Whether or not it is the intention of the government, social welfare cards for the poor can help revitalise a sagging traditional retail segment -- "mom-and-pop" shops.
The government implemented the welfare scheme last month, providing living subsidies to 11.67 million people who had pre-registered with the state as low-income earners or being unemployed.
In addition to monthly monetary credits for using public transport, the card also includes a monthly living allowance of 200 or 300 baht, depending on the income of the cardholder, which can be used for grocery shopping at designated Thong Fah Pracharath stores.
Wichit Chantanusornsiri is a senior economics reporter, Bangkok Post.
These are small family-run shops, whose business is either dwindling or dying. They have for years lost their competitive edge to the large-scale expansion of international convenience store chains.
Since last month, numerous mom-and-pop shops, designated by the Commerce Ministry to join the scheme, started to see their business pick up as more and more customers have shown up to use their cards.
The scheme has helped boost sales in these stores, revitalising their once-sagging business. The trend shows that the living allowance, seen as very meagre by middle-class standards, is meaningful for the poor.
Even though the initial implementation of the scheme may not have been smooth, it is just a technical glitch. The installation of electronic data capture, or EDC, which can read the welfare cards at the majority of designated stores, has been delayed. It has been reported that a number of stores let cardholders take goods first and held onto their cards for redemption later until the EDC is installed. This is not a big problem and can be easily resolved. Any chosen store found to have violated the agreed terms should be delisted from the scheme.
Given that there are 11.67 million cardholders, the state has mobilised a significant purchasing force. The collective annual spending of all cardholders is estimated to be at least 30 billion baht. This spending power is large enough to revitalise mom-and-pop shops which have suffered a decline in customers who have defected to franchise-operated stores popping up all over the country.
The government should capitalise on this opportunity to revive this traditional retail segment, instead of letting it die. With the new purchasing power these cardholders represent, each of the 19,500 designated shops should be able to reap an annual turnover of over one million baht. After cost deduction, these shop owners will likely earn enough profits to let give them a better chance of survival.
Amid the expansion of convenience store chains and hypermarkets, the long-term survival of the Thong Fah stores and other community shops is not going to be easy. This government scheme will partly help boost this sector. But operators of these local businesses have to take control of their own fate by making some adjustments in the way they do business.
Consumers prefer convenience stores to pop-and-mum shops for a number of reasons such as air-conditioning, proper displays of products on shelves that make it easy for shoppers to find them and the diversity of goods. A lack of these features has made mom-and-pop shops lose their competitive edge, as does their limited financing which is incomparable to the business chains' investment capital. Nowadays, convenience stores have become part of almost everyone's everyday lives.
Therefore, local communities and the government should work together to restore, transform and strengthen this retail segment. This business restoration can create jobs for local people and initiate vibrant local economies. Mom-and-pop shops can be targeted as local outlets to sell community products, such as fish sauce, chilli paste, soap, shampoo and coconut oil.
If these products become widely associated with a geographical location, the local outlets could attract customers from further afield and bring more money into local economies. With their own signature products and their own charm, they may be able to compete with convenience stores.
For the welfare card scheme, the government has installed the EDC in 5,500 out of 19,500 designated outlets. This makes it inconvenient at the moment for cardholders who have to search for EDC-equipped stores to use the cards.
If the EDC installment is completed in all stores by year end as promised by the Commerce Ministry and if more stores are selected to join the scheme, cardholders will find it convenient to shop at these outlets.
The dire state mom-and-pop shops are in is partly caused by government policy. There have been no restrictions on the expansion of convenience stores, forcing local stores and even street vendors out of business.
The government should take this opportunity to strengthen these local stores to create jobs for hundreds of thousands of people instead of letting this traditional retail sector fall victim to big business.
