Traditional trades modernise so as to compete

“We will see the closing-down of five or six traditional-trade outlets for every modern-trade or convenience store opened in the same area,” said Reece Croucher, managing director of In Deed Strategy into Action (Thailand). “However, we have also seen an increased number of modernised traditional-trade outlets in correlation with the growth in apartments and condominiums.”
The company’s grocery-outlet census showed that modern growth would slow down, especially |the larger outlets, because of l|imited land space, he said.
“However, we will see the increase of smaller outlets as well as convenience stores, such as 7-Eleven, which has over 7,000 units nationwide,” he said.
The decline of the traditional trade is already history because of the nature of the country’s geography and trade population. Consumers are dispersed in such a way that the modern trade cannot efficiently cover all the population, who desire close proximity, friendliness and a relaxed environment, as nobody wants to get dressed up every time she goes to the supermarket.
“In order to survive and move forward, traditional-trade outlets need to transform. They need to modernise and adopt higher standards as well as move to newer formats such as mini-marts instead of maintaining the mom-and-pop style.
“They also need to diversify and add on new offerings to their businesses such as food shops or laundry services. They should focus on their community needs such as for credit or smaller pack sizes for daily consumption,” he said.
The path to success in today’s highly competitive trade landscape can be complex. The traditional trade – characterised as retail locations that are typically family-owned and are not part of a larger chain – comprises the bulk of the retail trade and experts are realising that the largest potential for revenue and volume gains is in this largely uncharted environment.
There are 21 traditional-trade classifications such as small store, pharmacy, beauty store and pet-food outlet.
Whether they are fully fledged neighbourhood markets or simply a storefront at someone’s home, traditional-trade retail outlets are numerous and many are located off the beaten track.
Thailand has more than 300,000 retail grocery outlets, but most local and international companies lack a detailed understanding of this traditional-trade “universe”. To tap the potential for growth, suppliers, distributors and even other retailers must know what the traditional-trade universe looks like, how many outlets there are of differing types, their physical characteristics, product range, in-store dynamics, sources of supply, and other key data.
Those equipped with this information and the ability to utilise it effectively to make decisions on how to improve route-to-market strategy will quickly gain an advantage over those who have neglected to focus on understanding the traditional trade, Croucher said.