Consumer confidence points to slower spending as retailers fear a prolonged drag

A survey by the Thai Retailers Association and the Bank of Thailand found that overall retail and wholesale sentiment in March 2026 rose by 13.7 points from February. The improvement was seen across all components of the SSSG (MoM) index, or same-store sales growth compared with the previous month, including spending per bill and frequency of shopping, as well as across all regions. Gains were also recorded among retailers selling fast-moving consumer goods (FMCG) and construction materials. The exception was department stores, where consumers have started to show greater caution and are slowing their spending. The SSSG (MoM) reading rose from 31.1 points to 52.8 points, up 21.7 points. Spending per bill increased from 36.1 points to 49.3 points, up 13.2 points, while frequency of shopping rose from 43.9 points to 49.3 points, up 5.4 points. The sharp 21.7-point rise in SSSG (MoM) suggests that overall sales in March improved significantly from February. However, the figures are seen as reflecting panic buying rather than normal purchasing behaviour. Spending per bill rose far more strongly than shopping frequency, underlining the view that consumers were stocking up rather than returning to steady spending patterns. Fears the impact could last through the end of the year Since the United States and Israel launched attacks on Iran, with early operations targeting military infrastructure and security capabilities, the effects have extended far beyond the battlefield. They are now being felt through volatile oil prices, rising economic costs and growing concern over how the situation may develop. The conflict between the United States and Iran is also having an immediate and severe impact on the structure of the retail and wholesale business, because the area of confrontation directly affects the heart of global trade. The continuing consequences could stretch through to the end of 2026, mainly in three areas. First is an energy and inflation shock. Product costs, logistics costs and electricity bills have all risen sharply. Retail and wholesale operators are facing a margin squeeze, as the cost of goods sold is increasing but retail prices cannot be adjusted quickly because consumer purchasing power remains weak. Second is supply chain disruption. Longer logistics times have become a major risk as both the Strait of Hormuz and the Red Sea route via the Suez Canal and Bab el-Mandeb remain vulnerable. Major shipping lines are being forced to reroute via the Cape of Good Hope, adding two to four weeks to delivery times. This is raising the risk of stock shortages, while construction materials such as steel and aluminium are facing tight supply and sharp price swings. Third is the consumer impact. Thailand’s GDP is now seen as being at risk of stagnation or contraction. Various research houses have estimated that, if the war drags on, Thailand’s economy in 2026 could grow by less than 0.7%, or even slip into recession. Negative factors are weighing heavily on consumer confidence, prompting households to delay spending on non-essential items and focus only on basic consumer staples. This is already having a significant effect on department stores and lifestyle retail sales. Support factors could still turn crisis into opportunity Even so, despite the many risks, there are still key drivers that could help the retail, wholesale and service sectors continue growing from the second quarter through to the end of 2026, if operators are able to adapt in time. The first is public investment. State infrastructure projects are expected to become more visible from mid-year onwards, helping to spread income to workers and local communities, which are key target groups for wholesalers of construction materials and consumer goods. The second is the opportunity in private label brands. As consumers become more familiar with store brands during tighter economic conditions, the period from the second to fourth quarter could be when these products gain stronger traction. Retailers able to develop private label products with quality close to leading national brands could enjoy significantly better margins. The third is a shift from efficiency to hyper-velocity. After the first quarter, which focused on reorganising inventories, the businesses most likely to survive and grow will be those that prioritise inventory velocity rather than simply gross profit. Purchasing power remains fragile Nat Wongpanich , president of the Thai Retailers Association, said domestic purchasing power over the next 12 months would remain fragile and under pressure, weighed down by household debt that still exceeds 90% of GDP. At the same time, the Middle East situation has pushed up energy prices and living costs, influencing Thai consumer behaviour and making people place greater emphasis on value for money. He said this clearly marked the arrival of what he described as an era of value-conscious consumption. “Customers are now making buying decisions based primarily on price and promotions. The clearest pattern is that more people are switching to house brands and second-tier brands, planning their spending in advance, buying only when promotions are available, and using omni-channel platforms to compare prices and value,” he said. Even among upper-middle-income consumers, who still retain spending power, there is also a clear rise in selective spending, with more emphasis on experience and emotional value rather than buying in volume. For now, aggressive private-sector marketing campaigns are still helping to support overall consumption.