KUALA LUMPUR: Malaysia’s retail industry is expected to post a 5.5% drop in sales this year, dragged down by the negative growth in the first half.
Retail research firm Retail Group Malaysia (RGM) said the last time the industry recorded a negative growth rate was in 1998 – the first year of the Asian financial and economic crisis – when it contracted by 20%.
It projected industry sales to shrink by 18.8% year-on-year (y-o-y) in the first quarter and by 9.3% in the second quarter.
Assuming a recovery in the domestic economy from the second half of the year, the retail industry would subsequently see growth of 2.5% and 3.3% in the third and fourth quarters, respectively, RGM estimated in a preliminary report on “Malaysia retail industry during Covid-19 pandemic (April 2020).”
The group said the forecast 9.3% y-o-y decline in 2Q sales factored in the four weeks of the Movement Control Order (MCO) in April as well as the expected slow sales during Hari Raya Aidilfitri.
“Based on the retail sale performances of essential retailers during the first two weeks of the MCO, as well as the assumption of zero income for almost all the non-essential retailers, April is expected to see a 60.7% contraction in retail sales compared to April last year,” RGM said.
About 126,000 retailers, including 10% of stalls and markets, have remained open during the MCO period, it said. They represent about 37% of the total retail outlets in Malaysia.
On the other hand, more than 209,000 retail stores were shut.
“During the six weeks of business closure, non-essential retailers still need to pay an estimated RM6.2 bil in staff cost, including salaries and wages and allowances, Employees Provident Fund contributions and Social Security Organisation (Socso) contributions,” it noted.
On a positive note, RGM said, the business of grocery retailers climbed 20.9% during the first week of the MCO when Malaysians rushed to stock up on foods and basic necessities.
Grocery retailers include supermarkets, hypermarkets, mini-markets, provision shops and convenience stores.
“During the second week of MCO, the shopping activities became normalised when Malaysians were able to plan their grocery needs wisely,” it said, adding that grocery retailers enjoyed a growth rate of 9.5% in that week.
As more Malaysians started to cook at home, grocery retailers rang up higher sales. However, the strict social distancing measures implemented by the retail operators affected the shopping traffic and sale receipt per person, the research group said.
RGM’s preliminary report included data collected from selected members of the Malaysia Retailers Association on their retail sales performances in the first quarter of 2020. – April 14, 2020, Bernama
