BANGKOK: High household debt and low consumer confidence have subdued retail spending in Thailand, with marketers having to place emphasis on discounts and promotions.
Reuters reported an unexpected spike in bad loans at Thailand's banks in the first quarter, and described this development as "the latest symptom of a household debt malaise that also threatens consumer spending".
That household debt now stands at 85.9% of the country's GDP as consumers struggle to repay loans taken out on cars, homes and electronics between 2010 and 2013 when credit was easy.
Consumer confidence, meanwhile, has fallen for four straight months, as the index produced by the University of the Thai Chamber of Commerce fell to 76.6 in April, its lowest level for ten months.
Thanavath Phonvichai, an economics professor at the university, said consumer confidence needed to be lifted if consumption was not to remain stalled and urged a cut in interest rates.
A survey from Intage Thailand pointed to discounts and impactful promotional campaigns as the most effective marketing tools for stimulating purchases at a time of economic stagnation.
Chief operating officer Dangjaithawin Anantachai cited as an example the "green tea war" between makers Oishi Group and Ichitan Group. The promotions these two are undertaking lead some Thais to drink bottled green tea just for the caps and a chance to win a luxury car.
As well as having promotions function as a communication tool, she added that placement should be convenient.
Mom-and-pop stores play a role nationwide but convenience stores dominate, especially after dark when mom-and-pop shops and street stalls are closed.
Intage Thailand reported that Thai people spend roughly 120 baht a day in convenience stores, averaging two visits at 60 baht each.
Data sourced from Reuters, Bangkok Post; additional content by Warc staff