Malaysian retail sales in state of flux

While Malaysian retail sales have eased, overall sales are expected to increase for the year.

Sales contracted 1.2 per cent for the first quarter this year, attributed to poor Chinese New Year sales in January, according a Retail Group Malaysia (RGM) report.

As well as this, retail prices have continued to rise since the beginning of the year, given a weak ringgit and higher fuel prices.

While RGM had projected 1.5 per cent growth for the quarter, the Malaysia Retailers Association had estimated 0.9 per cent growth.

Meanwhile, the Malaysia Retail Chain Association (MRCA) expects the country’s overall retail sales to grow at 4.5 per cent this year.

Because of strong pre-Goods and Services Tax sales in 2015, figures last year fell 4.4 per cent. RGM says consumers became cautious as they were burdened by a higher cost of living.

All retail sub-sectors sales declined in the first quarter, except for the pharmacy and personal-care sub-sector, which had an encouraging growth rate of 3.7 per cent.

The department store/supermarket sub-sector had its third consecutive quarterly decline, sliding 3.7 per cent. The department store sub-sector fell back 0.1 per cent despite a strong recovery in the previous quarter.

Similarly, the supermarket/hypermarket sub-sector had another worse-than-expected slide of 4.8 per cent, the worst among the retail sub-sectors.

Following a strong recovery for most of last year, the fashion and fashion accessories sub-sector eased 0.1 per cent.

The other specialty stores sub-sector – including retailers selling photographic equipment with photo-processing services, child-related goods, used goods, TV shopping and restaurants – fell 3.1 per cent during the quarter.

More optimistic

MRA members are hopeful their businesses will pick up by the second quarter of this year, with a projected average growth rate of 4.8 per cent. Meanwhile, RGM is maintaining its retail sales growth forecast at 3.9 per cent for the year.

More optimistic, MRCA president Garry Chua says he believes retail sales growth this year will be driven mostly by tourism.

He says the government’s efforts to grow Malaysia’s tourism industry is a major boon for retail, particularly with tourists from China, and the creation of the Digital Free Trade Zone – the first e-hub outside China aimed at providing small and medium enterprises with access to global markets.

Following the introduction of electronic documentation in March last year for Chinese tourists, their numbers soared to 2.2 million tourists from then until December, compared with 1.2 million in the same period in 2015.

Chua says the weak currency is a big draw for overseas visitors, and will draw tourists also form the US and Europe.

Despite general weakened consumer sentiment, there is still demand from the middle-income segment of society, says Chua.

At the MRCA Retail Conference and Malaysia International Retail & Franchise (MIRF) Exhibition at the Gardens Hotel on July 12, MRCA will highlight economic transformations achieved through its digital retail initiatives.


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