Display mode (Doesn't show in master page preview)

2 Aug 2023

Real Estate and Construction

SMEs in the construction materials distribution business are facing increased competition from large players amid restricted purchasing competition (Current Issue No.3426 Full Ed.)


        Competition in the construction materials distribution business will become more intense during 2023 as operators are vying for greater share of the market that continues to grow at a meagre pace. Because purchasing power of the grassroots in the agricultural sector is expected to be affected by the El Niño phenomenon until next year, while large modern trade players, particularly those in areas where there are growing urbanization and development of special economic zones, have been expanding their branches, SMEs that do not have as much funds as their larger peers and have lower potential to adjust are bound to face both increased price competition and high management costs. As a result, their profitability and long-term competitiveness may decline.
        We at KResearch expect the total turnover within the construction materials distribution business in 2023 will reach approximately THB1.07 trillion Baht, an increase of 1.8 percent YoY, but the figure is still lower than that reported for 2022, because the prices of major construction materials, i.e., iron and steel, are set to decline while demand for construction materials may not grow at a faster pace in line with the slower growth seen in the overall investment in construction projects. However, close attention must be paid to the formation of a new Thai government and its policy guidelines as such factors may impact the overall investment confidence.
        Looking ahead, the building materials distribution business will continue to face a number of immediate challenges. Among these are the projected increase in product costs in line with the costs of production process improvements for sustainability, plus higher operating costs, which include transportation costs and minimum wages (major costs of operators) that may rise in the future. Additionally, the construction materials distribution business may have to cope with persistently high electricity bills and other long-term challenges related to environmental and technology trends, leading to adjustment costs in the future. 

View full article

Real Estate and Construction