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21 Jun 2021


Retail Business, 2021: Contracting 2.0%…Eyeing Vaccine Rollout to Help Restore Consumer Spending (Current Issue No.3230)


​KResearch maintains a cautious view towards the retail business during the remainder of 2021. For 2020, we expect that retail sales will contract 2.0 percent YoY. However, close attention must be paid to vaccine rollout at home over the coming few months (June-September), and whether there is a potential resurgence of COVID-19 or not as the two factors may affect consumer confidence during the rest of 2021, especially in 4Q21. If the vaccine rollout is on track and there is no new wave of COVID-19 while the government's spending stimulus measures, such as the third phase of the co-payment program, along with new economic stimulus measures under the executive decree authorizing the government to borrow another THB500 billion are in place, it is likely that retail sales will perform better than expected during 2021, particularly food and beverage, plus fast-moving consumer goods (FMCG)

Meanwhile, it is expected that e-commerce will continue to thrive in 2021, especially in 2H21 when retailers are set to introduce numerous campaigns, such as 11.11 and 12.12 marketing festivals, to bolster sales during the year-end holiday season. However, competition on such platforms is set to intensify due to the proliferation of players while the number of consumers with high purchasing power may not increase much. Eventually, this will determine who will be able to survive in the e-commerce business. Meanwhile, modern trade outlets, especially shopping malls, with emphasis on non-food products, and retail stores selling household electrical appliances, construction materials and home decoration items may not recover during 2021.

KResearch is of the view that aside from the vaccine rollout that will help restore consumer confidence and allow most businesses to resume services during the remainder of 2021, we expect that entrepreneurs will likely experience rising business expenses or product costs. Typically, any trading business can stay afloat during hard times, but during unusual conditions where consumer purchasing power is fragile, pricing competition is intense, and there are too many entrepreneurs; their attempts to transfer costs to consumers will be difficult. Therefore, entrepreneurs may need to make certain adjustments, such as reducing their profit margin through marketing campaigns/promotions, to ensure that there is sufficient cash flow in their businesses. Meanwhile, the government's relief measures for both consumers and entrepreneurs remain imperative during this difficult time.