Thailand’s retail recovery will depend on the effectiveness of government stimuli.
Thailand saw a drop in retail developments in the downtown areas of Bangkok, which are more dependent on demand from tourists rather than locals like those in the midtown and suburban locations, according to a report from CBRE Research.
Some retailers, especially for food and beverage (F&B), have been considering using less space per store, instead focussing more on delivery services following the growth of online food ordering in Thailand.
“The retail trend highlight this year has been the remarkable growth of the e-commerce industry in Thailand and how retailers adapted to online retail sales after social distancing measures were implemented,” said Jariya Thumtrongkitkul, CBRE Thailand’s head of advisory & transaction service – retail.
How fast the retail industry can recover from the pandemic will mainly depend on how effective government stimuli such as “Kon-La-Khrueng” (Let's Go Halves) and “Rao-Tiew-Duay-Gun” (We Travel Together) campaigns are, as well as when international travel restrictions will be lifted.
“The amount of retail space in the market, especially in Bangkok, cannot be sustained only by domestic demand in the long run,” the report added.
Thailand’s retail industry has experienced diminished footfall and a drop in spending power as a result of the pandemic. Consumer confidence index also fell to its lowest point in 20 years in April 2020 at 47.2.
“Even though the confidence has improved in the following months, it is still a long way from its pre-COVID-19 level. Due to business disruptions and increasing financial burden, the household debt as of Q2 2020 was at 83.8% of the total GDP, increasing from 78.9% last year,” the report stated.
Bangkok’s retail supply climbed 2.4% YoY to 7.8 million square metres as of Q3, from the opening of 12 new retail developments with combined retail space of 100,000 sqm with Siam Premium Outlet being the biggest development this year.
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