The retail industry has shown signs of improvement in 2024 compared to the previous year, attributed to the rebound in the tourism sector and the government's allocation of its annual budget, according to the Thai Retailers Association (TRA).
However, the recovery has been gradual and uneven, depending upon different retail formats and geographical areas.
Fashion and lifestyle shops, along with specialty retailers and restaurant chains, experienced growth rates ranging from 3-7%.
Stores dealing in construction materials, home decor and maintenance recorded increases of between 2-5%.
The lowest growth was seen in convenience stores, supermarkets, hypermarkets and wholesale consumer goods outlets, which recorded increases of just 1-3%.
The growth was primarily concentrated in the Bangkok metropolitan area, the eastern region and popular tourist destinations.
Despite numerous positive developments, retailers continue to confront challenges, said Nath Vongphanich, president of the association.
These challenges include economic growth falling short of government projections, which resulted in over 37% of retailers facing issues concerning excess inventory, a decline in investment which negatively influenced employment and consumption levels, the high level of household debt and intense competition from an influx in cheap imported goods.
Moreover, the government's disbursement of a 10,000-baht cash handout to 14.5 million vulnerable individuals has not had a substantial impact in terms of stimulating the economy, while there is a need for further information regarding upcoming assistance for the elderly and other demographics.
Furthermore, the severe floods caused losses of 50 to 60 billion baht according to estimates, while there are uncertainties surrounding the global economy and the foreign trade policies of President-elect Donald Trump, which have also affected consumer confidence in spending.
For the retail business in 2025, the TRA predicts growth of roughly 3-5% compared with projections for GDP growth of 2.3-3.3% for next year.
This anticipated growth is expected to be bolstered by the tourism and export industries, along with investments from both the public and private sectors, both domestically and internationally.
The TRA believes that with consistent and robust government support and promotions, the retail sector will significantly contribute to advancing the economy towards its growth targets, with the retail and service market valued at over 4.4 trillion baht.
The TRA proposes the government maintain a timely allocation of the 2025 fiscal budget and facilitate the distribution of funds through investments, procurement and stimulus measures to effectively propel the economy forward.
The next step is to reinforce retailer competitiveness, bolstering the competitive edge of retailers in Thailand through marketing support for micro-, small and medium-sized enterprises both domestically and internationally, as well as through the provision of low-interest soft loans.
As Thailand is entering the high season for shopping, the association proposes the government revive the "Shop Dee Mee Kuen" (shop and payback scheme) to stimulate domestic spending which would help boost the economy towards the year-end.
The association also recommended tax incentives to stimulate consumer spending among tourists by implementing a value-added tax exemption for purchases of more than 5,000 baht per person per day at the same retail location.
The association proposes the government position Thailand as a premier destination for tourism, healthcare, sports and shopping at both the regional and global scale, while harnessing soft power including Thai food and culture in order to stimulate spending and the country's economy.