Malaysia retail sales down 1.2% in Q1

PETALING JAYA: Sales in the Malaysian retail industry contracted 1.2% for the first quarter of 2017 compared with the same period last year, partly due to poor Chinese New Year sales in January on cautious consumer spending, according a report compiled by Retail Group Malaysia (RGM).

In addition, prices of retail goods continued to rise since the beginning of this year, given the weak ringgit and higher fuel prices.

The 1.2% contraction was worse than Malaysia Retailers Association’s estimate of a 0.9% growth and RGM’s projection of 1.5% growth.

Last year, the retail industry was down by 4.4% due to strong pre-Goods and Services Tax sales in 2015.

RGM said consumers turned cautious as they were burdened by higher cost of living. Average pump price for RON95 during the first quarter of 2017 was the highest since the implementation of managed float system in December 2014.

All retail sub-sectors sales declined in Q1, except for the pharmacy and personal care sub-sector, which reported an encouraging growth rate of 3.7%.

The department store cum supermarket sub-sector suffered from another negative growth rate of 3.7%, being the third consecutive quarterly decline.

The department store sub-sector fell back to negative zone with a 0.1% decline after a strong recovery in the last quarter.

Similarly, the supermarket and hypermarket sub-sector reported another worse-than-expected growth of -4.8%, the worst among the retail sub-sectors.

The fashion and fashion accessories sub-sector also slid 0.1% following a strong recovery for most part of 2016.

The other specialty stores sub-sector (including retailers selling photographic equipment with photo processing services, children-related goods, second-hand goods, toys, TV shopping as well as restaurants) dropped 3.1% during the quarter.

Looking ahead, MRA members are hopeful that their businesses will pick up by the second quarter of 2017, with a projected average growth rate of 4.8%.

Meanwhile, RGM is maintaining its retail sales growth forecast at 3.9% for 2017.

Citing trading condition remains tough for retailers for the second half of 2017, RGM said the challenges include higher cost of goods and rising operation costs for retailers.

“The recovery of retail sales is highly dependence on external economic demand and ringgit performance for the rest of the year,” it added.