In the heart of Southeast Asia, Thailand is renowned as one of the world’s favorite tourist destinations, with its stunning beaches in the south and mountainous areas in the north of the country. Tourism is important to the Thai economy—prior to COVID-19 it was attracting nearly 40 million tourists a year, contributing nearly 20% of the country’s gross domestic product.

Over the past 40 years, Thailand’s 70 million population has benefited from consistent economic growth, moving from a low-income to an upper-middle-income country with an average annual household income per capita of just under $4,000.

This economic dynamism has been matched by a rapidly developing retail trade. The industry changed significantly in the late 1990s following the Asian financial crisis when large Thai conglomerates sold off their valuable retail assets to leading global retailers. Ahold led the way, followed by Carrefour, Casino and Tesco. This influx of retailers helped accelerate development and professionalism within the industry and allowed it to leap ahead of many of its neighboring markets.

The market has now moved full circle, as with nearly every Asian market, and the international retailers have sold up and local companies now dominate the market. These are led by CP All Public Company Ltd., owners of 7-Eleven, Tesco Lotus and Makro; Central Retail, owners of TOPS, TOPS Daily and FamilyMart; and Berli Jucker Pcl (BJC), owners of Big C and Mini-Big C.

The 2000s saw rapid development of hypermarkets, supermarkets and personal care stores, as well as convenience stores. While hypermarkets were the dominant channel early on, the last decade has seen a dramatic rise in the importance of the convenience channel, which now boasts around 20,000 stores, spread throughout the country.

The Thai Consumer

Convenience stores in Thailand have one of the highest shares of the packaged grocery market of any country globally with over one-third of all sales going through the channel. The shift has occurred as shoppers in urban areas moved to an on-the-go lifestyle looking for quick solutions to save time. Increased traffic congestion in major cities has also helped push proximity retail as shoppers do more top-up shopping to meet their daily needs.

Nearly all Thais regularly use convenience stores and visit them frequently, often four or five trips per week—a frequency only matched by shoppers in Taiwan. And they have a lot of proximity formats to choose from. In addition to the modern trade, there is still a very strong traditional trade with over 400,000 mom-and-pop stores. These stores provide the most convenient location for shoppers to buy impulse products and some daily necessities, particularly in upcountry rural locations.

7-Eleven and FamilyMart

Within the modern self-service convenience channel, stand-alone traditional stores lead the way, headed by 7-Eleven and FamilyMart.

7-Eleven is the dominant market player with 12,740 stores and plans for a further expansion of 700 stores in the next 12 months, despite the impact of COVID-19. 7-Eleven was the first convenience chain in Thailand, opening its first store in 1988. Today, its store portfolio serves over 11 million customers a day. While current sales are split 70:30 between food/beverage and nonfood products, the chain is now focusing on how to develop from a convenience food store to an “all” convenience store through leveraging online channels.

Nearly all Thai consumers regularly use convenience stores and visit them frequently, often four or five trips per week—a frequency only matched by shoppers in Taiwan.

7-Eleven has driven innovation in the Thailand market, launching its Thai Smart Card (loyalty) in 2001 and Smart Purse Payment Card in 2006. Its digital presence has developed since 2014, including its All Online 7-Eleven site and 7-Eleven mobile app. It now has a combined 40 million online accounts across all its online channels. It is also one of the strongest brands in Thailand, winning “Thailand’s Most Admired Brand & Why We Buy” in 2020 for the eighth consecutive year.

FamilyMart has been in Thailand for nearly 20 years, originally operated by FamilyMart Japan before selling 51% to Central Retail in 2012 and eventually 100% in 2020. Currently, there are over 900 stores focused on meeting customers’ daily food and other needs from stores between 100-150 square meters. The chain is primarily focused on Bangkok and key tourist destinations, compared to 7-Eleven which operates nationally.

Competition and Growth

Besides stand-alone convenience stores, there are over 4,000 petrol convenience outlets including both the leading chains as well as specialist fuel chains such as Jiffy, owned by PTT (the largest operator of petrol stations); Shell Select; TigerMart and others.

The typical highway gas station in Thailand usually has a wide array of food and beverage outlets as well as a convenience store, providing significant competition for food-on-the go shopping missions.

It’s not just at petrol stations that convenience stores face this level of competition. Everywhere you look on Thai streets there are opportunities to purchase food and drink from street vendors selling fruit or sweet Thai desserts to pavement restaurants, as well as a wide array of fast-food outlets. Often vendors can be seen selling their products right on the store’s doorstep. Despite this, foodservice has seen rapid development over the past five years, with some stores now preparing food on-site, benefiting from Thais’ love of food and snacking at all times of the day.

Thailand has also seen significant growth from another convenient format—the minimarket, or proximity grocery store—which is primarily focused on meeting everyday grocery needs including fresh food but also targeting on-the-go shopping missions.

The leading chains are Tesco Lotus Express with over 1,600 stores typically sized between 150-250 square meters, Mini-Big C, TOPS Daily and the rapidly expanding CJ Express (500+ stores), part of the Carabao Group, producers of Energy Drinks.

These formats continue to innovate with new customer offers—for example, TOPS Daily has been introducing ready-made meals, coffee bars and even co-working spaces to its stores.

A Look Ahead

COVID-19 has significantly impacted the Thailand retail market with several lockdowns and curfews over the past 18 months as well as the loss of tourism, causing the economy to contract by 6% in 2020. This has led to household debt increasing to an 18-year high at 90.5% of GDP, up from 85% in Q4 2020.

With many people working from home, store opening hours being limited by the overnight curfews and interprovincial travel discouraged, customer traffic has been significantly impacted, which has led to store closures at least for the short term. While convenience stores have benefited from their proximity to shoppers, a restricted range of everyday essentials has limited that benefit. Most convenience stores have leveraged online services and use of delivery bikes to respond to the market challenges.

In the longer term, the outlook for the convenience channel continues to look positive, particularly as it further leverages the opportunities from digital commerce that have developed over the past 18 months.

This article was reprinted with permission from Global C-Store Focus, the monthly newsletter from U.K.-based Insight; www.insightresearch.co.uk.