Malaysia’s retail trade maintained a robust pace, growing +5.5% year-on-year (yoy) in September 2024 to RM64.4bil, bringing cumulative consumption to RM569.3bil in the nine months of calendar year 2024 (9MCY24), up from RM536.4bil in the same period of 2023.
This expansion was mainly supported by strong demand in food & beverage (F&B), tobacco, and non-specialized stores.
Resilient labour market conditions further supported retail sales, with the unemployment rate steady at 3.2% and the labour force participation rate inching up from 70.4% in August 2024 to 70.5% in September 2024.
Additionally, headline inflation moderated to +1.8% yoy in September 2024, which bodes well for consumer purchasing power.
“Moving into CY25, we expect the upward momentum in retail sales to persist, aided by stable employment, easing inflation, and increases in disposable income from government measures such as enhanced cash handouts, minimum wage hike, and salary increments for civil servants,” said MIDF Research (MIDF) in the recent Sector Update Report.
Additionally, the gradual tourism recovery is anticipated to further fuel retail demand, benefiting consumer staples and general merchandise retailers.
“We see Aeon as particularly well-positioned to capture this growth, with resilient domestic consumption likely to support strong top-line expansion in CY25,” said MIDF.
Malaysia’s consumer sector continues to experience strong tailwinds from the recovery in tourism, which has driven a significant increase in consumer demand.
According to Tourism Malaysia, international tourist arrivals surged to 18.4mil in the first nine months of 2024, compared to 14.5mil in the same period of 2023, underscoring the robust momentum following eased travel restrictions.
“We believe this sustained rise in visitor numbers will continue to fuel growth in tourism-related spending, which has been a crucial driver for consumer-facing industries, particularly within the F&B and retail segments,” said MIDF.
This positive trend should benefit companies in these sectors under our coverage, especially Spritzer, as higher tourist footfall is likely to maintain strong demand for bottled water.
As Malaysia continues to attract high volumes of tourists, we expect consumer activity tied to travel and hospitality to provide enduring support for growth across the sector.
The consumer sector in Malaysia is poised for solid growth in 2025, driven by a combination of favourable economic conditions and strategic policy measures.
Key factors supporting this growth include a strong labour market with positive income prospects and continued demand for essential goods.
Then there are the targeted consumer support measures in Budget 2025, and a steady rise in tourist arrivals, all of which will support consumer spending across various segments.
As households benefit from enhanced financial support, both essential and discretionary sectors are expected to thrive.
Companies like QL Resources and F&N, which provide everyday necessities, are well-positioned to capture stable demand.
Meanwhile, retailers such as Padini and Aeon, known for its affordable yet quality offerings, will likely see increased foot traffic and sales volumes.
This combination of factors will provide a strong tailwind for the entire consumer sector, driving growth and heightened retail activity throughout 2025. —Nov 19, 2024
Main image: t-systems.com
