KUALA LUMPUR (Sept 1): Malaysian retail sales rose 62.5% in the second quarter of 2022 (2Q22) compared with the same period in 2021, reaching a new record level, according to latest figures released by independent retail research firm Retail Group Malaysia (RGM).

The quarterly retail sales beat Malaysia Retailers Association and Malaysia Retail Chain Association members' expectations, which had in June estimated an average growth rate of 25.7% for 2Q22. Retail sales grew 18.3% year-on-year (y-o-y) in 1Q22.

On the back of the strong second-quarter performance, the two retailers’ associations are projecting an average growth rate of 61.7% in retail sales for 3Q22.

RGM attributed the 2Q22 results to three main factors: the Hari Raya festival, relaxation of Covid-19 standard operating procedures and the forced closures of many retail shops in May and June last year.

"Hari Raya Aidilfitri was celebrated nationwide on May 3 and 4. This period had accelerated the pace of recovery of Malaysia retail industry. Shopping centres and main commercial centres throughout Malaysia started to attract large shopping crowd three weeks before Hari Raya. The peak was one week before Hari Raya," it said in a statement.

"There were two long weekends’ holidays during the month of May. During Hari Raya Aidilfitri, Labour Day and Wesak Day, Malaysians were able to celebrate fully after two years of lockdowns. Retail sales during this period were very encouraging," it added.

For the first six months of this year, Malaysia's retail industry growth climbed 39.2% from the year-ago period.

RGM also said that for the first time since the pandemic, all retail sub-sectors achieved positive growth rates during 2Q22 — surpassing market expectations.

Retail sales of the department store cum supermarket sub-sector surged 59.7% y-o-y during 2Q22.

During the same period, the fashion and fashion accessories sub-sector managed to turn around with a 152.8% y-o-y growth. A year ago, its business suffered severely from partial and full lockdowns, noted RGM.

The children and baby products sub-sector grew 65% y-o-y in retail sale during 2Q22, while the pharmacy sub-sector reported a 31.5% y-o-y growth.

At the same time, the personal care sub-sector rose 79.8% y-o-y in 2Q22, while the furniture and furnishing, home improvement as well as electrical and electronics sub-sector rose 81.9% y-o-y.

The other specialty stores sub-sector (including photo shop, sporting goods store, store retailing musical instrument, optical store, store selling health equipment, arts and crafts store and direct selling stores) enjoyed a 91.2% y-o-y gain in 2Q22.

RGM is revising up its Malaysia retail industry growth forecast for full year 2022 to 31.7% from a previous estimate of 13.1%, taking into consideration the firm recovery of the industry since beginning of this year.

At the same time, it has revised the third-quarter retail sales estimate up to 50% from a previous estimate of 3.4%. It said the higher-than-expected growth rate is due to large contractions during the third quarters of 2020 (-9.7%) and 2021 (-27.8%).

Conversely, the fourth-quarter estimate has been revised downwards to 1% from 3.6% estimated earlier in June, based on the high base a year ago as well as the current challenges of the retail industry.

"Although at a slower rate in recent weeks, prices of retail goods continue to rise. Prices of many foods and consumer goods increased by double-digit within a short period of time since beginning of this year. The purchasing power of majority of Malaysian consumers have been affected.

"For many retail outlets, the lack of staff has affected their sales and operation hours. Shortage of staff applies to both Malaysians and foreign workers. Shortage of staff includes the entire retail supply chain," RGM said.