PETALING JAYA: Independent retail research firm Retail Group Malaysia (RGM) has revised upwards the local industry’s growth rate for 2022 to 13.1% from 6.3% estimated in March due to expected strong results during the second quarter of this year.
Malaysia's retail industry is anticipated to grow by 25.7% during the second quarter with contribution mainly from strong sales during the Hari Raya festival.
RGM said the beginning of the transition to the Covid-19 endemic phase for Malaysia from April 1, 2022, means less restrictions for businesses and the people as well as the return of international travellers. Additionally, more than five million Employees Provident Fund members withdrew up to RM10,000 per person from April 20, 2022. This led to more money to spend for celebrations in May.
“Shopping traffic has returned to pre-Covid levels. Shoppers are visiting physical outlets and dining in their favourite cafes and restaurants. However, the Malaysian retail industry is still facing several major challenges for the rest of the year,” RGM said in its Malaysia Retail Industry Report (June 2022).
It explained that prices of basic necessities have continued to rise since the beginning of this year. This supply-driven inflation has affected the purchasing power and lifestyles of Malaysians. This trend is expected to continue in the next few months.
Additionally, Bank Negara Malaysia has raised the Overnight Policy Rate by 25 basis points to 2.0% on May 11, 2022, and is expected to rise again soon which will further erode the purchasing power of Malaysians.
Retailers in the fashion and fashion accessories sector expect their business to continue to thrive with a 58.9% growth rate for the second quarter, the highest among the sub-sectors.
Department store-cum-supermarket operators expect to maintain their pace of recovery with a growth rate of 41.8% for the second quarter of this year, department stores at 14.1%, and mini-markets, convenience stores and cooperatives at 6.8%. The supermarkets and hypermarkets are expected to remain in the red zone with -3.5% growth.
Retailers selling children and baby products are optimistic of a strong recovery with 41.2% growth and pharmacies 21.3%. The personal care sub-sector is expecting business to leap by 52.3%. Operators of furniture and furnishing, home improvement as well as electrical and electronics are expecting sales to jump by 41.7% while the other specialty stores sub-sector projects a 13.3% growth rate.
Meanwhile, the local retail industry’s third-quarter growth rate is estimated at 3.4% due to a low base in the same period a year ago. Spending patterns should begin to normalise during this period. For the last quarter of 2022, the Malaysian retail industry is hopeful of a 3.6% growth rate after a rosy performance a year ago.
Malaysia's retail industry recorded a growth rate of 18.3% in sales for the first quarter of 2022, compared with the same period in 2021, attributable to economic reopening and Chinese New Year festival. The result is higher than the 16/5% estimate made in March 2022 by members of Malaysia Retailers Association and the Malaysia Retail Chain Association.
However, not all retail sub-sectors achieved robust sales in the first quarter of this year. Selected retail sub-sectors that enjoyed good performances during lockdowns have seen sales return to pre-pandemic levels.
The supermarket and hypermarket sub-sector shrank 7.6%, down to its pre-Covid-19 level. It was the worst-performing retail sub-sector in the quarter. Meanwhile, fashion and fashion accessories sub-sector recorded a 52.1% in growth rate, the highest growth rate achieved among the retail sub-sectors.
