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Abstract
In Thailand, as in other markets, the supermarket
‘revolution’ is seen as a ‘two-edged sword’. On the one
hand, it can lower food prices for consumers and create
opportunities for farmers and processors to gain access
to quality-differentiated food markets and raise incomes.
On the other hand, it can create challenges for small
retailers, farmers, and processors who are not equipped
to meet the new competition from, and requirements
of, supermarkets. Retailing in Thailand has come a long
way in only a couple of decades, with new companies
entering the market, such as the large European
companies Tesco, Carrefour (until recently) and Big C
(Casino Group). The number of convenience stores has also grown, with
7-Eleven (6000 stores) run by CP Group (CP ALL) and to a lesser extent
Family Mart from Taiwan.
Along with these modern trade retailers, third party logistics (3PL) service
providers such as Linfox, DHL, CEVA Logistics and others have also
entered Thailand. They have used their international experience to improve
standards, speed of service and value of service, helping retailers offer more
fresh produce and a wider variety of items at a lower delivered cost.
In the 1980s, Thailand already had transport infrastructure in the form of
an arterial road system, and that infrastructure was continually improved
during the nineties even in the aftermath of the financial crisis of 1997. This
has resulted in the road network being one of the best within ASEAN.
Developing-country governments can put in place a number of policies
to help both modern and traditional retailers. For example, in Vietnam,
even though the country was accepted into the World Trade Organization
with all its market-levelling requirements, international 3PL companies are
allowed to operate only as a junior partner in a joint venture with a local
company or companies. They cannot operate as a wholly-owned foreign
enterprise as yet. Therefore they are not willing to invest heavily in assets
until they have control of the company, and this in turn gives the local
industry time to develop, ready for the time when the 3PL providers can
have a controlling interest and thus be competitive.