Page 24 - FoodFocusThailand No.170 May 2020

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cash flow within their businesses. It has been seen that an increasing
number of both large and small retail operators has adjusted their business
models towards online channels through e-market places and social
networks, namely Facebook or Line, in order to provide customers greater
convenience via online orders and delivery services. Retail operators
relying on offline income are advised to explore online channels as one
of the means to generate income because their liquidity can be adversely
affected if the COVID-19 pandemic gets much worse.
From March 22 to April 30, 2020 when most stores are closed,
KResearch projects that turnover in the e-commerce market will increase
approximately by 20-30% or THB 6.8 billion over the THB 26.2 billion seen
during the normal period to THB 33 billion. Such an increase is attributable
chiefly to changing consumer behavior towards online shopping as most
consumers can no longer shop offline, given that most stores are closed. delivery technologies or applications. Therefore, the government’s
The most sought-after products via online channels are health and beauty request for a short-term closure of their premises may inevitably hurt
products (vitamins, dietary supplements and cosmetics), children’s their liquidity.
products, garments, footwear, and pet products. Online purchases of The restaurant business remains flexible and has channels to
fast-moving consumer goods (FMCG) may also increase, albeit at a generate income through offering dining and delivery services. After
moderate pace, because such products have largely been bought in the government’s announcement of its request for a temporary
advance while some stores still sell them offline. closure of non-essential venues, it can be clearly seen that
In addition, since most consumers are tightening their belts and some consumers in Greater Bangkok have increasingly used the food
consumers may lose their income, retail operators may need to offer more delivery service via applications while restaurants have been
promotions than usual. Supermarkets and convenience stores may have stepping up promotional campaigns via food delivery applications,
sales at their premises and marketing campaigns via an online platform. as well. Given this, we at KResearch expect that turnover in the food
Concurrently, cost control and reduction remain necessary to sustain delivery business when restaurants are closed from March 22 to
many businesses, which can be achieved through aligning their inventories April 30 will increase roughly 35-40% over the normal period or by
with the current demand and speedy negotiating with lenders concerning THB 1.2 billion from THB 3.3 billion to THB 4.5 billion. As a result,
rights and privileges that they are entitled to from the government relief restaurant operators, who do not have the delivery service, are
measures. advised to do so in order to tap into new customer segments either
Retail operators are also urged to map out plans to cope with various by themselves or in collaboration with other restaurant operators,
incidents that may change in the future, in particular if the number of having food delivery applications. Operators of restaurants located
COVID-19 fatalities has yet to peak as the government will likely introduce in business areas may offer special promotions to customers and
tougher measures. Such plans may include flexible transportation for assign their staff to deliver foods to offices nearby.
products having strong demand, product procurement from more diverse In addition, cost management is important for restaurant
sources, and customer communications to ensure their clients fully operators at this time, in particular for perishable food inventories.
understand that products to be delivered to them might arrive later than Meanwhile, restaurant operators may simplify their menus, though
originally agreed. they should maintain options for customers so that they can at least
• Restaurants have increasingly penetrated the market via online reduce costs and set food prices more easily in alignment with
channels and delivery services to ease the impact of the COVID-19 economic conditions. Concurrently, they are required to build
pandemic on liquidity and possibility of laying off their staff. customer confidence by maintaining cleanliness at their premises
KResearch is of the view that the impact of government measures, and ensuring that all containers are tightly fastened. They should
including the declaration of a state of emergency and a request for high adopt social distancing in dining areas and for the queuing system,
risk venues to close over the short term, on the restaurant business may as well.
vary depending on the service style of each restaurant. Certainly, those Due to the high uncertainty surrounding the current situation,
offering a full table service will be a major casualty, though they can be business operators may have to map out contingency plans to brace
spared by offering takeaway and food delivery services. KResearch has for various impacts, such as those for food ingredients and delivery
classified restaurants into three categories, as follows: service, in case that there are problems with their food delivery
1. Full service restaurants are those located in shopping malls and service providers.
tourist attractions, or garden style restaurants, deriving core income from In summary, the prolonged COVID-19 pandemic has adversely
clients dining at their premises. These eateries will likely be substantially affected the way of life, health and well-being of people in Thailand,
affected by the COVID-19 pandemic because owners have restrictions as well as the business sector on a broader scale. The retail and
on adopting new sale channels. restaurant businesses have not been spared either as seen from
2. Limited service restaurants, which is generally any partially self- their sluggish sales, which would have been derived from both Thai
service establishment, whose patrons order or select items and pay before and foreign clients. This impact along with the government’s request
eating at a counter such as fast food restaurant or some types of Asian for high risk businesses to close over the short term and the
eatery, may not be threatened much by the COVID-19 pandemic because declaration of a state of emergency under the Emergency Decree
they offer many styles of service, including casual dining and take away, to combat the COVID-19 pandemic has led KResearch to assess
though some offer food delivery service, which requires them to develop that turnover in the e-commerce and food delivery businesses from
their own applications or join hands with food delivery application March 22 to April 30, 2020 may increase over the normal period by
developers. Under the current circumstance, these eateries are therefore roughly THB 8 billion. However, such a rise may not be able to offset
able to make adjustments and reduce the impact of the COVID-19 outbreak the shortfall in their core income from offline sales. As a result, net
faster than full service restaurants. turnover in the retail and restaurant businesses may decline THB
3. Street food vendors are largely small eatery operators, offering 72 billion during this period.
services at premises and take away. Recently, they have partnered with Looking into the remainder of 2020, the outlook for retail and
food delivery application developers to offer food delivery service and restaurant businesses will hinge on many variables. As a result,
allow them greater adaptability to cope with the virus outbreak. However, related operators are urged to keep abreast of additional relief
some small restaurant operators have experienced a liquidity squeeze measures that are scheduled to be introduced.
while renting premises. In addition, others do not have access to food

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