Malaysian retailers say rebound hopes dashed by MCO 3.0 despite improved first quarter performance

A view of an empty shopping mall during the movement control order in Kuala Lumpur June 2, 2021. — Picture by Firdaus Latif
A view of an empty shopping mall during the movement control order in Kuala Lumpur June 2, 2021. — Picture by Firdaus Latif

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KUALA LUMPUR, June 9 — Retailers have cast doubt on whether the industry can recover by the second quarter following the enforcement of the third movement control order (MCO), even as performance showed signs of improvement in the January-March period this year.

The two major retailers’ association had projected an average growth rate of 18.4 per cent for the second quarter of 2021, but the estimates came before the government announced stricter movement curbs that kept customers away from malls and restaurants starting early May.

“Many retailers in Malaysia were hit hard when people avoided going to enclosed places such as shopping malls,” the Retail Group Malaysia (RGM) said in a statement.

“After a series of new lockdowns have been introduced since the beginning of May 2021, the light of hope at the end of the retail tunnel has been turned off temporarily.”

RGM comprises the Malaysian Retailers Association and the Malaysian Retail Chain Association.

The retail industry posted a negative growth of 9.9 per cent sales for the first quarter of 2021 compared to -11.9 per cent in the same period last year, still beating the initial -13.4 per cent forecast made by members in March 2021.

Retail sales for the October-December 2020 period, when some Covid-19 restrictions were lifted, had dipped by nearly a fifth, at -19.9 per cent.

The government was forced to impose a second MCO from January 13 to March 4, 2021 after daily cases began to surge. The majority of retail trades were ordered to shut down during the initial period of this lockdown, hitting sales.

Retailers said shopping traffic in major shopping malls in the country dropped by as much as 90 per cent compared to December 2020.

“During this lockdown, many non-essential retail shops were allowed to open but with few customers during peak shopping hours. The situation was worse than retail businesses during MCO 1.0 in March 2020,” it said.

The average inflation rate jumped to 0.5 per cent the first quarter of 2021 turned positive after three consecutive quarterly declines, reflecting a slight improvement in consumer demand and spending.

The average price of food and nonalcoholic beverages, as well as miscellaneous goods and services rose 1.5 per cent in the January to March period.

Still, private consumption declined by 1.5 per cent in the same period, weighed down by the second MCO.

The current lockdown is expected to last beyond the two-week “full movement control order” with revised movement restrictions and ban on the opening of certain retail trades.

RGM said it expects retail sales during the third quarter of 2021 to be affected as well, revising the growth rate from 4.1 per cent estimated in March 2021 to 3.5 per cent for this quarter.

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