Malaysians Shopping Less, Retail Sector Takes A Hit

Malaysians Shopping Less, Retail Sector Takes A Hit

To nobody’s surprise, Malaysians are now shopping less, and this has caused a dip in retail sales around the country.

According to Retail Group Malaysia, the local retail industry recorded a 4.4% fall in sales in the first quarter (Q1) of 2016, compared to a 4.6% growth a year ago.

The fall was attributed to the pre-goods and services tax (GST) frenzy last year, during which consumers’ spending rose sharply during the last weeks before the implementation of the tax on April 1, 2015.

Weak Chinese New Year sales in February 2016, coupled with rising costs of retail goods and services resulting from the weaker Ringgit, have further contributed to the decline.

Although a negative first quarter growth rate was expected, the Malaysian Retailers Association (MRA) reported that the results were below the industry expectation of a 4% fall in sales.

“Retailers continued to depend on heavy price discounts to attract Malaysian consumers to buy. As a result, their profits were eroded,” the report said.

It also stated that all retail sub-sectors recorded declines in their businesses during the first quarter except the “Other Specialty Retail Stores” sub-sector.

The Department Store/Supermarket sub-sector recorded a negative growth rate of 7.3%, suffering the worst performance among the retail sub-sectors for Q1 2016.

The Supermarket and Hypermarket sub-sector also reported a weaker-than-expected growth of -4.2%, its fourth conservative negative quarterly growth rate.

However, MRA members are optimistic that businesses will return to black during Q2 2016 with an average growth rate of 9.9%.

The estimated growth rates for Q3 and Q4 2016 are 5.0% and 5.5% respectively.

“The greatest challenge in 2016 for the retail industry in Malaysia is still consumers’ spending. After one year of implementing GST, Malaysian consumers are still holding back on spending,” the association pointed out.

It added: “Further increases in cost of living in the near future will worsen it.”


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