tprint in regions with lower outlet penetration rates such as the northern and east coast regions of Peninsular Malaysia, as well as the whole of East Malaysia. The brand plans to open two new disbursement centres in Sarawak and Selangor by the end of 2024 and 2025, respectively. By the end of 2027, the brand anticipates operating at least 25 distribution centres. There are also plans to further strengthen its sourcing capabilities by tapping into potential new markets within the Asia-Pacific region for certain categories of goods that it believes are more competitively priced, for it to provide better value to its customers. An international supply chain would also enable the brand to assess opportunities to establish an international outlet presence.  A holistic perspective According to Bob Chua, a serial tech entrepreneur in Malaysia and an investor of a private family office, any IPO in the current climate, must be viewed with a strong sense of confidence underpinning future growth.  He said this can be seen in 99 Speed Mart’s plans to grow its stores and distribution centres quite aggressively in the coming years. “Globally, there are some obvious headwinds and geopolitical risks which are keeping investors on their toes. On a more local note, however, we are continuing to see a steady amount of ventures raising funds on the back of strong prospective growth,” he told Inside Retail. Chua said that institutions are sitting on a lot of dry powder, which they need to put to work, however, with the higher interest rates (and hence cost of capital), they are very selective in the deals they tend to back.  “As for this particular IPO, there is a large institutional pool which is encouraging, but a rather tight retail spread, which may suppress the upward trajectory of immediate market capitalisation,” he added. Either way, Chua said that observers will likely learn more as the book-building exercise plays out. With such a strong consumer brand, however, and the recent IPO uptake, he would not be surprised if the IPO is oversubscribed. All is not well As far as the overall retail market in Malaysia, Chua said that online commerce is on a downward trend, footfall into malls is quite low, and the general sentiment is that consumers are starting to tighten their belts. “Share prices of online pure plays such as Sea’s Shopee and Alibaba’s Lazada are way down from the Covid heydays, and likewise most of those in the luxury segments, also affected by China’s slowdown and economic woes,” he noted. As for the mass segment, such as mini-markets like 99 Speed Mart, however, Chua believes it will continue to thrive. In terms of challenges, Chua believes that the dwindling value of the Malaysian ringgit could be a factor for imported goods, and rising costs overall due to fuel prices, weather events and supply chain constraints. “These are challenges that the entire world is facing at the moment, however, Malaysia like most countries in Apac, is also quite fortunate to have hefty government subsidies offsetting such unwieldy and inflationary price pressures,” he said. Chua believes 2024 will be rather muted until countries see some inflationary easing, and the US Federal Reserve reduces interest rates to ease the pressure on economies. A market overview Based on independent market research conducted by Frost & Sullivan in February, 99 Speed Mart is the largest mini-market player and a leading grocery retailer in Malaysia, holding a market share of 37.9 per cent and 11.1 per cent in 2022. According to the IMR Report, the mini-market retail segment in Malaysia is expected to grow at a CAGR of 5.2 per cent from 2022 to 2027 driven by the expansion of chain retailers as they continue to cater to the consumers seeking convenience and accessibility. Interestingly, according to the Malaysian Industrial Report for March 2024, compiled and written by Retail Group Malaysia (RGM), for the fourth quarter of 2023, the Malaysian retail industry recorded a disappointing growth rate of -0.2 per cent in retail sales, as compared to the same period in 2022. According to the report, retail prices, especially food prices, continued to rise during the last quarter of 2023. Higher costs of living have also hurt the purchasing power of Malaysian consumers. The Israel-Hamas war has also led to a boycott of many Western brands with alleged links to Israel, or that purportedly pledged to support it. Malaysian consumers avoided stepping into these retail stores and buying these brands from retailers. For the fourth quarter of 2023, Malaysia’s GDP was logged at 3.0 per cent, while the inflation rate was logged at 1.6 per cent.   Retail Group Malaysia (RGM) has forecast an average 7.1 per cent year-on-year growth in retail sales for the first quarter of 2024 following a 0.2 per cent drop in the previous quarter. The group expects improvements in all sub-sectors, partly due to festivities and school holidays. The bigger picture According to the report, for 2024, the biggest challenge for the Malaysian retail industry remains the cost of living. Under the Budget 2024, the Malaysian government increased the subsidies for households and persons to battle the rising inflation. From the beginning of the year, a 10 per cent sales tax has also been levied on imported low-value goods. The government will also be introducing a high-value goods tax at a rate of 5 to 10 per cent on certain high-value goods, and this new tax will commence from May 1, once it receives approval from the Parliament. The service tax rate on many goods and services has also increased from 6 to 8 per cent and this has led to higher prices on retail goods and services. This will have an effect on retail spending on essential items. While the weakening ringgit continues to put pressure on companies selling imported retail goods, many of them are passing the costs to end consumers. On the other hand, the weakened ringgit has boosted both domestic and international tourism.