Retail sales in Malaysia fell by nearly one per cent in the last quarter of 2014 as consumers cut back spending, spooked by the looming introduction of GST.
On April 1, Malaysia’s government introduces a goods and services tax on most items, excluding food, of six per cent.
Sales in the fourth quarter fell 0.8 per cent year-on-year – the worst quarterly performance on record, and below predictions by the Malaysia Retailers Association (MRA).
The poor fourth quarter lowered the full year figure to 3.4 per cent growth, compared with 4.5 per cent growth in the previous year.
Retail Group Malaysia (RGM), in a report released this week titled Malaysia Retail Industry Report, said Christmas, lower fuel prices and the year-end sale season all failed to lift sales.
“Furthermore, the (impending) implementation of the goods and services tax (GST) next month did not stimulate consumption during the last quarter (of 2014). Retailers used heavy discounts to encourage consumers to shop, but failed to generate higher sales. During the quarter, many retailers suffered declines in profit margin growth,” the report said.
Department store sales fell 5.7 per cent last quarter, while hypermarket sales rose just one per cent. Fashion and accessory sales fell 2.2 per cent.
Miscellaneous retailing – including optical products, second-hand goods, health and fitness equipment, toys, souvenirs, duty-free goods, arts and crafts, photographic equipment – and foodservice, believe it or not – performed the worst, with sales contracting 6.7 per cent.
RGM is concerned consumers do not understand the potential impact – or lack thereof – on retail prices post-April 1.
“Retail sales performance during the first two months of this year was below expectation as consumers were confused by different public messages on the prices of retail goods and services after March 2015,” it said.
Possible rushed purchases – to avoid paying six per cent on big ticket items – may power sales growth in the first quarter of 2015. In the survey, MRA members said they were hopeful of a recovery, RGM estimating growth of 5.8 per cent.
But RGM has lowered its 2015 full year prediction from 5.5 per cent growth to 4.9 per cent growth.
“Malaysian consumers will get used to GST by the last quarter of 2015. Retail spending will return to normal again by this period. Retail is expected to recover strongly with a 6.9 per cent growth rate,” it said.
