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20 Jul 2012

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Retail Business, 2H12: Bright Prospects, but Some Risks (Business Brief No. 3318 Full Ed.)

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KResearch holds the view that unless there is any extreme event beyond the control of retailers or the government, retail business is expected to achieve ongoing growth, supported by the government's cost of living reduction program, delayed price increases by producers and continued marketing campaigns by retailers. It is estimated that retail business may grow in a range of 4.9-6.6 percent YoY in 2H12, putting the full-year growth at around 4.8-6.0 percent.
Nonetheless, certain risks remain. Among them are possible flooding and domestic political uncertainty that are likely to affect both business sentiment and consumer confidence. The persistent Eurozone debt crisis may continue to inhibit our exports, which may in turn curb consumer spending. Retailing is thus likely to witness intensified competition as sellers seek to spur demand.

In addition to active marketing campaigns, retailers are expected to embark on branch network expansion and outlet renovations. Focus will likely be on branching out into provincial markets, e.g., Chiang Mai, Songkhla and Udon Thani, as a means toward greater revenue in the future, especially with the coming ASEAN Economic Community (AEC) in 2015, when markets are expected to become more vibrant.

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