Impact of World Class Distributors on Retail Industry on Thailand
Jirapar Tosomboon Thammasat University, Bangkok, Thailand
Abstract
Within the past 50 years, the distribution system for consumer products in Thailand has tremendously changed. This change can be divided into four stages.
- The first stage, (1944-1957), after World War II, America used Thailand as their army base and put a lot of money into Thailands government. The rising economy changed the local distribution systems from the hawker to the grocery store and made wholesalers become more powerful.
- The second stage, (1957-1975), Central, the oldest and largest department store which opened at the end of first stage, expanded with four more branches. Besides from Central, Thai-Daimalu the first foreign department store also started operations. During this stage, there was strong competition among suppliers and most of these suppliers tried to bring back power from the wholesalers.
- The third stage, (1975-1994), saw not only Robinsons and The Mall, but other department stores including Makro, the first cash & carry wholesaler, open. In the third stage power changed from the suppliers to modern trade. Suppliers considered Central, Robinsons, The Mall and Makro as their key accounts.
- The fourth stage, (1994-2001), saw the success of Makro stimulated by Central to open the Big C supercenter and Carrefour hypermarket. Also, CP group opened Lotus supercenter. At the end of this stage, Thailand faced the economic crisis and Thai investers had to invite world class distributor to buy or become their partners.
The first world class distributor was Makro who came to Thailand in 1989. But the real impact occurred after Carrefour, Tesco, Royal Ahold, Delhaize Le Lion and Casino took over Thai ownedÕs distribution in 1998 and 1999. These world class distributors had a direct impact on the whole distribution system. Within a few years of joining the Thai market, they had wipped out half of the local department stores and supermarkets as well as some of the grocery stores and they had also took away many small and medium suppliers.
We expected that, at the end of the year 2001 the world class distributors would control half of the consumer product that passed through modern trade. Also, it will be the first year sales from modern trade have exceeded traditional trade. This paper will explain about the factors that attracted these world class distributors to Thailand. Also, the paper will discuss about the impact of world class distributors on the retail industry in Thailand and try to find possible ways of saving Thailands retail industry.
