Bangkok retail market’s post-pandemic recovery

Retailers adapt their malls to capture demand from tourists

February 03, 2023

Prior to the COVID-19 pandemic, Bangkok’s retail was driven by foreign tourist arrivals, which peaked in 2019 with almost 40 million arrivals, of which Chinese tourists accounted for the largest portion. However, with the pandemic and the subsequent restrictions on international travel, lockdown measures, and the ensuing economic uncertainty, the majority of retailers closed or refurbished their malls due to the lack of customers, particularly tourists. The pandemic also led to a fluctuation in the market, driven by a shift in consumer behaviour. Nevertheless, after international arrivals resumed in 2022, the retail market showed signs of recovery, as demonstrated by improvement in consumer confidence.

Figure 1: Foreign tourist arrivals by continent of origin, 2011 - 2022

Source: Ministry of Tourism & Sports analysis by JLL, 2022

Bangkok's retail market has always been heavily dependent on tourism. A large portion of prime malls in the Central Business Area catered to their demand by focusing on luxury goods, souvenirs and international F&B offerings. Before the outbreak, Chinese tourists with high spending were the major contributors to Thailand’s economy. Now that China has begun to allow international travel, the retail sector is quickly adapting to capitalise from the return of Chinese visitors.

In 4Q22, Bangkok’s retail market showed signs of recovery, thanks to rising consumer confidence, driven by the return of tourists and the wider improvement in the economy. The retail sale index increased to almost 4.7 trillion THB in 2022 and exceeded the pre-pandemic levels. In addition, there has been positive leasing demand due to pent-up demand in prime malls with increased footfall. Forecasts indicate that the retail sector will continue to strengthen over the next few years, thanks to the return of tourists.

ASIATIQUE is an example of a tourist-focused retail centre which was closed during the pandemic. The centre re-opened in 4Q20 and struggled with low foot traffic. During this period of low activity, the centre installed new experiences to capture the eventual return of tourists. These included new landmarks as well as altering their tenant mix to focus more on lifestyle and upgrade to F&B offerings.

The developer Central Pattana (CPN) launched a “Tourist Welcome Package” to attract tourists back to their malls. Other malls, such as Siam Paragon and Amarin Plaza, also utilised the pandemic as a time to renovate areas of their malls to increase competitiveness and capitalise on the return of tourist demand.

Figure 2: Thailand retail sales values, 2018 - 2025F

Source: Oxford Economics analysis by JLL, 2022

The pandemic had a significant impact on Bangkok's retail market as retailers had to adapt to both the uncertainty of the situation and the changes in consumer behaviour. The tourism sector has already played a key role in the recovery of the retail market and is set to continue driving growth in the sector. Thanks to the adaptation of retailers by turning challenges into opportunities. The enhancement centres with new cultural experiences, refreshed tenant offerings, and tourist-focused campaigns stand ready to benefit from the market improvement, helping retailers and landlords alike.

JLL predicts that Bangkok’s prime retail sector will continue to see more malls being renovated through the next few years, as the fight for footfall has increased the competition in the sector. This will ultimately lead to increasingly well-targeted shopping experiences for domestic and foreign tourists and will see the sector become even more vibrant and mature.