Retail industry posts strong Q3 growth

  • Business
  • Wednesday, 01 Dec 2010

PETALING JAYA: Malaysia's retail industry recorded a strong sales growth of 9.8% in the third quarter, beating Retail Group Malaysia's earlier estimate of 6.8%.

The latest Malaysia Retail Industry Report (November 2010) said the higher-than-expected growth in the July-September period was due to the poor performance recorded in the same period in 2009.

Last year, Malaysia's retail industry did not expand due to reduced consumer spending, Retail Group Malaysia managing director Tan Hai Hsin said in the report.

Despite the strong quarterly result, the profit margin of retailers only improved by 4.2%. The report said retailers still depended on heavy discounts and frequent promotions to get consumers to buy.

TA Securities analyst Farhana Hamzah said the retail industry growth for the third quarter was within expectation as major retailers were aiming for single digit growth.

Consumer spending has improved this year due to better economic growth, she told StarBiz. She said growth for the last quarter would not be as strong as the third quarter, but would be better than last year. She said full year growth was expected to be over 6%.

Assuming the Economic Transformation Programme for the retail industry is implemented on time, the retail industry next year should perform better than this year, she said.

Tan said members of the retailers' association expected sales to rise by 12.7% for the last three months of the year, which was significantly higher than Retail Group Malaysia's earlier estimate of 3.5%.

The department store cum supermarket operators are expecting their businesses to expand by 10.1% during the fourth quarter, he said. However, department store operators expect business to slow down toward the end of the year after a strong performance during the first nine months.

They estimate a growth of 7.2% for the last quarter. This is the lowest estimate given by all the retail sub-sectors, Tan said.

Retail Group Malaysia has revised upward the growth rate of Malaysia's retail industry to 7.8% this year from 6.1% earlier.

The retail industry is expected to grow by 5% next year, amid slower recovery in the world economy as well as the continuous rise in cost of living.

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