Drought holds back Thailand's retail store expansion

[webfact]

Drought holds back Thailand's retail store expansion
BANGKOK | BY KHETTIYA JITTAPONG

BANGKOK: -- Nov 25 Sales have fallen at all but one of Thailand's major supermarket retailers as the worst drought in a decade strikes at the heart of the farming sector - the backbone of the rural economy - and frustrates plans to open more stores in the provinces.

Big C Supercenter, Thailand's second-biggest hyper mart chain after Tesco PLC, suffered a 5.2 percent slide in third-quarter same-store sales growth (SSSG) from a year earlier, the most among its peers. About half of Big C's sales come from the country's interior where consumers are concerned about drought, low crop prices and a weak economic outlook, analysts say. Tesco's Thai unit does not report quarterly SSSG numbers.

Big C, majority-owned by Casino Group in France, has reduced its pace of expansion like many other cautious retailers. That's in sharp contrast to the sector's aggressive expansion plans just a few years ago.

Full story: http://www.reuters.com/article/2015/11/24/thailand-retail-idUSL3N13I2P920151124


-- Reuters 2015-11-25

[plachon]

Go to the poorest parts of the Northeast, supposedly the driest region of Thailand, and you will not find agriculture at the heart of the economy. While it sounds cute and folksy to call farming "the backbone of the rural economy", the reality is that farming is just one amongst a number of income streams for the majority of rural households. Far more important for most is off-farm remittances from family members working elsewhere and increasingly, other small non-farm businesses, like contract piecework, such as sewing or jewelry making, or local labouring.

Thus to blame drought as the main cause of any downturn in sales is disingenuous and suggests a good cover for other more likely causes, such as higher unemployment on the off-farm jobs or lower remittances sent back home by family members due to higher costs of living, general inflation and downturn in the economy, due to the mismanagement of the incumbent govt. Drought is such an easy scapegoat, because it is mute and will never answer for itself.

[PatOngo]

You don't need a mega mall to get hopelessly into debt for an iPhone 6 or a Honda Wave in Nakhon Nowhere.

[leeneeds]

How low is the water table ?, and how accessible is it,? and is it feasible to tap into and pump water, most areas around the north east the water table is between 12m too 60m deep, not too difficult to look at a system of submersible pumps , pumping to holding , dispersing location, dam, river, creek, etc, , the geology of the north east is very young in age terms , and drilling such clays and silt stone calcite etc is not too hard, on the gear, to be used and do not need gigantic rigs to reach these depths,

Money well spent if done correctly , and tapping into the ground seepage of all the rains in this vast area to recycle,

my thoughts for what its worth.

[Lunchbob]

Go to the poorest parts of the Northeast, supposedly the driest region of Thailand, and you will not find agriculture at the heart of the economy. While it sounds cute and folksy to call farming "the backbone of the rural economy", the reality is that farming is just one amongst a number of income streams for the majority of rural households. Far more important for most is off-farm remittances from family members working elsewhere and increasingly, other small non-farm businesses, like contract piecework, such as sewing or jewelry making, or local labouring.

Thus to blame drought as the main cause of any downturn in sales is disingenuous and suggests a good cover for other more likely causes, such as higher unemployment on the off-farm jobs or lower remittances sent back home by family members due to higher costs of living, general inflation and downturn in the economy, due to the mismanagement of the incumbent govt. Drought is such an easy scapegoat, because it is mute and will never answer for itself.

Agreed that the range of income sources is much broader than just farming as farming has not been enough for many decades, but rice income is a big boost. A smallish farm used to earn 100,000 baht or thereabouts in 1 sale and the other sources are steaey trickles. So, families defer larger debts, etc...

[jaltsc]

"Sales have fallen at all but one of Thailand's major supermarket retailers as the worst drought in a decade strikes at the heart of the farming sector - the backbone of the rural economy..."

Subsidies, lots more subsidies. That's the solution. Or, lenient/irresponsible lending practices by the banks. They worked so well in the past. Then the people can put down payments on needless expensive motor vehicles and luxuries that they will never be able to pay off, thus leading to lifelong debt. Don't blame the drought as the main culprit of the present economic situation. Blame the long history of fiscal irresponsibility and believing that getting something for nothing is a good thing.

