After one year of implementing Goods & Services Tax (GST), Malaysian consumers are still holding back on spending.
KUALA LUMPUR: The Malaysian retail industry recorded lower-than-expected growth rate of 7.5% in retail sales in the second quarter of this year, according to Retail Group Malaysia (RGM).
RGM, an independent retail research firm, which tabulates quarterly retail data, the latest quarterly result was “below market expectation”.
“It was 24% lower than the estimate made by members of Malaysian Retailers Association (MRA) in June 2016 at 9.9%,” it said in a statement.
RGM said the second quarter marked the first anniversary of the implementation of Goods & Services Tax (GST) by Malaysian government on April 1, 2015.
It said a year ago, Malaysian retailers suffered a severe decline in retail sales of 11.9%. It was the worst quarterly growth rate since 1999.
“For the first six months of this year, the retail sale growth rate was 0.5%, as compared to the same period a year ago,” RGM said, adding that sales of all retail sub-sectors rebounded from GST during the second quarter of 2016.
However, the extent of recovery varied greatly from one sub-sector to another sub-sector.
Department store cum supermarket sub-sector recovered from poor performance during the first three months of this year with a growth of 3.9% during the second quarter of 2016.
Department store sub-sector bounced back from its poor result during early of this year with a strong growth rate of 21.1% during the second quarter.
“This sub-sector is the best performer during this latest quarter as compared to other retail sub-sectors. This is the first recovery after four conservative quarters of negative growth rates,” RGM said.
The supermarket and hypermarket sub-sector reported a better growth rate of 8.7% during the second 3-month period of 2016. This is also the first recovery for this sub-sector after four conservative quarters of negative growth rates.
Meanwhile, fashion and fashion accessories sub-sector returned to black with a growth rate of 6.5% during the second quarter of 2016, as compared to the same period a year ago.
During the second 3-month period of this year, pharmacy and personal care sub-sector recovered from weak sales with a positive growth rate of 7.5%, as compared to the same quarter a year ago.
Going forward, RGM said members of the retailers’ association estimated an average growth rate of 5.9% in the third quarter of 2016. Similar to the sale results in second quarter of this year, the projected average growth rates of the retail sub-sectors varies considerably.
The department store cum supermarket operators are expecting a moderate growth rate of 2.7% for the third quarter of this year.
On the other hand, the department store operators are expecting their businesses to dip with a negative growth rate of 7.6% for the third 3-month period of this year.
Supermarket and hypermarket operators are expecting a stronger recovery with 19.3% growth rate for the third quarter of 2016.
“The projected retail sale growth rate of Malaysia retail industry in 2016 by RGM stays at 3.5% or RM 99.5bil in retail sale values,” RGM said.
“In view of the current weak economy and more increases expected in prices of retail goods and services before the end of this year, Malaysian consumers will continue to stay cautious in their spending,” it added.
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