Thai F&B and experiential retailers are likely to open fewer stores or downsize in scale for the remainder of the year following an unprecedented hit to the industry brought on by the coronavirus pandemic.
The sobering view of Thai retail’s prospects for the remaining months of this year came out of a new CBRE research report conducted in May, finding a high degree of uncertainty for the foreseeable future.
“What we have been seeing in the past three months are brand-new challenges that took everyone by surprise,” said CBRE Thailand head of advisory & transaction services – retail Jariya Thumtrongkitkul.
“For around two years, we have been saying that those who cannot adapt quickly enough to the shifting retail landscape will not survive, but this is on another level. Retailers have to change their business operations not only to match the drastic drop in footfall but to accommodate a new way of shopping.”
According to the Bank of Thailand, figures from the May retail sales index show a year on year drop of 34 per cent, much of which is attributable to a decline in the sale of vehicles and fuel. While final figures are as yet unavailable, a general drop is expected in the sales number for both food and non-food retailers in the territory for the period in question.
Adaptive strategies from both landlords and retailers have attempted to restore a healthy business outlook, including flexible rental terms and various sales and marketing strategies such as longer grand sales events and frequent mall activities.
The CBRE report suggests that eventually, resizing existing rental space will emerge as an increasingly important approach for tenants to become more cost-effective. It expects that e-commerce penetration will no longer be optional but a must for Thai businesses to survive.