Friday 29 Mar 2024
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KUALA LUMPUR (March 9): The Malaysian retail industry registered its worst performance in over two decades last year, contracting by 16.3% and recording only RM90 billion in retail sales, as the Covid-19 pandemic forced people to stay home while retail stores remained shut for most part of the year. This year, while the industry is expecting to grow 4.1% and ring-in sales to the tune of RM93.7 billion, it is not expected to achieve the sales levels of 2019.

In 2019, the country’s retail sales expanded by 3.7%, translating into RM107.5 billion in sales.

“Last year, Malaysia’s retail industry recorded the worst performance since the Asian financial and economic crisis that took place 22 years ago. In 1998, retail sales in Malaysia dropped by 20%,” Retail Group Malaysia (RGM) managing director Tan Hai Hsin said in the latest edition of the Malaysia Retail Sales Report (March 2021). In 2020, retail sales contracted for four consecutive quarters at 11.4%, 30.9%, 9.7% and 19.7% respectively.

For this year, RGM has cut its growth projections to 4.1% from 4.9%, after major states nationwide were once again placed under the movement control order (MCO) for the most part of the current quarter, which restricted shopping traffic throughout the country.

“Interstate travel ban is expected to be enforced for longer period of time and it has been affecting domestic tourism spending,” Tan said.

“The return of foreign tourists will be slow and gradual. Travel bubbles with selected countries will likely begin towards end of this year,” he added.

Tan noted that vaccinating the majority of the population will take a while, and expected movement restrictions and social distancing measures to be in place until the end of the year.

“For the entire year, consumers’ spending is not expected to recover back to 2019 level,” Tan emphasised.

Sales in 1Q2021 is estimated to shrink by 13.4% with department store operators expecting to contract by 47.4%, while supermarkets and hypermarkets will decrease by 14%. However, a recovery of 7%, 4.1% and 13.9% respectively is anticipated over the next three quarters. (see tables)

For the past 23 years, RGM has been publishing retail data on behalf of the Malaysia Retailers Association (MRA). It has now decided to also partner the Malaysia Retail Chain Association (MRCA) to release a more comprehensive set of data.

This means new sub-sectors have also been added including mini-markets, convenience stores, furniture and furnishings, home improvements, electrical and electronics (E&E), cafés and restaurants, and F&B kiosks and stalls.

In 2020, a majority of the retail sub-sectors contracted by double digits, with the department store, and fashion and fashion accessories segments shrinking the most at 38.3% and 37.9% respectively.

The only two sub-sectors which grew last year were the mini-markets, convenience stores and cooperatives which expanded by 14.8%, and furniture and furnishings, home improvements and electrical and electronics (E&E) which grew by 0.4%. All other retail sub-sectors contracted by double digits. (see table for specific sub-sectors).

Meanwhile, in the October to December 2020 (4Q20) period – traditionally a very strong quarter for retailers due to the year-end holidays, Christmas shopping and back-to-school shopping – retail sales contracted by 19.7% from a year earlier, after the second conditional movement control order (CMCO) was enforced in the Klang Valley on Oct 14, 2020.

The Klang Valley accounted for 60% of the country’s retail sales. Retail sales were further dragged down when the CMCO was later extended to include all states except Sarawak until the end of 2020, according to the report.

“Third-wave Covid-19, restrictions on interstate travel, restrictions on inter-district travel, working from home, as well as delay in school opening led to significant reduction in shopping traffic in malls, commercial centres and food and beverage (F&B) outlets located throughout the country,” said Tan.

In 4Q20, the retail sub-sector that was the worst hit was the fashion and fashion accessories segment, which contracted 49.6%. Another segment that was badly hit was the department store category, which slumped 44.7%, according to the Malaysia Retail Sales Report.

On a positive note, at least two retail sub-sectors expanded. The furniture and furnishing, home improvements and E&E segment grew 11.7%, while the mini-market, convenience store and cooperative segment grew 10.2%, it said.

Edited ByLam Jian Wyn
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