Thailand’s retail sector expects double-digit growth driven by private consumption and online retail

Anticipating a robust year ahead, Thailand’s retail sector is poised for a double-digit expansion. The growth is primarily spurred by a surge in private consumption and the government’s stimulus measures, such as the Easy E-Receipt tax refund scheme and a boom in online retail. However, the rising cost of living is a cause for concern, as stated by the Economic Intelligence Center (EIC), Siam Commercial Bank’s research division.

Chayanit Somsuk, an analyst with EIC, highlighted the key growth drivers: the Easy E-Receipt scheme, a rise in private consumption, wage increases, and a revival in tourism. Chayanit shared these insights during the recent Thailand’s E-commerce Trend 2024 event organised by Priceza.

The tax refund scheme, which runs from January 1 to February 15, allows individuals to claim a tax deduction of up to 50,000 baht on purchases from businesses using the e-tax system.

Predicted to clock a 12% growth from 3.75 trillion baht in 2023, the retail market this year is expected to touch 4.21 trillion baht. The sector’s Compound annual growth rate (CAGR) for the period 2025-2027 is projected to be between 5-7%, significantly higher than the 2% CAGR observed during 2019-2021.

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Chayanit also drew attention to the challenges facing the industry, including high product prices, uncertainty around government economic stimulus policies, and households grappling with high debt. Online retail, she noted, is a significant growth catalyst in the retail industry. The pandemic has reshaped consumer behaviour, with online shopping becoming the norm and brands are rapidly adapting to this trend.

Although online retail’s phenomenal growth during the pandemic years of 2019-2021, when it rose by 47%, is unlikely to be replicated, it is expected to continue growing. The online retail segment is projected to reach 910 billion baht in 2024, marking a 10% growth from 820 billion baht in 2023. The segment’s CAGR for 2025-2027 is anticipated to be 8%.

Social Commerce

According to Chayanit, online retail is set to account for 21.5% of the total retail market in 2024, up from 13.2% in 2020, and is projected to reach 23.4% in 2027. As consumer behaviour shifts online, brands are transitioning towards a blend of online and offline sales channels and social commerce.

Social commerce, Chayanit pointed out, is set to play an increasingly significant role in driving local e-commerce. By 2027, social commerce is projected to constitute 15% of total e-commerce, up from 11.5% in 2024 and 5% in 2019.

Global social media statistics reveal that Thais spend between three and four hours daily on social media. The most popular platforms are Facebook, TikTok, Line, Instagram, and Facebook Messenger, claiming 37%, 21%, 16%, 9%, and 6% of users respectively. Chayanit underscored the role of social commerce in blending e-marketplaces and social media, thus facilitating easy access to consumers.

However, the growth of e-marketplaces is projected to decline. In 2022, e-marketplace channels accounted for 44% of brands’ total budget for sales and marketing activities, down from 48% in 2019. Meanwhile, omnichannel accounted for 4.8% of such expenditure in 2022, with other channels accounting for the remaining 49%.

According to a survey conducted between November and December 2023, consumers prefer shopping for clothes, healthcare, and beauty products online. The survey also found that credit cards are the most popular payment method for online shopping, with 47% of respondents using them. Other payment options include money transfer/QR and prompt pay (23%), cash on delivery (21%), marketplace wallets (2%), and wallets like True Money and Paotang (4%).

The survey revealed a preference for environmentally friendly and recyclable packaging among 25% of consumers. Chayanit concluded by outlining the emerging e-commerce trends, such as the application of artificial intelligence for data analytics and the focus on automation and personalisation by e-commerce players, reported Bangkok Post.

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Alex Morgan

Alex is a 42-year-old former corporate executive and business consultant with a degree in business administration. Boasting over 15 years of experience working in various industries, including technology, finance, and marketing, Alex has acquired in-depth knowledge about business strategies, management principles, and market trends. In recent years, Alex has transitioned into writing business articles and providing expert commentary on business-related issues. Fluent in English and proficient in data analysis, Alex strives to deliver well-researched and insightful content to readers, combining practical experience with a keen analytical eye to offer valuable perspectives on the ever-evolving business landscape.

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