The prospects for Thailand's fast-moving consumer goods (FMCG) market worth 442 billion baht are expected to stay bleak this year and next, as consumers remain cautious about spending during 2018-19, says Kantar WorldPanel Thailand, a market research company.
Aitsanart Wuthithanakul, the company's business development manager, said domestic sales of FMCG are likely to shrink as much as 1% during 2018-19 because consumers still have less money in their pockets and household debt remains relatively high.
"Despite growing exports and the government's massive capital injection to fund the infrastructure development, a majority of people have yet to enjoy any benefits," Mr Aitsanart said.
"They are still cautious about their spending now, as indicated by their frequency in shopping complex visits, which is still relatively low so far. 2018 and 2019 will be the most challenging years for both manufacturers and retailers because market demand will continue to contract."
Mr Aitsanart said urban people on average made 145 shopping trips in 2017, a drop from 158 in 2016.
Retailers and manufacturers, meanwhile, are expected to place more emphasis on promotional campaigns and pricing strategies to lure customers.
Mr Aitsanart said the FMCG market was estimated at 442.82 billion baht in 2017. The industry showed low growth in recent years, up 2.6% in 2014, 2.2% in 2015 and 1.7% in 2016, before falling 0.4% in 2017.
Last year, the home care segment grew by 4.1%, with personal care up 2.6%. The food and drink category fell 2.4%.
Packaged groceries sales fell 0.4%, the worst showing since the financial crisis of 2007.
Mr Aitsanart predicted that convenience stores will continue to gain in popularity, along with small supermarkets like Mini Big C and Tesco Express, while hypermarkets are likely to maintain their share and e-commerce will become larger than supermarket chains by 2020.
The convenience store segment has grown by an average 0.5% a year since 2013 and will become the leading modern trade channel by 2019.
