Impact of hypermarkets on consumption and distribution in rural areas: case study of Ubon Ratchathani in northeastern Thailand

Abstract

Hypermarkets in East Asian countries have reached a turning point in their life cycle, where local expansion has become essential for further development. Unfortunately, existing studies on retail internationalisation have paid little attention to rural development. To address this gap, this study evaluates the impacts of hypermarkets on local consumption and distribution in Ubon Ratchathani, a regional city in northeast of Thailand. Results of the study showed that hypermarkets have succeeded in converting high-income level consumers in Ubon into customers. However, because Ubon does not have a sizeable middle-class population, hypermarkets have reached out to tourists and the local low-income groups. Second, although hypermarkets are direct and strong competitors to small domestic retailers, the domestic retailers in Ubon managed to survive better than expected. This could be due to the fact that hypermarkets are largely inaccessible to the poor, despite their low price policies, comfortable store layout and engaging entertainment options. Third, hypermarkets have not greatly influenced the distribution of agricultural products in Ubon. They continue to depend on traditional middlemen, who also act as educators to farmers and collect farming products efficiently. The findings of this study suggest that if hypermarkets want to expand further in rural areas, they need to attract new customers and introduce changes in the existing distribution network to capture the traditional advantage enjoyed by local domestic retailers, especially with regard to agricultural produce.