Edited November 25, 2015 by jaltsc

[worgeordie]

Within 5 miles of our house we have access to 8 shopping

centers,some of them very big Malls,the biggest one Central

festival mall,there are people walking about,but very few seem

to be actually buying anything,I think some shops will be lucky

if they make a sale,the only businesses doing any trade are

the food outlets.

The majority of people here just do not have the spending power,

so maybe the Mall operators realize,that there are an oversupply

of retail space,what we need is more 7-11's as there is not

quite one on every corner. drought has nothing to do with it.

regards worgeordie

[doublephil]

The farmers might earn more money if they stopped buying huge quantities of un-necessary agro-chemicals such as herbicides and pesticides and returned to more traditional and more eco-friendly farming methods. It would also help the rest of us from being poisoned by toxic chemicals in our food and drinking water every day.

[SOUTHERNSTAR]

My oh my, the drought is not the problem, the problem is the lack of disposable income. May I also add that that problem isn't unique to the NE, but is problem in the whole country. Now lets look at the GDP stats and it will become clear that the GDP started to decrease in 2013 when exports started to contract. The GDP slide however accelerated at the end of 2013. How they got to a 2,9% GDP growth, this quarter I don't know as exports (70% of GDP) are still decreasing and consumption has also stalled (with imports also decreasing). Only the really wealthy still got money the poor and middle class are maxed out.

[Hawk]

strikes at the heart of the farming sector - the backbone of the rural economy........

I had the impression that this government was trying to destroy the farming sector.

[elgordo38]

How low is the water table ?, and how accessible is it,? and is it feasible to tap into and pump water, most areas around the north east the water table is between 12m too 60m deep, not too difficult to look at a system of submersible pumps , pumping to holding , dispersing location, dam, river, creek, etc, , the geology of the north east is very young in age terms , and drilling such clays and silt stone calcite etc is not too hard, on the gear, to be used and do not need gigantic rigs to reach these depths,

Money well spent if done correctly , and tapping into the ground seepage of all the rains in this vast area to recycle,

my thoughts for what its worth.

Crisis management is not implemented till we are in a full blown crisis.

[elgordo38]

"Sales have fallen at all but one of Thailand's major supermarket retailers as the worst drought in a decade strikes at the heart of the farming sector - the backbone of the rural economy..."

Subsidies, lots more subsidies. That's the solution. Or, lenient/irresponsible lending practices by the banks. They worked so well in the past. Then the people can put down payments on needless expensive motor vehicles and luxuries that they will never be able to pay off, thus leading to lifelong debt. Don't blame the drought as the main culprit of the present economic situation. Blame the long history of fiscal irresponsibility and believing that getting something for nothing is a good thing.

Getting something for nothing is the new generalized thinking. Why save? banks are paying no interest to speak of. Governments keep harping save for retirement yeah sure. We are in a new paradigm. What the above poster says is true. Cheap credit trumps saving cash to buy and all that free money floating around has to find a home somewhere. All this cheap plentiful money in the system has made life into a casino lifestyle. Products are made so cheap every 2 or 3 years they need to be replaced. Governments want you to focus and desire. Desire of all these cheap wonderful gadgets switches your focus away from the mushrooming problems that are cropping up world wide. Magicians use the same trick in their magic acts. Unfortunately politicians are not magicians and everything I have is paid for. I took off the rose colored glasses years ago. As the saying goes "the emperor had no clothes" well politicians do not either.

[elgordo38]

My oh my, the drought is not the problem, the problem is the lack of disposable income. May I also add that that problem isn't unique to the NE, but is problem in the whole country. Now lets look at the GDP stats and it will become clear that the GDP started to decrease in 2013 when exports started to contract. The GDP slide however accelerated at the end of 2013. How they got to a 2,9% GDP growth, this quarter I don't know as exports (70% of GDP) are still decreasing and consumption has also stalled (with imports also decreasing). Only the really wealthy still got money the poor and middle class are maxed out.

