KUALA LUMPUR: Retailers are divided on whether recent changes to cheap sale regulations would be a boon or bane for them given the present lacklustre economic environment. While some traders feel the reduction in the number of such sales will not hit their takings, others want the government to reconsider the decision.

Last December, the domestic trade, cooperatives and consumerism ministry (MDTCC) made several changes to the sales guidelines for retailers and traders under the Trade Description (Cheap Sale Price) (Amendment) Regulations 2016. The changes came into effect on Jan 1.

Notably, the number of special sales allowed is reduced to four per year from five times previously. Three of the four special sales would be determined by the ministry, while one would be at the trader’s discretion.

The three sales fixed by MDTCC for this year are the 1Malaysia Super Sale (March 1 to 30), 1Malaysia Mega Sale Carnival (June 5 to Aug 31) and the 1Malaysia Year-End Sale (Nov 1 to Dec 31).

Interestingly, the cheap sale regulation does not apply to restricted sales, like a member privilege sales day which has gained popularity among consumers and retailers these days.

The amendments also see the MDTCC relaxing one of the requirements. Retailers now only need to have at least 50% of their goods displayed for a cheap sale during the sales period compared to 70% previously.

MDTCC enforcement division director Mohd Roslan Mahayudin was previously quoted by local media as saying that the changes were made as part of the government’s initiative to ensure that sales are conducted in a more efficient and effective manner.

Retail Group Malaysia (RGM) managing director Tan Hai Hsin does not think fewer cheap sales would affect overall retail sales this year, adding however that he has yet to gather feedback from retailers on this matter.

“Retailers may still offer other promotional events to promote buying within their stores,” he said.

Tan opines that the amendments made to the cheap sale regulation is generally good for Malaysian retailers.

“In my opinion, this will also benefit consumers. Consumers prefer genuine sales, rather than just low prices. They do not want poor quality low-priced goods. They want branded goods with a good discount.”

“When the number of sales is reduced, retailers may focus on genuine sales instead of just heavy discounts,” he said.

A spokesman for Parkson Holdings Bhd concurred with Tan. He said that the reduction in the number of sales would improve the productivity for each sale period.

“Limiting the sale to four times will create the interest or urgency to shop during the sale period rather than when every day is a sale day,” he said.

The spokesman added that all retailers would be on equal footing as long as the authorities enforced the new regulation and retailers adhered to it.

“We have our loyal customers especially the Parkson Card and BonusLink members who will continue to patronise and shop at Parkson. Hence, we do not think it will have much impact on the shopper traffic to our stores,” he said when asked if he thought the fewer sales would dent shopper traffic.

However, Mydin Mohamed Holdings Bhd managing director Datuk Ameer Ali Mydin, one of the largest hypermarkets in Malaysia, believes that more flexibility should be given to retailers when it comes to how traders conduct their sales.

He welcomed the government’s efforts to focus on the major sales to attract foreign tourists to Malaysia as a shopping destination. However, he said the bulk of retailers’ business is derived from the locals, not the tourists.

“By restricting the number of sales retailers could have, retailers could lose out on several opportunities to conduct sales during some of the festive seasons.

“Retailers might not necessarily want to have sales during the same period. If all retailers conduct their sales during the same time, how much can consumers spend? Consumers only have a limited amount of money to spend anyway,” said Ameer, who is also a council member of the Malaysia Retailers Association.

On the need for only 50% of merchandise to be displayed for cheap sales instead of 70% previously, Parkson’s spokesman saw it as less restrictive and easier to comply.

Ameer, however, highlighted that the relaxation of that regulation would benefit departmental stores and retailers, but not hypermarket operators like himself where more than half of the goods are foodstuff that yield thin margins.

“The regulation puts everybody into the same box. It lacks flexibility. I believe the ministry should allow the industry to govern itself instead of having such regulations in place,” he said.

That said, regulation in place or not, the weak consumer sentiment still lingers. RGM’s Tan said the association expects this year’s retail industry growth rate to be 5%.

“We have witnessed higher retail shop closures throughout the country in the last one year. We saw weak occupancy rates for newly completed shopping centres in the last six months. Many new commercial centres are also suffering from poor take-up rates,” he said.

Predicting that the retail market will remain weak over the next few months, Tan expressed the hope that retail sales will recover in the second half of this year as there would be more clarity on US economic policies under newly elected President Donald Trump while the world economy stabilises by then.