by Ruangrai Tokrisna

Paper presented to PECC-Pacific Food System Outlook Meeting Kun Ming, China (May 11-13, 2005)

Rapid growth in modern retail food outlets in Thai economy increased its share from around 5% in late 1980s to more than 40% recently, a significant impact on wholesalers as well as retailers. The economic crisis in late 1990s increased FDI in modern retail food sector.

Decrease in number of grocery stores could be explained by the economic crisis, loss to more efficient modern retail food outlets, and changes in customers' life style. Development of hypermarkets had an adverse impact on wholesaling. Hypermarkets and convenience stores preferred buying directly from producers and suppliers, skipped wholesalers to reduce their costs. Some grocery stores turned to buy from hypermarkets. Together with the decrease in number of grocery stores, wholesalers decreased. Suppliers were also impacted, through the lower profitability selling to hypermarkets due to the low price policies.

Consumers gained from development of modern retail food sector, buying cheaper from hypermarkets at a better services. Retail trade efficiency was improved. Impact on employment was not clear due to decrease in traditional retail outlets. Nevertheless skilled labors were employed in modern retail food sector. Another adverse impact could be traffic problems around the area where modern retail outlets were concentrated.

Available for download at www.pecc.org/food/papers/2005-2006/Thailand/tncpec-ruangrai-paper.pdf [1]

Powerpoint available at www.pecc.org/food/papers/2005-2006/Thailand/tncpec-ruangrai-presentation.pdf [2]