David J. Schaffner, Blaire Bokal, Scott Fink, Kimberly Rawls, and Jeremy Schweiger
Rapid growth of the Thai economy in the 1990s led to dramatic changes in food retailing. The traditional food-distribution system—hundreds of thousands of fresh markets that sell fruits, vegetables, meat, and ﬁsh, along with small mom-and-pop food stores that distribute dry goods—is giving way to modern supermarkets, hypermarkets, and convenience stores, all being developed at an incredible pace. This paper examines the changing Thai food-retailing sector and reports the ﬁndings of a consumermarket-basket price comparison by type of retail outlet in various regions of the country. Thailand’s Food-Retailing Sector The retail food market in Thailand can be divided into four major sub-sectors: supermarkets, hypermarkets, convenience store chains, and traditional or fresh markets. Despite the rapid growth of non-traditional retail formats during the 1996–2000 period, as Table 1 shows (this growth occurred during a time of economic downturn and upheaval), traditional markets still accounted for over 80% of food retail trade in 2000. For this reason, retail chains are optimistic about the prospects for future growth by attracting more people into store formats other than the traditional markets. It is estimated that hypermarkets and convenience store numbers will grow by 400 percent during the 2000-2010 period, while supermarkets will increase by 200 percent (Jitpleecheep 2000). Supermarkets In Thailand, supermarkets for the most part have developed in department stores (multi-level shopping
centers), the primary retail-distribution channel for the growing middle class. There are approximately 100 supermarkets in department stores, and with various department-store groups, ownership is divided. However, the Dutch retailing giant Ahold is a major player, operating over 40 supermarkets in shopping centers under the TOPS name. Along with TOPS, the other supermarket chain of signiﬁcant size is Food Lion. While the standalone supermarket independent from department stores has been slow in developing, Belgium-based Delhaize, which owns the Food Lion brand, has been aggressively expanding with stand-alone units that are generally 1,000 to 2,000 square meters and offer 6,000 to 10,000 product items. Delhaize currently operates 36 stores in Thailand (Rungfaraisarn 2004). Hypermarkets In the mid-to-late 1990s, the development of the superstore or hypermarket changed the industry. A hypermarket is typically 15-20,000 square meters and provides all the basic needs of the consumer under one roof and at very competitive prices. Unlike most supermarkets, which tend to target the middle and upper-middle classes, the hypermarket is aimed at the masses. Until the economic downturn in the late 1990s, hypermarkets were owned either locally or through joint ventures with foreign retailers. During this time ownership changed signiﬁcantly, resulting in new competitors—all foreign-owned and with massive ﬁnancial resources at their disposal. Today the Thai hypermarket sector is dominated by Tesco/Lotus (British), which operates 48 units and in recent years has accounted for more than 5 percent of foreign direct investment in Thailand (Market Asia Paciﬁc 2003). Other major players are Big C (French) with 37 stores, Carrefour (French) with 22 stores, and Makro (German, Interspar AG) with 22 stores. Competition from the hypermarkets is resulting in a shrinking independent retailer sector—it is estimated that independent shops are shrinking by 20% a year in total ﬂoor space while “modern
Schaffner is Professor Emeritus, Agribusiness Department, California Polytechnic State University, San Luis Obispo. Bokal, Fink, Rawls, and Schweiger were students in the Cal Poly Thai Studies Program, Spring Quarter, 2004. The authors thank Lamar Robert, agricultural economist and consultant, and Chiang Mai, for his assistance in providing...