KUALA LUMPUR: Sales in the Malaysian retail industry contracted 1.1% in the third quarter on eroding Malaysians purchasing power, according a report compiled by Retail Group Malaysia (RGM).
“Despite strong economic performance during the third quarter, majority of consumers did not receive higher take-home pays. The propensity to spend was not high as reflected in the decline in Consumer Sentiment Index during the same period,” RGM said in the report.
It added that the rising cost of living has also deteriorated the purchasing power of Malaysian consumers.
For the first 9 months of this year, the retail sale growth rate was 1.9%, as compared to the same period a year ago.
Members of Malaysia Retailers Association (MRA) projected the third quarter growth rate in August 2017 at 2.9%. The latest figure was also way below RGM forecast at 4.0%.
According to the report, all retail sub-sectors suffered decline in sale in the third quarter, except pharmacy and personal care sub-sector and other specialty retail stores sub-sector, which reported a 6% growth.
After a short recovery, department store cum supermarket sub-sector suffered dip in sale during the third quarter of this year with a decline of -3.5%.
The department store sub-sector slid into red with a negative rate of -4.4% during the third quarter.
Despite selling basic necessities, the supermarket and hypermarket sub-sector reported the worst result during the latest quarter. For the third quarter of 2017, retail sale of this sub-sector dropped by 5.2%.
Going forward, members of MRA estimated an average growth rate of 3.8% during the fourth
quarter of 2017.
“With consideration of the latest poor result, RGM has revised its annual growth forecast downwards again from 3.7% to 2.2% for Malaysia retail industry in 2017. This is the third revision since end of last year,” it said.
Based on this latest revision, the total sale turnover for Malaysia retail industry in 2017 is estimated at RM 100.0bil.
“RGM projects 6.0% growth rate in retail sale for 2018. The recovery of the Malaysian retail market next year is highly dependence on election, external economic demand and ringgit performance,” it said.