Retailing grew steadily in 2021 as the pandemic receded in the second half of the year and lifestyles slowly normalised. However, Laos’ retailing industry remains underdeveloped, with informal retailing dominant especially given the recent drop in disposable incomes, which also stimulated cross-border shopping.
Laos went into its first nationwide lockdown in March 2020 which prohibited everyone from leaving their homes except to buy essential products or for health reasons. Working from home was also made compulsory for all office workers.
Traditional markets and supermarkets remain the preferred retail channels of the majority of Laotians. This is mainly because these outlets usually lie in close proximity to their homes, offering convenience and low prices.
According to a report from the World Bank, the second wave of COVID-19 had a severe impact on sales in April and May in 2021. This followed on from a fall of over 40% in 2020 over the previous year.
During the pandemic, some lockdown policies and movement restrictions, which were put in place in response to the rising numbers of COVID-19 cases, caused disruption in the transportation of goods, creating delays on deliveries and temporary shortages. This also led to an increase in the prices of some fresh products in the market due to logistical issues and disruptions to the supply chain.
The Lao kip was weaker than the Thai Baht and the US dollar in 2021 which made the price of imported goods more expensive for local consumers, with the prices of some products rising by 10-25%. Consumers therefore opted to buy more products from local producers, especially food products.
Rapid modernisation is likely to support strong growth in Laos’ retail industry during the forecast period. Among key drivers of growth in this respect are expected to be the modernisation of the country's banking system, with the spread of financial cards and payment apps set to spur both store-based retailing and e-commerce.
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Sales of new and used goods to the general public for personal or household consumption. Excludes specialist retailers of motor vehicles, motorcycles, vehicle parts, fuel. Also excludes foodservice, rental and hire and wholesale industries (Cash and Carry). Sales value excluding or including VAT/Sales Tax. Retailing is the aggregation of Store-based retailing and Non-store retailing. Retailing excludes the informal retail sector. Informal retailing is retail trade which is not declared to the tax authorities. Informal retailing encompasses (a) sales generated by unregistered and unlicensed retailers, ie retailers operating illegally, and (b) any proportion of sales generated by a registered and licensed retailer which is not declared to the tax authorities. Unregistered and unlicensed retailers operate predominantly (although not exclusively) as street hawkers or operate open market stalls, as these channels are harder for the authorities to monitor than permanent outlets. Activities in the illegal market, which is usually understood to refer to trade in illegal, counterfeit or stolen merchandise, are included within our definition of informal retailing. Activities in the “grey market”, which is usually understood to refer to trade in legal merchandise that is sold through unauthorized channels – for example cigarettes bought legally in another country, legally imported, but sold at lower prices than in authorized channels – will be included as informal retailing if no tax is paid on sale by the retailer. However if the retailer pays tax – for example on cigarettes bought legally in another country but sold at a lower price than standard – the sale is included within formal retailing. In relation to click and collect purchases (i.e. where purchases are made over the internet but picked up at store) where the sales data is attributed depends on where the payment is made: If payment is made in store, then the sale is included in store-based sales. If payment is made over the internet, then the sale is included in internet retailing.See All of Our Definitions
This report originates from Passport, our Retailing research and analysis database.
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