemonth 2000. During the past 5 old ages of back uping function for export industry, more than 30 providers of nutrient merchandises and 24 makers of nonfood merchandises such as handcraft, places, flower that are able to widen their market to international graduated table with Carrefour. For nutrient industry, Carrefour Quality Line Mangoes has been exported hebdomadal footing to Singapore market. With web of Carrefour shops in more than 30 states worldwide, the chance of local makers in Thailand is more broaden.
4.6. Food retail concatenation and fresh nutrient
Globally, agricultural trade goods are classified into 4 groups – cereals, veggies and fruit, farm animal, and fuel harvests and vegetable oils. For Thailand, the Office of Agricultural Economics ( OAE ) has classified Thai farm harvests into 8 groups utilizing Thailand Standards Industrial Classification. Those harvests are nutrient harvests, oil harvests, fibre harvests, veggie, fruit tree, perennial tree, cut flower and others. Concentrating on vegetable and fruit tree, OAE provide information on some major green goodss which are garlic, shallot, onions, murphies, chili, tomatoes, baby maize as vegetable and pineapple, longan, rambutan, durian, mangosteen, lichee, lemon and bananas as fruit. Vegetables and fruit one-year production of Thailand has reached 11.3 million tones with 0.8 % of universe market portion in twelvemonth 2004. There are 1.24 million rais of land under vegetable and fruit cultivation in Thailand. ( FAO statistic study, 2004 )
Fresh Fruit and Vegetable ( FFV ) are of import for little husbandmans and typically produced under less co-ordinated system. Its selling system has changed from traditional selling system to supermarket and hypermarket. Space for FFV in these retail ironss has increased quickly. Consumer behaviour was one of factors driven the changing. This changing has significantly impact to market entree of husbandmans.
Selling system for FFV and had been developed over the past several decennaries as followers ;
From the past pattern
Farmers chiefly supplied their green goodss to wet market both straight and through mediators. Produces largely supplied within their country due to low development in selling concatenation and logistics. Most of retail shop were Mom & A ; Pop food market store which represented traditional food markets. Those stores sold limited assortment of FFV which were supplied from wet market.
Thai supermarket concatenation, Foodland, was originally spread in Bangkok-urban countries. These supermarket served clients with a broad scope and big FFV. Supermarket had somewhat changed consumer ‘s behaviour. Most consumers still buy FFV from traditional market – moisture market and ma & A ; pop grocery stores. The grounds were cheaper and fresher green goodss of wet market. In rural countries, merely ma & A ; pop food market store and moisture market served consumers. Farmer straight sold their merchandises to consumers. However, there was non much market mercantile establishment for husbandmans.
Bangkok residential country expanded to suburb due to increasing in per capita income and population growing together with existent estate and substructure developments. Change in populating form such as spent less clip on shopping and cookery, had drive consumers to shop at convenient topographic point with one halt shopping such as store in section shop with supermarket within shop.
At that clip, most of supermarkets are local operated by section shop proprietor and opened in their section shop. The first hypermarket, Marko, was opened in 1988 in Bangkok.
In this decennary, organic agriculture had besides emerged and will be major merchandise in supermarket in following decennaries. Organic FFV was supplied to urban supermarket as premium merchandises. Note that, merely a little figure of husbandmans engaged in organic agriculture organized by private companies.
Early on 1990s, many modern retail shops had been opened in many large metropoliss other than Bangkok such as Chiang Mai and Sriracha. More hypermarkets were besides quickly opened in suburb country.
After economic crisis in 1997, Thai retail concerns sold their concern to foreign investor due to concern prostration and foreign direct investing publicity by authorities. For case, they resulted in rapid enlargement of modern retail trade particularly hypermarket. All modern retail shops have spread from urban, large metropoliss to medium metropoliss and little towns even rural country across the state. These alterations have impact on traditional food market stores, wet market, selling system for agricultural green goods and consumers.
This was get downing point of large changing in FFV selling system. Expansion of nutrient retail concatenation mercantile establishments together with addition in the export of processed nutrient, FFV has increased its importance in value concatenation.
In this decennary, a large market for FFV was opened in Patumtani state named “ Talad Thai market ” . It became the largest FFV wholesale and retail market in Thailand for husbandmans and consumers. It is besides the biggest FFV market in Asian. It represented a new image of wet market with cleanliness, engineering and parking.
Shelf infinite for FFV in modern retail shops, both hypermarket and supermarket has increased quickly because urban consumers changed their behaviour to shopping at modern retail shops. In 2002, 40 % of fruit and 30 % of veggies were sold through supermarket and hypermarket in Bangkok country. ( ACNielsen 2003 ) . Those groundss seem to be new chance for husbandmans to take part in value concatenation enlargement. Organic veggies are besides increasing popularity in the market topographic point for domestic market chiefly through modern retail shops with the rise of wellness concerns.
