Tesco, Carrefour, 7-11 and others hang tough in the face of Thai Commerce Department thuggery

It's really really simple. Retail law should benefit the consumer, and Commerce Department regulations should be written to reflect the interests of the consumer, not some loud-mouth mom and pop lobby that's trying to stick it to the chain stores. Most consumers prefer to shop at a brightly lit, well stocked shop with fixed fair prices and convenient locale like 7-11 than hike several kilometers to some indifferent Thai shop run out of someone's dingy living room where you have to haggle with some cretin over a carton of stale milk.

Big retailers refuse to sign store freeze

Commerce Ministry threatens more rules

PITSINEE JITPLEECHEEP

Operators of 15 modern retail businesses refused to sign an agreement to freeze their store expansion at a meeting with Commerce Ministry officials yesterday. Some executives told officials they had no authorisation to make such commitments and would need to consult with their offices, adding that they needed more details of the proposal.

The response displeased Preecha Laohapongchana, the caretaker deputy commerce minister. Mr Preecha said retailers would have to stop store expansion voluntarily or would face tougher regulations that could make growth even more difficult.

The ministry gave the retailers a week to think about their position and rescheduled the signing of a memorandum of understanding for next Wednesday. The agreement would call for them to freeze expansion until a new retail law or regulations are passed.

The Commerce Ministry has been under pressure from small local retailers and suppliers, who for the past few weeks have been staging protests demanding the government do more to deal with big foreign retail chains.

The small operators claim they cannot compete in terms of price, selection or amenities with the chains, from convenience stores to discount hypermarkets. Including nearly 3,000 7-Eleven stores, the big chains have a total of about 3,700 outlets and are expected to have 4,700 within two years.

Mr Preecha has threatened ministerial announcements to control the business if big retailers do not sign an agreement.

He did not specify how long expansion should be frozen. ''It would not take a long time and would depend on how much co-operation retailers give us,'' Mr Preecha said.

He said the agreement would contain provisions for big retailers and government officials to study how to help small shops survive in a more competitive market.

Mr Preecha blamed modern retailers for lacking the intention to solve environmental problems such as traffic and pollution, caused directly by aggressive store expansion.

Gwyn Sundhagul, customer marketing director of Tesco Lotus, said his company was ready to comply with the state rules whether they were fair or not.

''But,we want the government to carefully consider any new regulations. Besides, we want to know which is the real party that has been affected by the problem,'' Mr Gwyn said.

He said that if consumers were affected by Lotus's business, they would not be visiting its stores.

Mr Preecha acknowledged that Tesco Lotus was popular because it offered good prices, but said the rapid expansion of its smaller Express outlets in subdistricts and tambons had worried local retailers.

But Mr Gwyn argued that only 100 Tesco Express outlets were available in Bangkok, compared with around 380,000 shophouses.

Currently, four Tesco Lotus outlets are being constructed in addition to 18 Tesco Express stores and one Talad Lotus.

Praphan Eamrungroj, senior vice-president for properties at Big C Supercenter Plc, said halting store expansion would not only affect retailers but also contractors and new job opportunities.

Currently, Big C has three new outlets under construction in Chiang Mai, Samui and Chon Buri.

According to Jariya Chirathivat, vice-president for marketing and communication at Big C, she believed both traditional and modern retailers could co-exist as consumers still patronised both types of businesses.

Mr Gwyn cited figures by the market research firm ACNielsen, which found that the frequency of visits to small shops had increased to 19 times per month as of March, from 17 a year earlier. In the same period, it said, hypermarket visits declined to twice a month from four times.

As well, the survey reported, 87% of respondents still patronised small grocery stores and 78% went to wet markets.

Suchada Ithijarukul, the president of Siam Makro Plc, said her company had 470,000 members. Of the total, 323,000 are small grocery stores, which rose by 5,400 from the same period last year.

She added that 65% of total sales at Makro were to small grocery stores and shops, and were up 15% year-on-year in the first eight months of 2006.