Yes the boomers have quit spending they are chucking the nest and looking for cheaper digs or renting so they can travel more. Thus the travel industry is booming. My daughter is a boomer just retired and her and her husband went out and bought a motorhome. The upcoming milleniums seeing that they will never have the prosperity of their parents are more frugal. They make lower wages have no benefits like pensions etc. they are the millenium nomads. Their priorities are different. They double up with friends or live in the parents basement bike or Uber to work put off marriage raising families and buying homes why? well they just cannot afford to and their priorities are travel, social media going out with friends to restaurants bars they have a whole different concept of living than their parents. Also they realize that as families get smaller so do their chances of a circle of workers providing them with any kind of pension. Their life is in the here and now not 30 years down the road and another 30 years retired. Look for falling auto sales(sharing self driving cars. They will not sit idle in large parking lots while people work they will be shared more in the future), real estate and associated products like furniture lawnmowers (they have no interest in cutting grass) Look for an increase in travel agencies, motorhome sales, restaurants (not McDonalds) IT products, large flat screen TV's and all the new FIT gadgets. They will live life in the here and now their way not the way we did listening to government lies about saving for our future. They have seen their future and realize prosperity is dying so today is for living.

[whatproblem]

Money holding back my purchase of a jet plane

[farangmick]

Go to the poorest parts of the Northeast, supposedly the driest region of Thailand, and you will not find agriculture at the heart of the economy. While it sounds cute and folksy to call farming "the backbone of the rural economy", the reality is that farming is just one amongst a number of income streams for the majority of rural households. Far more important for most is off-farm remittances from family members working elsewhere and increasingly, other small non-farm businesses, like contract piecework, such as sewing or jewelry making, or local labouring.

Thus to blame drought as the main cause of any downturn in sales is disingenuous and suggests a good cover for other more likely causes, such as higher unemployment on the off-farm jobs or lower remittances sent back home by family members due to higher costs of living, general inflation and downturn in the economy, due to the mismanagement of the incumbent govt. Drought is such an easy scapegoat, because it is mute and will never answer for itself.

You forgot the off-farm remittances from thousands of farang sending money every month to their faithful! girlfriends. A new "farang" house in some small village can provide a few months work for cousins, uncles and nephews.

[GR8fun in LOS]

Having lived in Thailand for 10 years, a number of things that I have recently noted follow with particular attention directed toward Big C, by name not character.

• the "car purchase scheme" which gave a 100k baht bonus, now many people cannot afford those regular monthly payments nor make a reasonable sale to recover the costs, therefore it is difficult to find funds to spend in the local supermarket.
• the ongoing price increases demanded by Big C shops seems way above inflation, why have their increases been approved or demanded?
• I have friends in Patong who claim that the price increases there cannot be substantiated and the style of merchandising is very much aimed at the supposed Chinese Tourist market not local shoppers

Is Big C trying to grab much more than they are entitled to from the consumers all over Thailand?

This would not be an unusual accusation, in my experience, and almost certainly sums up the ability of Thais to forward plan; they want it now no matter what the conditions may be.

My humble opinions which may not be agreed with but I put the claim forward for intelligent comment.

[EnglishGuru]

Yes, I wish I could change my username.

I wonder if it is the drought stalling Bic Cs expansion, in fact, or maybe a reduction in what I am sure are purchase/lease and build terms that could be considered the gladdest of glad handing. I have wondered with the sheer number of Big Cs in Bangkok how many would still be going concerns were they forced to pay for operations from business revenue? Maybe so. Besides the government is perfectly correct in assuming I, the people, do not wish to travel more than the length of an MRT stop to shop at one.

As for the drought...yeah, water management actually is important and requires competence, unlike other areas in the public sector. Though I am sure its FTI or maybe ATI has had the largest increase to date. Of course roads and waterways, sewer or for drought management, don't seem to be much on anyone's radar either: then again, infrastructure is over rated. A car kickback though, critical to my sense of sabai sabai.