Joint venture with experient foreign companies brought some benefits to local concern. In add-on, Technology and proficient such as logistic direction and procurement process can be transferred to local concern. Most of hypermarket established their distribution centre at strategic location ( Wang Noi, Ayuttaya ) to be a centre for receive green goods from supplier and administer to their shops, besides performed quality control and extra processing for their shops.
4.7. Fresh Food supply concatenation
In general, most of retail ironss both supermarket and hypermarket sell same merchandise class of fresh nutrient which can be grouped as shown in figure 4.8.
Figure 4.8 Combination of Fresh Food subdivision of Supermarket
( beginning: www.bigc.co.th accessed on 2 September 2009 )
In many states around the universe there has been a pronounced inclination to switch from procurance by single supermarkets, which may affect buying from sweeping markets, to a centralised system affecting a cardinal purchasing office for fresh fruit and veggies, with several distribution centres in a state. In South East Asian, there has been a major displacement in the construction of nutrient distribution from little independent shops supplied by sweeping markets, to supermarket supplied by contracted manufacturers and makers. ( Cadilhon et al, 2003 ) . In Thailand, hypermarkets have been bettering the supply concatenation of fresh green goods and convey benefits to both husbandmans and clients. Oraphan ( 2006 ) highlighted supply concatenation direction for fresh nutrient merchandises of modern retail ironss as shown in figure 4.9.
Figure 4.9: Food supply concatenation of Modern Trade
( Beginning: Oraphan,2006 )
Normally, manufacturers are required to fall in enfranchisement. In this instance little manufacturers are to alter long-standing production patterns in order to provide supermarket. ( Wiboonpong et Al, 2004 )
A sweeping market is considered a premier centre of trade for nutrient and other agricultural merchandises. The sweeping market ‘s mark clients include husbandmans, aggregators, agent, caterers, retail merchants and consumers. In Thailand instance, Talad Thai is the largest in private owned sweeping market in Asia opened in 1995. The market is unfastened 24 hours a twenty-four hours and vitamin D has 25,000 parking infinites. The outgrowth of supermarkets has non created any direct impact on sweeping markets as the former are located in larger metropoliss and the latter serve the full state. Furthermore, most providers to hypermarkets or supermarkets still depend on the sweeping market for their supplies. There are 6 specialised jobbers in the market who deliver to supermarket ironss. They beginning their merchandises from husbandmans and husbandmans ‘ groups, normally on the footing of a verbal contract. The outgrowth of hypermarkets has led the sweeping market to better its efficiency and started utilizing new engineerings to confront competition. Small husbandmans are still depending on the sweeping market to market their green goods. ( Tejathavon, 2003 and Chen et al 2005 )
4.8 Government policies related to Fresh Food retailing
Due to increasing in function of modern retail mercantile establishments as major channel for FFV market, Ministry of commercialism, Thailand ( MOC ) attempt to associate and utilize transnational retail ironss efficaciously. In March 2009, understanding between MOC and taking modern trades, Tesco Lotus, Carrefour, Big C, Makro and Tops Supermarket, were signed to increase their merchandising volumes for fruits and veggies in domestic mercantile establishments and export markets. After understanding, they will buy 20-30 % of agricultural end product to work out an glut and falling monetary values of FFV during the harvest season encountered by husbandman. This plan will assist raise monetary values of FFV and work out oversupply jobs.
For case, Tesco Lotus will increase its volume of FFV from 30,685 dozenss a twelvemonth to 45,000 dozenss. Of this sum, 5,000-10,000 dozenss will travel for export to United Kingdom, its headquarter, with the entire 8 billion ticals.
Furthermore, to straight provide FFV to consumer in upcountry and rural country, MOC besides cooperate with local disposals nationwide to sell fruits and veggies at local metropolis halls. This plan would let go of immense volumes of FFV straight to consumers. Not merely domestic market, MOC by Department of Export Promotion is negociating with modern bargainers abroad to increase their imports of FFV and flavoring merchandises from Thailand. Targeted markets are China, Japan, the Middle East and adjacent states. ( The Nation, 31 March 2009 )
In add-on, distribution channel of Allium sativum with a Thai garlic train to consumers was launched by MOC during oversupply period. Participating vehicles will administer green goodss to assorted states such as Talad Thai, linked up agriculturist with the manufacturer of chili paste and modern jobbers and retail merchant with agriculturists ‘ co-ops.