Thailand's retail industry is expected to register double-digit growth this year, driven by private consumption and government stimulus measures.
The government's Easy E-Receipt tax refund scheme and the rise of online retail are contributing factors, but there is concern regarding the high cost of living, according to the Economic Intelligence Center, the research arm of Siam Commercial Bank.
"The Easy E-Receipt scheme and the growth of private consumption, coupled with an increase in wages and the tourism revival, are driving continued growth in the retail industry this year," said Chayanit Somsuk, the centre's analyst, during the Thailand's E-commerce Trend 2024 event held recently by Priceza.
The Easy E-Receipt scheme allows individuals to receive a tax deduction of up to 50,000 baht for the purchase of goods and services from business operators backed by the e-tax system between Jan 1 and Feb 15.
The retail market this year is expected to reach 4.21 trillion baht, growing 12% from 3.75 trillion baht in 2023, compared to the compound annual growth rate (CAGR) of 2% during 2019-2021. The centre expects CAGR in the sector during 2025-2027 of 5-7%.
The challenges in the industry include expensive product prices, which pressure purchasing power, and the uncertainties on some of the government's economic stimulus policies as well as households with high debt, Ms Chayanit said.
She said online is a driving force behind overall retail growth. Consumers have changed their shopping behaviour to online since the pandemic, and brands are also adjusting to expand their online sales channels.
Online retail is continuing to grow but is not expected to reach the heights it did during the pandemic from 2019-2021 when the sector registered growth of 47%. The segment is expected to reach 910 billion baht in 2024, growing by 10% from 820 billion baht last year. It is anticipated that the segment's CAGR will be 8% during 2025-2027.
"Online retail is playing an increasingly significant role, expected to account for 21.5% of the total retail market in 2024, up from 13.2% in 2020. It is forecast to reach 23.4% in 2027," said Ms Chayanit.
Users have changed their shopping behaviour online, while brands shift to online and an omni-channel mixture of online and offline as well as social commerce, she added.
Ms Chayanit said social commerce will play more of a role to drive the local e-commerce industry. Social commerce will account for 15% of total e-commerce in 2027, from 11.5% in 2024 and 5% in 2019.
Global social media statistics found that Thais spend 3-4 hours on social media, with the top platforms being Facebook, TikTok, Line, Instagram, Facebook Messenger and X, with 37%, 21%, 16%, 9%, 6% and 4%, respectively.
"Social commerce blends e-marketplaces and social media that enables easy access to consumers," Ms Chayanit said.
She added that the e-marketplace growth is expected to decline. In 2022 the e-marketplace channels accounted for 44% of brands' total budget spending related to sales and marketing activities, down from 48% in 2019. The omnichannels accounted for 4.8% of such spending in 2022, while other channels accounted for 49%.
She said that according to a research house's survey from November to December 2023, users prefer to shop for clothes, healthcare and beauty online.
Of the total respondents, 68% buy beauty products in offline channels, 19.4% at Shopee and Lazada, 7.5% at Facebook and TikTok, and 4.4% at online channels of Central and the Mall.
For clothes, 69% were purchased offline, while 17.1% were on Shopee and Lazada, 9.9% on Facebook and TikTok, and 3.5% at online channels of Central and the Mall.
For health products, 75% buy offline, Lazada and Shopee were on 18% and Facebook and TikTok at 7%.
In terms of payment, credit cards are most popular when shopping online, with 47% of total respondents, money transfer/QR and prompt pay at 23%, cash on delivery (COD) at 21%, 2% on wallet of marketplaces, and 2% debit and 4% wallets like True Money and Paotang.
Working people prefer payment via credit card, baby boomers prefer COD, and Gen Z use COD and money transfer.
A survey found 25% of consumers prefer environmentally friendly and recyclable packages.
Ms Chayanit said the trends in e-commerce include the use of artificial intelligence for data analytics and the e-commerce players' focus on automation and greater personalisation.