KASIKORN RESEARCH CENTER (KResearch) holds the view that the current flooding will cause retail business growth to decelerate during 2011. The deluge is being felt throughout the retail supply chain, from suppliers to distribution centers, and along transport routes to sales channels, especially via modern trade outlets. Consumer sentiment and purchasing power are both being affected, particularly those directly hit by this calamity.
If the floodwaters recede soon, retail business in 4Q11 may witness some improvement, particularly toward the end of the year, being the seasonal peak period for sales. In our view, if the flooding can be drained off shortly and retailers expedite repairs and renovations, the overall retail business for 2011 may thus achieve growth of 6.0-7.0 percent, versus the 8.5-10.0 percent previously forecast. To maintain this momentum, retailers should focus on marketing activities, e.g., promotional campaigns, home repair advisory services, etc., to invigorate consumer spending. Meanwhile, the government should lend a hand with accelerated budgetary disbursements for rehabilitation and reconstruction, which would also help create jobs for workers displaced by the flooding.
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