What: Southeast Asian retail faces mounting challenges as economic growth slows, tourism declines, and competition from Chinese imports intensifies.

Why it is important: This situation underscores the vulnerability of Southeast Asia’s retail sector to macroeconomic and geopolitical shocks, reinforcing the importance of balanced growth and innovation.

Southeast Asia’s retail sector is entering a period of heightened uncertainty as the World Bank projects slower economic growth for 2026. Major retail conglomerates such as Makro-Lotus, Big C, and Central Retail are already experiencing the effects of this downturn, with stagnant growth, declining tourist arrivals, and subdued consumer demand undermining profitability. Retailers are responding by intensifying promotions, leveraging digital payment partnerships, and calling for government stimulus to support spending and tourism recovery. However, these efforts are complicated by the influx of low-cost Chinese imports, a consequence of US tariffs, which has intensified competition and forced both local and international retailers to rethink their supply chain and pricing strategies. Central Retail’s recent struggles highlight the risks of over-reliance on tourism and aggressive expansion, especially as operational challenges in Vietnam and weak domestic demand persist. The sector’s response is shifting toward greater operational efficiency, resilience, and a more balanced approach between local and tourist-driven demand, as retailers adapt to a complex and volatile economic environment.

IADS Notes: The World Bank’s projection for slower growth in 2026 aligns with recent developments in Southeast Asia’s retail sector. In February 2026, Inside Retail and the Bangkok Post reported that major players like Makro-Lotus, Big C, and The Mall Group are facing stagnant growth and subdued consumer demand, prompting intensified promotions and calls for government stimulus. The influx of low-cost Chinese imports, highlighted by Inside Retail in September 2025, has increased competition and forced retailers to reconsider supply chain strategies. Central Retail’s challenges with declining same-store sales and profits, as detailed by Inside Retail in June and August 2025, underscore the risks of over-reliance on tourism and aggressive expansion, particularly amid operational struggles in Vietnam and weak domestic demand. These sources collectively illustrate the sector’s vulnerability to macroeconomic and geopolitical shocks and the growing emphasis on resilience and balanced growth.

Southeast Asian economies’ growth to slow in 2026, World Bank says