Malaysian retail industry sales falls 4.4% in Q1

Weak sentiment: Retailers continue to depend on heavy discounts to attract consumers and as a result, their profits are eroded, according to the report.

PETALING JAYA: The Malaysian retail industry recorded a 4.4% fall in sales in the first quarter of this year compared with a 4.6% growth a year ago, according to Retail Group Malaysia.

The fall was attributed to higher pre-goods and services tax (GST) sales a year ago, as well as the weak Chinese New Year sales in February 2016.

The report was based on interviews with members of the Malaysian Retailers Association on their retail sales performances.

Although a negative first quarter growth rate was expected, the results were below the industry expectation of a 4% fall in sales, said the group.

“Consumers’ spending rose sharply during the last few weeks before the implementation of the GST from April 1, 2015.

“Consumers took advantage of the retail offers in anticipation of price increases after the implementation of the tax,” it said in the report yesterday.

It added that prices of retail goods and services had been increasing gradually since early this year, partly due to the weak ringgit.

This, it said, had further deteriorated the spending power of consumers.

“Retailers continued to depend on heavy discounts to attract consumers. As a result, their profits were eroded,” it said.

The report 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 cum supermarket sub-sector recorded a negative growth rate of 7.3%, suffering the worst performance among the retail sub-sectors for the quarter.

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

The group said members of the retailers’ association expected their businesses to return to black during the second quarter of 2016 with an average growth rate of 9.9%.

The estimated growth rates for the third and fourth quarters of 2016 are 5.0% and 5.5%.

“The greatest challenge in 2016 for the retail industry is still consumers’ spending.

“After one year of implementing the GST, consumers are still holding back on spending.

“Further increases in the cost of living will worsen it,” the association said.