Thailand retail sector is a vital component of the country's economy and the sector is predicted to grow further in the coming future. According to PWC, Thailand's consumer goods market will remain one of South-east Asia's most important, with retail sales of US$ 165.96 billion in 2015 from US$ 115 billion in 2011. Annual retail sales growth is expected to rise to 5.2% by the end of 2012 and 5.9% in 2013 before settling at 5.8% through 2015.
Thailand has long been an interesting destination for foreign supermarket and hypermarket retailers. For instance in April 2011, Fast Retailing (FR) and Mitsubishi Corporation agreed to establish a joint venture to set up Uniqlo stores in Thailand (Uniqlo is FR's casual wear subsidiary and Japan's largest apparel label). The first Uniqlo Thailand store that opened in September 2011 is the company's largest in Southeast Asia. Meanwhile, Swedish furniture chain IKEA has opened its first Thai store in November 2011, which is its largest in Southeast Asia and one of its five largest worldwide. IKEA plans to follow up with two new stores in Bangkok.
Many mega-stores are focusing on expansion to strengthen their foothold in the country's retail market. Central Retail Corporation plans to spend Baht 1 billion (US$ 32.5 million) in 2012 on the creation of 200 additional Tops Daily mini-supermarket outlets, marking a significant increase on the 70, that it opened in 2011. Big C has also invested about Baht 2.5 billion to open four hypermarkets this year. They will also open 75 proximity stores, namely Mini Big C this year. Each Mini Big C store requires an investment of between Baht 4 million and Baht 5 million. Most retailers are also very optimistic about the Mega Bangna, a Baht 10 billion (US$ 325million) retail project which began operations in May 2012. It expects to attract more than 110,000 visitors daily or 40 million annually.
However, Thailand is a challenging market for retailers. Foreign retailers cannot own land in the country and need to meet minimum capital requirements in order to hold majority stakes in a retailing or wholesaling business. The government is also trying to pass a Retail and Wholesale Business Act, which has been in preparation for years, and is targeted to regulate the growth of modern mass retailers and wholesalers. However these challenges have not stopped foreign retailers from entering the industry or stop their expansion plans. These initiatives along with others will help to show incredulous growth for Thailand retail market in the coming years.
(Source: Insight Alpha)