Thailand duty-free retailer King Power will shut its downtown branches in Srivaree, Pattaya, and Mahanakhon in September as part of a cost-cutting initiative, which also includes a voluntary redundancy program for staff across all branches.

Once a significant revenue driver for the company, the three outlets for closure were initially established to cater to tour groups.

However, in an interview with Thansettakij, CEO Nitinai Sirismatthakarn said the business model was no longer sustainable.

“The closure of these three branches is partly due to their unviable business structure,” he said. “Another factor is the need to streamline our workforce to stay competitive in a changing landscape.”

“Sales have been low since Covid-19,” said Sirismatthakarn, noting that airport duty-free stores, which cater to individual travellers, have been less impacted than downtown outlets.

Eligible staff who choose to participate in the redundancy program will receive compensation in accordance with labour law, along with additional payments based on length of service. They also have the option to transfer to other branches.

Following the closures, King Power will continue to operate three downtown duty-free locations: Rangnam, One Bangkok, and Phuket.

At the same time, the company is renegotiating its concession contracts with Airports of Thailand (AOT) covering five airports. Although it had previously sought to terminate the agreements, revised payment terms have now been reached.

The talks come amid a broader downturn in Thailand’s tourism sector, with total arrivals down about 5 per cent this year and a sharp 33 per cent drop in visitors from China, according to Asean Now. 

AOT shares have fallen 35.6 per cent since the start of the year, raising investor concerns over potential revenue losses tied to King Power.

The airports have also commissioned two state universities to conduct an independent review of the concession agreements; a move Sirismatthakarn supports as a “check and balance” mechanism.