KUALA LUMPUR, April 14 — Malaysia’s retail industry is expected to post a 5.5 per cent 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 1998 — the first year of the Asian financial and economic crisis — when it contracted by 20 per cent.
It projected industry sales to shrink by 18.8 per cent year-on-year (y-o-y) in the first quarter and by 9.3 per cent in the second quarter (Q2) of 2020.
Assuming a recovery in the domestic economy from the second half of the year, the retail industry would subsequently see growth of 2.5 per cent and 3.3 per cent in the third and fourth quarters, respectively, RGM estimated in a preliminary report on “Malaysia Retail Industry During Covjd-19 Pandemic (April 2020).”
The group said the forecast 9.3 per cent y-o-y decline in Q2 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, the month of April is expected to see a 60.7 per cent contraction in retail sales compared to the same month of 2019,” RGM said.
About 126,000 retailers, including 10 per cent of stalls and markets, have remained open during the MCO period, it said. They represent about 37 per cent of the total retail outlets in Malaysia.
On the other hand, more than 209,000 retail stores were shut down, which represented for 63 per cent of the country’s retail sales, it added.
“During the six weeks of business closures, non-essential retailers still need to pay an estimated RM6.2 billion in staff cost, including salaries and wages, 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 per cent during the first week of the MCO when Malaysians rushed to stock up 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 per cent 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 during the first quarter of 2020. — Bernama
