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RETAILING
Clusters could lift negotiating power
KRISSANA PARNSOONTHORN
Traditional mom-and-pop shops should adjust by following in the footsteps of convenience stores in attracting consumers in order to survive in the highly competitive retail market, according to retail experts.
Piyawat Titasattavorakul, managing director of CP All Plc, the local operator of the 7-Eleven convenience-store chain, said family shops should form clusters to increase their bargaining power when buying goods from suppliers, modernise their shelf displays and pay more attention to product quality and services.
As well, they should enhance the efficiency of store management and exchange information with other retail operators and related government agencies to keep abreast with consumer trends. ''These will help them reduce operating costs and risks and enjoy a sustainable growth. Finally, they can survive even as the retail market is dominated by giant players,'' he told a retail seminar yesterday.
Mr Piyawat explained that forming clusters was a smart solution because shop operators could learn from one another what products sold well. Once the popular products are identified, they can increase their bargaining power by buying them in bulk at cheaper prices, which could help reduce their logistics costs as well.
Yanyong Phuangrach, the director-general of the Internal Trade Department, said the authorities would like to see small shops join hands to increase their competitiveness.
The department offered its strong support when fresh-market vendors formed a network to boost their bargaining power when buying vegetables, fruits, meat or other goods from suppliers. As well, he said, they have formed groups when seeking financing from banks in search of a better deal.
''We want to see mom-and-pop shops become stronger since they are an important part of the retail business and are close to local consumers.''
The local retail business is worth 1.2 trillion baht, representing 14% of the country's gross domestic product and employing about six million people or 16% of the total workforce.
Over the past few years, a number of old-style shops have failed to survive the fierce retail competition. They have blamed discount stores like Tesco Lotus, saying the foreign chains have lured their customers by offering prices with which they could not compete.
In fact, Mr Piyawat said, many of these small shops are not aware of the strengths they have over modern-trade chains. They are closer to their communities and have long-term personal relationships with customers.
''Yet many of them have failed because they do not recognise their advantages and understand the changes in consumer behaviour. Many also lack good store management and standards, resulting in high operating costs and disrupted cash flows,'' he said.
Moreover, they can ill afford to improve their shops and management systems and sometimes do not have big enough stocks to serve customers.
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