Thai retail market may face a challenge when AEC kicks off

 Thailand is attractive to retailers, both within and beyond Asean, thanks to its developed retail environment driven by diverse retailing formats and other supporting infrastructure, such as its strength as the region’s shopping paradise, its strong hospitality and service sector and a vast number of local products. Many businesses have started to see huge business and investment opportunities in Thailand once the AEC is established.
John Christie, CEO of Tesco Lotus, said the creation of the AEC would likely increase regional economic prosperity and stability, as well as bring with it new business opportunities.
“We are currently reviewing what these are likely to be, and are planning to maximise them wherever possible,” he said.
Buppa Lapawattanaphun, a lecturer in corporate-identity management and communications at the University of the Thai Chamber of Commerce, said the AEC would be another “turning point” for Thailand’s retail industry and local retailers need to prepare for this new challenge.
She added that local businesses need to be able to cope with more intense competition stirred by new international players, who are at an advantage both in terms of capital and skilled labour.
“Local retailers should join forces, in things such as joint-venture retail projects in Thailand and abroad. They should focus on the development of human resources so they have better communication skills, or even push for further development in areas that Thailand is already strong in, such as food and agriculture. They should transform the threats at this turning point into opportunities,” she said.
However, Chatrchai Tuangrattanapan, director of the Thai Retailers Association, does not believe any drastic changes will hit the local retail industry when the AEC kicks off in 2015.
“Thailand will take another two to three years for any laws or regulations to be settled in relation to the AEC,” he said.
He added that retail categories, such as hypermarkets, department stores, supermarket and convenience stores would not really be impacted significantly by the AEC, because the market is mature and already dominated by major Thai and international players. Hence, it would be quite difficult for new players to occupy the market.
“However, Thailand’s retail market might get a huge number of new international speciality and luxury retail stores. Major Thai retailers, such as Central and The Mall Group, as well as real-estate firms, like Land & House and MBK, will expand their networks in potential markets in the Asean,” Chatrchai said.
However, he said, Thai retailers need to make adjustments in terms of fluency in the English language and human-resource development as well as develop international management skills and expertise. Chatrchai said the agreement between Thailand and other Asean members over the retail sector was still unclear under the AEC framework.