SPECIALITY and lifestyle retail stores are beginning to make a mark in the local retail scene, catering to varied lifestyle needs of Malaysians.
The season's latest fashion, al-fresco dining, coffee culture and innovative shopping complexes are just some of the trends reflected in the changing facade of the local retail scene.
Khong and Jaafar Sdn Bhd managing director Elvin Fernandez said the proliferation of retail outlets in the Klang Valley was indicative of a prospective jolly time this year. This is driven by private consumption that accelerated to a year-on-year growth of 11.4% in the second quarter compared with 8.4% in the first quarter of this year. Boosting the sector is an upbeat consumer sentiment amidst a low interest rates environment. The booming retail industry in the Klang Valley will translate into better demand on retail properties, in terms of rentals and capital appreciation despite an elevated inflation rate in August, he said.
The Consumer Price Index (CPI) has been edging up since May, although economists still consider it low compared to regional standards. The inflation rate edged up to 1.4% in August from 1.2% in May.
Retailers contacted by StarBiz generally had the same opinion that the current low level of inflation has a neutral effect on retail sales but the combination of low interest rates, good job prospects and positive consumer sentiment have an overall positive effect on retail businesses.
DTZ Nawawi Tie Leung Sdn Bhd executive director Brian Koh said the vibrant local retail property scene, in the short term, is expected to remain bullish with a projected growth at 6.6% for the whole year compared to 1.5% last year. This is boosted by rising disposal income, higher tourist arrivals and the coming year-end festivities.
“The recent bonus announcement for civil servants will also boost retail sales,” Koh said.
Koh said initial growth rate projection for the third quarter in most retail sub-sectors would be strong except the departmental cum supermarket category.
YY Lau Property Solutions chief executive officer Y.Y. Lau agreed that suburban supermarkets were facing keen competition from hypermarkets.
“Chain hypermarkets offer a wider variety of products with more economical price tags as they purchase in bulk,” Lau said, adding that generally, most of the sub-sectors would do well.
But some quarters opine that the outburst of retail space that swamps the retail market in the Klang Valley may water down consumer spending and consumption while others say rental rates will face downward pressure.
Lau believed that retail sector is unique as rentals can go against the general market trend.
“For instance, rental rates for retail space in an established shopping complex may be revised upwards albeit a general downturn in the property sector, but the rates may be lowered for those who are renting in the less popular malls in an effort to entice them to stay,” Lau added.
Nevertheless, rental rates will be stable, with notable exceptions, given the market adjustments to all the new supply coming into the market, Koh said.
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