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| Retail in Thailand: the Survival of the Biggest |
| UPDATE : 24 December 2009 |
The Council of State now is tasked with reviewing the draft, which should take no longer than 60 days. The revised draft will then be sent to the Cabinet for a final approval, with the hope of salvaging small mom-and-pop shops as big supermarkets are surging.
Bigger stores are overtaking the groceries' market because of one simple reason: cheaper prices. When it comes to groceries, quality don't differ much, therefore a good deal anywhere is going to sell well. With that in mind, consider the fact that bigger stores have more to work with. More funding means they can acquire cheaper wholesale products. They also have more advanced management systems than a mom-and-pop shop.
The end product is smaller retailers being flushed out of the market, joining the large group of Thai debtors or teaming up to protest against another inevitable opening in their area of residence.
The new legislation entails that there will be a new committee set up to monitor the country's retail and wholesale businesses. Sub-committees will be formed in sub-regions only as necessary. However, the main mechanism of the new law is to regulate these businesses according to its size between 120 to 3,000 meters squared. The bigger businesses will have to be established at least 10 kilometers away from the central district, with less lucrative opening and closing times.
On the surface, it sure sounds like an effective way to help smaller businesses compete. But if one considers the facts, this law is long overdue, and is most likely too late.
Big supermarkets have already expanded to most profitable areas both in the cities and remote areas. And the fact that the main mechanism to regulate these hypermarkets is area, many stores have already adjusted or adapted strategies, such as establishing mini-stores to avoid being bounded by such mechanism. In fact, pushing these supermarkets to establish mini-stores make it even harder for mom-and-pop stores to survive.
According to the Commerce Ministry, statistics in this past year show that there's an increase from 8,900 to 9,900 supermarkets, while the number of mom-and-pop stores have dropped from 400,000 to 290,000.
This certainly indicates that this law is much too late. The focus, instead, should be on plugging loopholes in the law to truly establish a fair market. The Government must quickly adjust its attitude about dealing with such problems, especially as the AFTA or ASEAN Free Trade Area will be in affect this coming year.
from Post Today: Analysis pg. 3
Wednesday December 23rd, 2009
rewritten by: Patcharapol Jitramontree
patcharapol@tannetwork.tv
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