MOM-AND-POP retailers in Thailand could benefit from upcoming inflation, even though earlier downward pressure on prices have eaten into sales, a new report suggested.
Such opportunities for small businesses would come even as stiff competition and weak consumption fuelled “price dumping of products”, said Maybank Kim Eng analyst Maria Lapiz.
The prices of basic goods are expected to rise, after softness in 2018, which Ms Lapiz said “should drive the migration of household purchases to lower-priced or smaller-sized products that are predominantly sold at traditional retailing outlets such as mom-and-pop stores” and make up for the broader consumption slump.
On top of that, smaller stores would offer vendors access to “untapped niches” in Thailand’s maturing consumer market, Ms Lapiz added.
Noting that families are grappling with a poor income outlook and growing debt, Ms Lapiz said that Bangkok-listed cash-and-carry wholesaler Siam Makro should benefit from “entrepreneurial activities designed to augment household income” as it supplies goods to small businesses.
The Bank of Thailand - which implemented a surprise rate cut on Aug 7 in a bid to boost demand, amid a strengthening baht - expects headline inflation of 1 per cent in 2019.
Headline inflation rebounded to 1 per cent in July, from a four-month low of 0.9 per cent in June - fuelled by sharp price increases for food and non-alcoholic drinks, on the back of the impact of drought conditions on the cost of vegetables and fruits, rice, and meat.