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Randall Shannon , Ph.D.
Assistant Professor Randall is a faculty member at the Ph.D. Program in Sustainable Leadership, College of Management, Mahidol University. His Specializations are: Retailing, shopping behavior, branding, private label brands, consumer behavior
THAI CONSUMERS AND SUSTAINABILITY: WHERE IS THE STORY GOING?
By Randall Shannon, Assistant Professor & Program Director / College of Management / Mahidol University

Introduction

With a population of nearly 70 million, Thailand is a large and attractive market for a wide variety of products and services, and also has more than 30 million tourists visiting per year. With the advent of ASEAN, businesses are poised to reach other member countries more easily, making Thailand an attractive base of operations. This chapter will cover issues related to the aging population and Thai consumer behaviour, and discuss retailing, health, wealth, and living arrangements.

For readers from other countries, one important warning is to be cautious of copying and pasting values from other cultures. While Thailand is number two in the world for the number of 7-Eleven convenience stores, it is not because Thai people are time pressured. Thai culture is collectivist, so people tend to be very social, but there is low time pressure and people are raised to live in the now, to enjoy life and not dwell on the past or the future. This means that trying to sell a product or service based on saving time will not be as interesting to consumers compared to offering convenience or showing how saving time allows them to enjoy themselves more or somehow enhance their lives or their image. Products and services positioned for future benefits, such as insurance and concentrates have faced slow acceptance. Like other Asian cultures, there is a high degree of importance on face and status, and conspicuous consumption. Looking good and being in-trend is important.

Dangers of Overconsumption

For marketers, this creates a wonderful scenario: consumers who love to have fun and socialize and who want to ‘keep up with the Joneses’ by using branded products, seeing and being seen. Being present-oriented and enjoying life makes it easier for consumers to take on debt without thinking through what it may mean for the future, hence there is a very large and increasing problem with household debt. For those with low income and education, they very often do not understand the details of debt or how it compounds. Some may try to flee their problems and not realize the debt grows and may end up passing debt to their relatives. Interest rates and fees are often not transparent, and payment plans may utilise a balloon payment to attract consumers without them fully understanding the implications.

Manufacturers, financial service providers, marketers and retailers all need to be cautious and responsible about encouraging moderate consumption and ensure that consumers understand and strive to achieve and maintain financial self-sufficiency. There is potentially an opportunity for applications, products or services that help educate and facilitate better savings goals and investments to reach those goals. The majority of Thais are saving too little, too late, and too conservatively, and end up not having enough income for a comfortable retirement. Overarching sustainability issues: over consumption, lack of awareness and lack of concern.

An Aging Population

Thailand is facing a major demographic shift in terms of the population rapidly moving to older age brackets. This has massive implications – there are fewer births, which means not as many customers, students, or workers. ASEAN is helping fill these jobs, to some extent, but the problem will continue to grow. Products and services will increasingly need to think about the large number of older consumers. For example, biophysical changes such as eyesight – labeling on packages and websites, positioning of products on shelves, ability to hold and open packages, store accessibility and parking. Research in the US shows older consumers are less interested in social benefits (will that be true here?), but are attracted to functional benefits of products or services, such as convenience, ease of use, reliability, quality and personalized service. Older consumers in Thailand may or may not have more money than their younger counterparts, but have more free time. Older consumers often want to be sure before buying and reduce risk, so be careful that salespeople are patient and friendly, not condescending – free samples can also help reduce risk. With fewer children being born, the extended family is becoming smaller, meaning there will be fewer people available to help raise children, but also fewer young people able to help care for aging parents or relatives as they balance their careers and face changing roles due to aging.

Lifestyles Are Changing

Parents and grandparents often helped raise children for those working in the family, but this is becoming less common. There has been a condominium boom, which makes the extended family less feasible, due to lack of space. While this may lead to increased interest in time saving products and services, consumers are still not time pressured in the way that many other countries are. This presents opportunities in terms of childcare, and convenience oriented products and services, such as ready to eat foods. However, Thais are increasingly facing the challenge of where aging parents and relatives can live. There are increasing numbers of assisted living or retirement communities which are utilising smart home technologies and cater to the elderly. Even those who prefer aging in home, there are increasing opportunities for the Internet of Things – both in terms of helping reduce energy consumption and improving quality of life by helping monitor activity and product consumption, such as smart refrigerators. This is a major ongoing opportunity. Some questions to consider: Will younger consumers be willing to place older relatives into assisted living facilities and will it be socially acceptable to do so? Who will be the decision maker? Who will pay? There may also be increased opportunities for assisting older consumers – such as helping drive or accompany them to the doctor or hair salon. Opportunities for assisted living, smart homes, Internet of Things, caregiver services.

