Retail sales growth for 2016 revised downwards again

PETALING JAYA: Independent retail consulting firm Retail Group Malaysia (RGM) has revised downwards the local retail industry’s sales growth rate for 2016 to 3.0% from 3.5% or to RM99.1 billion in value.
“Next year remains a challenging year for Malaysian retailers. Significant recovery will only be expected during the second half of 2017. Retail Group Malaysia projects a 5.0% growth rate in retail sales for 2017,” it said in its November 2016 Malaysia Retail Industry Report.

As the economy is not expected to recover strongly in the immediate term, it said, Malaysian consumers are expected to hold back on their spending during the first half of next year. At the same time, the cost of living of average Malaysians will continue to rise in 2017, including food and beverages, medical and transport.
“The continued weakening of the ringgit will impact the costs of retail goods. Retailers may be forced to raise prices again during the first six months of next year,” said RGM.
The revision in retail sales growth for 2016 is the second for the year, a factor of the poor performance of retail sales in the third quarter of this year.
Malaysia’s retail industry reported a disappointing growth rate of 1.9% in sales in the third quarter of 2016, compared with the same period in 2015, it said.
This latest quarterly result was significantly below the Malaysia Retailers Association’s (MRA) forecast of 5.9% growth issued in August 2016.
“The Hari Raya festival in early July did not lead to higher retail sales. Higher minimum wages from July 1, 2016 did not bring cheer to retailers as well. Malaysian consumers have yet to recover from the negative impact of the Goods & Services Tax introduced by the government on April 1, 2015,” RGM said.
Based on the latest projections by MRA members, the forecast retail sales growth rate for the fourth quarter is maintained at 5.5%.