ASEAN’s Mom-and-Pop Stores: Different Name, Same Identity, and its Function to Drive Economies Forward in the post-Covid 19 Era
Date : 08 Dec 2020
Whether you roam around Bangkok, Manila, or Jakarta, even in rural areas in ASEAN countries, you might notice that there are a huge number of mom-and-pop stores. Even though they have different names (Shohuay in Thailand, Sari-sari stores in the Philippines, and Warung in Indonesia), they all have similar functions to facilitate final consumers for their needs for basic commodities and can also be a distribution channel for locally-made products. With the advent of modern retailers in ASEAN’s cities, mom-and-pop stores have lost their significance in consumers’ lives especially in an urban area. Consumers seem to neglect or even forget these stores, this is consistent with changing lifestyles and demands for convenience. However, the covid-19 crisis can be a turning point and an opportunity for these stores to revitalize and use their strengths to become a gamechanger to drive the local economy forward if they are well-equipped and fast enough to catch up with the new normal era.
ASEAN’s mom-and-pop stores: Advantages and Strengths
ASEAN’s mom-and-pop stores can be labeled as the identity of ASEAN since it is one of the necessary things in the lives of millions and disperse around the region. There are around 400,000 stores in Thailand, 1 million stores in the Philippines, and 3.5 million stores in Indonesia. They have many advantages that their rivals cannot compete with. Firstly, the business operation is highly flexible since they are mostly family businesses. They often sell in a small amount, provide some loans for the consumers or allow the customers to change the products which are suitable with ASEAN consumers’ lifestyle. Moreover, they know their customers pretty well thanks to the nature of ASEAN people who are collectivist and care about other people. The owners often befriend with their regular customers, as a result, informal but a long-term relationship is established. Another advantage that is worth mentioning is their locations since most of the stores are located in the center of the communities. Therefore, mom-and-pop stores are considered a cultural symbol that reflects ASEAN’s characteristics as a whole.
Why can mom-and-pop stores save the economies?
Covid-19 has made the region more economically vulnerable. The international economy sector such as the tourism and service sector has been restricted. The tool that can make the countries survive is the domestic sector. And this is where the mom-and-pop stores step up.After the crisis, many people were unemployed and had to go back to the provinces. They sometimes made the products on their own and sell them to survive this hard time. Selling via an online channel can be promising, but if they want to reach more customers, an offline channel may be a profitable channel for some products as well. However, to meet the huge modern trade standard can be tough for these small businesses. At this point, a more flexible policy from mom-and-pop stores can help them put their products on the shelves and generate income more easily. Take Thailand as an example, many mom-and-pop stores source the local products in the form of consignment and sell them to the customers. This can add variety to their products and create differentiation in the store. Also, they can help and build a relationship with local entrepreneurs.
Apart from this, some people from the tourism or service sector whose jobs were affected by the crisis chose to open stores to earn money. This can be their new investment and generate more jobs in the economy. As a result, it can be summarized that if the mom-and-pop stores are strengthened, the local economy and the community products’ value chain can move forward which results in more resilience and sustainability in the long run.
How can we help them?
The biggest question here is how we can help the mom-and-pop stores regionwide to compete and help uplift the local economic sector. Before finding solutions, it is worth mentioning that mom-and-pop stores have to face a lot of challenges such as lack of good management and proper accounting practices, more intense competition from modern trade and online channels, increasing costs, and changing consumer behavior. These factors make it harder for mom-and-pop stores to drive the entire economy or even survive. There are many ways that mom-and-pop stores can be assisted. Each stakeholder’s participation is required to uplift their competitiveness. At the value-chain level, suppliers or big wholesalers can be mom-and-pop stores’ coaches providing them with know-how, expertise, beautification project, or marketing materials for these stores to attract more customers or enhance their efficiency in the stores. It is very reasonable for big wholesalers and suppliers to help these stores since they are their main customers. In the case of suppliers, the more traditional mom-and-pop stores there are, the more negotiating power they have with modern retailers. That is why some suppliers also become the mom-and-pop stores’ partner and grow together with them.
Apart from that, technology providers and start-up companies can play a very important role to increase mom-and-pop stores' competitiveness and help them catch up with the 4.0 era. Since the cost of doing business is higher and customers become more demanding, many technology providers are here to fill up the gap of stores’ needs for the stores to enhance their efficiency by digitization. Indonesia is a good example of this since there are many start-ups that target mom-and-pop stores in the country such as Warung Pintar that helps the mom-and-pop stores with its state-of-the-art technology. With striking yellow prefabricated kiosks IoT devices, POS system, in-built Wi-Fi, and automatic stock replenishment systems, the stores can increase their productivity and income, bringing about the better livelihood of the stores’ families. From this case, it can be seen that the start-up community can provide new technology for these stores in order to enhance their operation and connect the stores to their prospective customers.
One of the most important stakeholders is government. The government can help mom-and-pop stores by providing knowledge through capacity building activity. The government can also organize activities to build a network between mom-and-pop stores and other stakeholders especially local entrepreneurs, technology providers, and financial institutions for them to strengthen their networks and exchange their knowledge or resources with one another. Moreover, it should enhance the start-up and business ecosystem to facilitate SMEs or start-ups to do business more easily. Furthermore, it can collaborate with educational institutions to extract some knowledge and conduct research to improve the competitiveness of the mom-and-pop stores. One interesting initiative by the government to help the mom-and-pop store is from Thailand. The Thai government initiated the welfare card scheme which provides the low-income people with a 200 – 300 Baht monthly allowance to purchase necessities products at Tong-fa (Blue flag stores) which mostly are small or medium mom-and-pop stores. Since there are more than 14 million cardholders nationwide, the sales of these stores have increased significantly. Even the recently launched half-half co-payment scheme also involved the mom-and-pop stores which can partly help them survive the crisis.
In conclusion, developing mom-and-pop stores to be competitive and sustainable requires collaboration from many stakeholders. After Covid-19, the challenge is not only to make them survive but make them be a gamechanger of the economy, that is, become a distribution channel for local entrepreneurs, a source of consumer goods in the communities, and a driver of the overall economy. The answer is, we need digitization, network, and know-how from each stakeholder to make Shohuay, Warung, Sari-sari stores, or whatever it is called in ASEAN stronger, become a pillar of our local economy and identity of ASEAN forever.
Credited Writer: Nuttawat Unjitlerd (Richard Wen) is a trade officer in the Department of Business Development, Ministry of Commerce working in SME empowerment and business promotion field. He has interests in small and local entrepreneurs, Chinese, Thai and ASEAN culture and languages. You can reach him at firstname.lastname@example.org.