Lifestyles Need Changing

While young people want to look good, the vast majority of the population does not exercise on a regular basis. Malls are filled with dermatology and anti-aging clinics and supermarkets are filled with products promising young looking skin and slim figures. Supplement consumption is increasing, despite consumers admitting they don’t really know if they work. On a more serious note, the main components of life satisfaction involve health and wealth, and many Thais are going to find themselves facing difficulties with both. Thailand is number one in ASEAN and number four in the world for alcohol consumption. If companies can help educate consumers, there is a wide range of opportunities open to promote healthier lifestyles, whether for themselves or their loved ones. Few Thais have a gym membership, despite widespread availability of gyms over the past twenty years. Shopping malls are increasingly offering community spaces for sharing time, and some are offering areas for those who want to exercise. This should be encouraged. As consumers and their relatives age, we can expect to see increasing interest in health enhancing products. Not just foods and beverages, but also likely air purifiers, pillows and products that suggest they will enhance the quality of life. For those with enough savings, there will be more time for travel and leisure. Opportunities for educating consumers about products and services leading to healthier lifestyles: foods and beverages, supplements, exercise and wellness programmes.

Retail Trends

Many companies are pushing financial technologies and e-payment systems, but Thailand has always been a cash based society, typically with small transactions. Debit based cards ensure spending is limited, and there are relatively strict limits about obtaining credit cards. Despite aggressive attempts to get Thais using e-payment and shopping online, acceptance has still been limited. Online retail sales are difficult to track, as many transactions are consumer to consumer through Facebook or Instagram, but they have been estimated to be just one percent of overall retail sales. Bangkok has the most Facebook users in the world, and social media is now a part of life for most people, young and old. The government is also pushing technology acceptance and e-payments, perhaps hoping to collect taxes, but there is still a general distrust of such systems.

While online shopping is likely to increase, Thai people enjoy hanging out in the malls and being serviced by salespeople. The selling point for online shopping will be convenience, which for younger people may mean avoiding traffic and saving time, but for older people will increasingly involve accessibility. Retailers will have to give more thought as to how to get aging consumers into their stores, their experiences within the stores, and how they will get back home. Several retailers have already begun offering deliveries to homes or condos, or even pick up points, such as at 7-Eleven.

There has been a boom of smartphone adoption, so digital marketing is a must. Bangkok has the most Facebook users in the world and social media is a part of daily life. Smartphones are now all-in-one entertainment devices, used for reading news, watching shows, playing games, listening to music and perhaps the most common of all – chatting with others. Joox has been surprisingly successful in terms of offering a free music service and yet was able to get a large number of consumers to pay subscription fees. As with fast moving consumer goods, when looking at a market with large numbers of people with low income, offering smaller sizes or making transactions affordable is an important consideration in terms of reaching a lot of people.

Opportunities for activities which facilitate social interaction, trying to build trends by utilising digital marketing and social media.

Sustainability Trends

Many large companies are pushing sustainability initiatives, but this is not being driven by consumers. For some companies, they may be following fashion, as CSR became prominent in the news. Some companies do a lot, but say little. Siam Cement has been very active in developing building materials which enhance energy efficiency, and some companies actively utilise and adopt such products to build new or upgrade existing facilities. Tesco Lotus introduced more energy efficient ‘green’ stores in Thailand, and followed by building zero carbon stores. There is more use of natural lighting, solar, wind and even rainwater collection among companies. All good, but these bring energy saving benefits. We expect to see these initiatives continue to expand and over time, consumers will become more aware and appreciative. For now, we still see extremely widespread use of plastic bags and straws, and even Styrofoam. Sustainability is not at the forefront of consumers’ minds, especially those with low incomes. Companies need to continue to educate consumers and likely will need to motivate consumers with rewards or punishments. Recycling and purchasing hybrid cars or energy efficient electronics is mainly driven by economic benefits, not altruism. Change takes time, and unless the government suddenly imposes penalties, this will likely be a gradual shifting of values as the younger children grow up with better role models and higher awareness.

Conclusion

A great many changes are sweeping across Thailand. Huge numbers of the population now have access to the Internet and social media. TV was already present, but now they have an interactive medium and can learn from connections via social media. On the other hand, most consumers have low income and are increasingly taking on debt, which eventually may become unmanageable. The population is becoming older and the established pattern of the extended family helping out seems to be declining. These problems also create opportunities, as younger people who are working will need help with childcare, older people will need help running errands and finding living arrangements catering to the elderly, or perhaps more products and services which allow them to age in home.

Consumers will eventually adopt e-payment systems, but no doubt there will be a massive shake up in terms of which platforms dominate. There is an urgent need for companies to help educate and promote the importance of savings and also preventative health behaviors, such as exercising. Medical services will become increasingly important as the population gets older, but it would be beneficial for the entire country if people took a more proactive and preventative approach.

Similarly, increasing awareness and interest in issues related to sustainability will also be beneficial to all.

Three Things You Need To Consider:

1. Raise awareness and urgency about the need for sustainability, try to reduce over consumption and debt, highlight the importance of savings and preventative health behaviours and how these relate to life satisfaction.

2. Online retailing will grow, but perhaps not as quickly as many expect.

3. Digital marketing and use of social media will be essential tools to reach consumers in Thailand, with the growth of ASEAN there will be increasing numbers of non-Thais in the market as well.