The expansion of modern trade food retailing in Thailand

Abstract

© 2014, © 2014 Taylor & Francis. With a population of nearly 70 million people, Thailand is a large and attractive emerging market, drawing investments from various foreign food retailers since the 1980s. An economic crash and currency devaluation in 1997 brought both new challenges and opportunities, and led to a renewed wave of expansion, but also calls for regulation, which had not been strictly enforced. Thailand has been host to transnational retailers from many countries, several of which ultimately withdrew. The competitive landscape has continued to evolve, with a range of new store formats, expanded services, smart phone applications and online shopping, and a push to expand both private label brands and ready-to-eat foods. However, some of these offerings appear to have potential conflicts in terms of Thai consumer behaviour. Thai culture places low importance on time; few shop online, and the majority of consumers have low incomes, and thus may not be attracted to visit modern trade retailers for the same reasons as customers in the retailers' home markets. Despite this, Thailand is currently the second largest global market for 7-Eleven and Tesco's number two international market. This presents a paradox in that Tesco operates hypermarkets, while 7-Elevens are convenience stores. Do Thais want hypermarket style volume discounts, or higher priced convenience, or both? Thais traditionally have shopped in wet markets and enjoy fresh foods, which contradicts attempts by many retailers striving to sell ready-to-eat foods. Many Thais are concerned about face and status, which may be a barrier towards buying private label brands. This paper describes the history and expansion of food retailing in Thailand and also highlights how cultural differences may affect consumer behaviour. As the ASEAN Economic Community (AEC) aims to open borders more broadly, there will likely be more expansion of stores and potentially more cultural differences. Whether transnational or domestic, food retailers may need to further consider aspects of culture and consumer behaviour to determine whether to adapt their strategies, rather than copy and paste formats from abroad.