Tighter competition expected for Bangkok’s retail sector in 2022

The sector’s outlook is expected to suffer weaker consumer confidence.

Bangkok’s retail business competition throughout 2022 is expected to be more intense, especially among larger retail developers who continued to expand during the pandemic, according to a report from CBRE.

The outlook for retailers is believed to be as difficult and as competitive as ever, with consumer confidence affected by the ongoing effects of the pandemic, rising debt, and the prospect of rising inflation, the report stated.

“Whilst large retail groups are able to ride out the storm, smaller businesses will need to continue to adapt to survive in what is likely to be another difficult year,” CBRE said.

Thailand’s retail industry remained less active in Q1 when compared with the last quarter, the report noted, due to a nationwide surge in COVID-19 cases fueled by the more contagious Omicron variant since the beginning of January.

This happened despite the Thai government having eased restrictions and continued with various spending stimulus measures.

Nonetheless, large retailers were opening new branches, taking over other retailers and investing in their e-commerce platforms during the pandemic, the report added.

The country’s consumer confidence index (CCI) dropped 13.4% YoY to 42.0 in March from 43.3 a month earlier amidst slowing consumption due to rising energy prices and fears over the rapid spread of the Omicron variant, CBRE noted.

In Q1, total retail supply in Bangkok rose 1.4% YoY from 7.8 million sqm from the same period last year to 7.9 million sqm. Total occupied retail space also climbed from 7.4 million sqm to 7.5 million sqm over the same period.

At the same time, 700,000 sqm of the net lettable retail area was under construction and 200,000 sqm of retail space is expected to be completed within 2022, CBRE said.

Overall, Bangkok’s real estate market saw some improvement in overall sentiment during the first quarter of 2022, coinciding with the easing of many business restrictions.

The report noted that the positive start to the year reflected a generally improved mood, and although there is an expectation that 2022 will also be hard economically, the hope is that it will be better than 2020 and 2021.

“Despite Omicron causing a surge in COVID cases, the government reintroduced schemes to encourage tourist arrivals with reduced quarantine requirements and there was optimism of a more pragmatic approach to how the government would deal with COVID in 2022,” CBRE said.

READ MORE: Bangkok’s retail growth to depend on government support: report