Should traditional mom-and-pop retail change?
By Jon Fernquest[Introduction|Vocabulary|Article]
[Reading Questions|Answers]
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Small shopkeepers have been holding protests recently in an attempt to influence politicians and regulate the expansion of large retail companies like Tesco Lotus, Carrefour, 7-11, or Big-C.
This year a gigantic Tesco-Lotus store opened in Maesai in Chiang Rai, pulling away customers from the Burmese side who patronised the local Maesai market. Shopkeepers were angry, but local Thais enjoyed the lower prices.
Do large stores like Tesco Lotus pull money out of local economies?
Who should politicians listen to? Consumers or store owners?
It is worth noting that even developed Asian economies like Japan have many more middlemen between producer and retail outlet than, for instance, the United States. Is this a cultural difference that should be preserved?
Today's article is from the "opinion and analysis" section of the Bangkok Post so it is written with a strong opinion.
Strong opinions provide the opportunity for strong debate, so if you don't agree with the article use the opportunity to dream up counter-arguments of your own.
Reading Questions
Here are some questions to guide your reading (See answers at end):1. What should retail regulations not infringe upon, according to the author?
2. What is the problem with neighborhood stores, according to the author?
3. What is the "modern retail trade" according to the author?
4. Why are customers attracted to modern retail establishments?
5. What features of traditional stores do customers dislike, according to the author?
6. Should people who inherit stores from their parents run them like their parents have, according to the author?
7. What advantage do neighborhood store owners have over large impersonal retail companies?
8. What are some examples of small traditional stores learning from modern retail practices and changing the way they do business?
9. What effect on politicians is the author afraid the protests of small store owners will have?
10. According to AC Neilsen, are traditional retail stores still an important part of the Thai economy?
Bangkok Post Article: September 13, 2006
A matter of choice
Any legal restrictions authorities plan to impose on the modern retail trade in favour of traditional grocery stores must not infringe on shoppers' freedom to choose.
Consumers must not be restricted to derelict mom-and-pop shops and neighbourhood wholesalers who are only keen to seek government protection without making their own genuine effort to attract people back to their stores.
The proliferation of the modern retail trade - shopping centres, department stores, hypermarkets, convenience stores and supermarkets - reflects the consumers' choice of where they want to spend their money. These modern trade establishments offer the kind of quality of goods and services at competitive prices as well as a pleasant shopping experience, which consumers demand but cannot find at most traditional outlets. It is a well-known fact that at most traditional stores, not enough attention is paid to good customer service and expiration dates of products; the selection of goods is limited yet are priced higher than at modern trade establishments. Many of these neighbourhood outlets are untidy, dirty, poorly lit, not to mention the lack of air-conditioning - a common feature at all modern retail outlets.
Many traditional store owners inherited their establishments from their parents and operate them in the old fashion, ignoring the rapidly changing consumer behaviour. These operators need to make a self-evaluation and see how they can adjust to the new world using common business sense, learning some good practices around them, being adaptive and at times innovative in attracting customers who live right next door.
Being part of the community, they have the edge and flexibility over their modern trade competitors, such as closer personal business relations with their shoppers, giving them credit terms or instalment payments, allowing them to purchase in smaller volumes than usual, say, five eggs instead of a dozen.
All is not lost. There are good examples of traditional shops having adapted themselves and co-existing with modern trade establishments, even under the same roof. Notice those small traditional shops offering bakery and Thai desserts at shopping centres like Seacon Square and Future Park Rangsit, which continue to enjoy good business even though the same products are on the shelves of big stores located within the same complex.
It is crucial that the authorities thoroughly consider the overall picture of retail trade and avoid knee-jerk regulations which restrict modern trade and thus affect consumers and the economy as a whole, in order to please traditional store operators. Politicians should not seize the opportunity to win political support from traditional store owners by listening to and acting on the protesting side while penalising the other.
Is the picture currently being portrayed - that traditional shops have quickly been driven out of business (by two-thirds over the past four years to just 100,000), that they are on the "verge of extinction'', or that consumers have completely stopped buying at those old outlets - a bit distorted?
