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5 Aug 2005

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Retail Business, H2/2005: Sluggish, Strong Marketing Needed amid High Cost of Living

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Retail business over the second half of this year (H2/2005) is poised to be mired by numerous negative factors, i.e., the economic downturn, rising interest rates and hikes in oil prices. The sales turnover of essential goods shall likely remain somewhat upbeat, while luxury products may see slower growth, particularly, those catering to medium-income earners. Kasikorn Research Center (KRC) expects that the sales turnover of retail business over the latter half of this year may grow only around 10-12 percent, over-year, slowing from the growth of 17.95 percent posted for the second half of last year. Even so, if the government's mega-projects, incomes earned from tourism and exports show signs of improvement during the last six months of this year, retail business may be prevented from getting worse or even see brighter prospects than earlier forecast for H2-2005.

It may thus be an uphill task for most retail operators to run their businesses. Outstanding marketing strategies should be mapped out to better access consumers in a bid to encourage them to loosen their purse strings. To this end, more frequent discount promotions, introductions of novel products and services, not to mention attractive shopping atmospheres, should all be employed to create a competitive advantage and differentiate retailers from their rivals. Meanwhile, retailers having wider networks nationwide should have an advantage in lower costs per unit over those with smaller networks.

Still, efficient logistics management is deemed vital. It could be said that sound business policies, a clear business direction and ample funding will, from now on, be the keys to retail business operations. KRC takes the view that consumers will have greater choices over the latter half of this year, while each retailer shall have to adopt efficient strategies, proactively or reactively, to better cope with changing consumer behavior in the midst of the rising cost of living.

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