Thai consumer behaviour is changing because of the outbreak of the coronavirus, with consumers spending more on medical supplies and spending less on eating out and travelling. Such changes are having a negative impact on businesses.
Most of the businesses that have been affected by these changes in behaviour are businesses that depend on Thai tourists. This development could cost the industry between 13.1 to 17.5 billion baht in the next three-month period, accounting for 5 to 6.5 per cent of what they would usually make.
Retail outlets and restaurants are also taking a hit from the outbreak and the overall limited purchasing power, where the virus could take 900 million to 1.5 billion baht away from their income as well.
According to Kasikorn Research Center’s survey, with a sample size of 1,200 participants, 66 per cent of the respondents are concerned over the coronavirus outbreak in China, Thailand, and the rest of the world. K-Research estimated that between January and March, Thai people will spend around 2.2 to 2.5 billion baht on medical supplies such as surgical masks and hand gels.
“More than 70 per cent of respondents said that they have to spend more on these supplies,” the report said.
In terms of travelling, Thai people who already planned their travels over this three-month period have avoided going to crowded areas, while people who have yet to arrange their travel plans will temporary hold off on traveling until the situation settles down. For people who still want to travel, they will go to provinces that have yet to report an infection.
The research house suggests tourist destinations and tourism operators continuously update their websites or social media with information about their local areas in order to reassure travellers. Operators should also promote meetings, incentives, conferences and exhibitions (MICE) tourism to match the government stimulus measures.
On February 4, the Cabinet introduced a tax deduction of two times the expenditures for MICE tourism in provincial areas to promote domestic tourism.
Apart from not travelling to other provinces, most Thai people have lowered the frequency of their daily travelling, even avoiding going to retail stores by buying larger quantities at a time and spending less time picking their products from shelves. Some have opted to go to stores with fewer people. If possible, they will buy readymade food, cook at home, or order-in instead of going to their favourite restaurants.
A Thai Enquirer reporter observed at least 50 per cent fewer people buying food at a local market in Lam Luk Ka District over the past two weeks, while about 80 per cent of passengers on rail transport (Bangkok Mass Transit System and Metropolitan Rapid Transit) in Bangkok have been seen wearing surgical masks.
K-Research said the businesses that will benefit from these changes in behaviour are readymade food operators, restaurants that have a delivery option, and online food delivery services. The think tank said people’s behaviour will return to normalcy once there is a cure or a vaccine for the coronavirus, when the government presents preventive measures that can create confidence for consumers, and when the number of infections in the country starts declining.
KR-Household Economic Condition Index
The research house’s KR-Household Economic Condition Index (KR-ECI) for January is at its lowest in six years, as the outbreak is creating a downside risk on the cost of living and concerns over future employment. As mentioned, people are spending more on medical supplies and care.
The three-month Expected KR-ECI also slipped in line with the current KR-ECI for January, which decreased from 42.4 index points in December down to the current 40.6 – the lowest in 72 months. Households in Thailand are concerned about their income and employment over the next three month as the layoff rate is still high.
The Ministry of Industry said 222 factories shut down in January, 53.1 per cent higher than the same period last year, with more than 2,500 factory workers now out of a job. The ministry has attributed the shutting down of factories in Thailand to the ongoing trade war between the US and China, more than the outbreak of the coronavirus.
K-Research added that the overall slowdown of the economy and the ongoing drought are other factors that are hampering people’s purchasing power in the first half of this year. However, the historically low policy interest rate at 1 per cent should help ease private debt obligations for now.