The most recent study on actual shopping behaviour conducted by international research firm AC Neilsen shows that 87% of shoppers visit mom-and-pop shops every month while 78% go to wet markets every month.
Shoppers' monthly visits to hypermarkets dropped from four in 2004 to two in 2005. Last year, the average monthly shoppers' visits were 19 for mom-and-pop shops; 11 for wet markets; 11 for convenience stores outside petrol stations and four for convenience stores situated in petrol stations.
AC Neilsen's study estimates that traditional establishments still control 60% of the total retail market, with modern trade having 40%, and Tesco Lotus, the largest hypermarket operator, accounting for less than 6%. There are still more than one million shophouses in operation, with 380,000 of them in Bangkok; plus 125,000 wet markets. The modern trade outlets have mushroomed to some 4,000, up more than 100% from 2001, driven by consumer demand and pushing Thailand's retail market value up by 60%, from 208 billion baht in 2001 to 335.39 billion in 2004.
Traditional shop operators must be realistic and open-minded enough to bear in mind that, at the end of the day in our free enterprise environment, consumers will decide where they shop.
Boonsong Kositchotethana is Deputy Assignment Editor (Business), Bangkok Post.
Vocabulary (in discussion above)
infringe on x - restricts freedom in activity x, interferes with x
derelict - broken down, not maintained or repaired
mom-and-pop shop - local neighborhood shop (usually run by a family, thus "mom and pop")
wholesalers - sellers between the factory and store, usually sell only in large quantities
hypermarkets - a very large supermarket
an establishment - (formal) a store, business, or organisation (emmphasizes that it is at a particular place for a long time)
outlets - retail outlets, stores for selling a companies products
credit terms - the details of a loan, like the interest rate and how long one has to pay it back
instalment payments - the monthly payments a customer makes when they get a loan to buy something
knee-jerk - responding automatically without thinking, believe without thinking, always see things the same way without thinking about it
seize the opportunity - immediately take the opportunity or chance to do something, when you get the chance
on the verge of - about to happen
extinction - cease to exist, stop existing (for example after the extinction of dinosaurs there wasn't a single dinosaur in the world)
distorted - changing something in a bad way (from what it should be)
open-minded - willing to think about thing and maybe change opinion
Answer Key:
1. What should retail regulations not infringe upon, according to the author?
Shoppers' freedom to choose.
2. What is the problem with neighborhood stores, according to the author?
They seek government protection without making an effort to make their stores more attractive to customers.
3. What is the "modern retail trade" according to the author?
The "modern retail trade" consists of shopping centres, department stores, hypermarkets, convenience stores and supermarkets.
4. Why are customers attracted to modern retail establishments?
They respond to customer demand (They give the customers what they want).
They give them the kinds of products they want, at the quality they want, at
"competitive prices," and provide them with a "pleasant shopping experience."
5. What features of traditional stores do customers dislike, according to the author?
Traditional stores have a limited selection of products, poor service, high prices, no expiration dates on products, in stores that are messy, dirty, poorly lit, and without air conditioning.
6. Should people who inherit stores from their parents run them like their parents have, according to the author?
People who inherit their stores from their parents should learn about "rapidly changing consumer behaviour" and innovative ways of attracting new customers or business in the neighborhood.
7. What advantage do neighborhood store owners have over large impersonal retail companies?
They have "closer personal business relations with their shoppers."
They can tailor the products and services they sell to the customers' needs, allowing smaller quantity purchases and credit terms adapted to their needs.
8. What are some examples of small traditional stores learning from modern retail practices and changing the way they do business?
Small bakery and Thai desert shops in shopping centers do good business even though the same products are sold in larger retail chains in the same shopping center.
9. What effect on politicians is the author afraid the protests of small store owners will have?
He is afraid that politicians will try to win political support from the shopkeepers while they ignore consumers, the people who buy things in the store, whose opinion should also be poltically important.
10. According to AC Neilsen, are traditional retail stores still an important part of the Thai economy?
Yes, they "still control 60% of the total retail market."
