From clicks to bricks

  • Retail
  • Tuesday, 17 Sep 2019

Shopping frenzy: Interest in the new Samsung Galaxy Note10 at an all-time high, evident by the long queues and huge crowds of excited customers at a mall in Kuala Lumpur.

Petaling Jaya: Retail Group Malaysia managing director Tan Hai Hsin said more Malaysians are shopping online but the market size is “still insignificant” to affect retail growth.

Tan was responding to an email on why the retail sector saw a revision in growth from 5.5% as projected earlier to 4.5% as reported in the April-June quarter in the September 2019 Malaysia Retail Industry Report.

“The (online) market size is still insignificant. The lower projection has nothing to do with online sales, ” Tan said.

He said the slower retail growth was due to the current economic condition. The third quarter July-September period is expected to have a projected growth of 3.2%.

On a 12-month annual basis, Tan is revising its earlier 4.9% growth to 4.4%.

“The local economy was affected by external political and economic developments in recent years, which discouraged consumer spending, ” he said.

On clicks versus bricks, he said current trends in the last few years showed that Malaysian consumers are still shopping at physical stores.

This has resulted in online stores making a clicks-to-bricks move.

People queing to buy bubble tea at one of the shop  in Subang Jaya. - FAIHAN GHANI/The Star.People queing to buy bubble tea at one of the shop in Subang Jaya. - FAIHAN GHANI/The Star.

“This is evident from the weekend crowds at popular malls in every city in Malaysia.

“Several successful online retailers, such as ChristyNg and dUCk, are still opening physical stores. We are also seeing many foreign retailers, such as Henry Jacques, Halcyon Days, Panerai opening their first physical stores in Malaysia, ” said Tan.

“Millennials - early 20s and to mid-30s - are not sitting at home and ordering everything online. Year-to-date, they queued for soft-served ice cream at Family Mart.

“They queued at least two hours at the latest bubble tea shops, queued at least three hours at Haidilao Hot Pot restaurants. They slept overnight at a shopping mall in order to buy the latest Samsung smartphone.

“The crowd gathered at Uniqlo for the limited edition KAWS t-shirts. They queued at SPAO Jimatlah Event in Sunway Velocity Mall and they enjoyed taking selfies inside popular fashion store fitting rooms.

“All these prove that our young generation are willing to visit physical stores with products and services that appeal to them, ” said Tan.

On the abolition of the goods service and tax (GST) on June 1,2018, the report said its removal “was the main reason for the higher prices in June, 2019.”

The highest increases were recorded in furnishing, household equipment & routine household maintenance, recreation services and culture, food and non-alcoholic beverages and housing, water, electricity, gas and other fuels, the report said.

Despite that, private consumption maintained its growth momentum with 7.8% during April-June 2019 period, driven by Hari Raya festivities.

“ Malaysian consumers were very excited and full of hope after the change of ruling party last year. This was reflected in the consumers’ confidence index published by MIER during second quarter of 2018.

“However, this excitement did not translate into higher purchasing power.

“Malaysian consumers did not go all out to spend on all kinds of retail goods, mainly because they did not have extra incomes to do so.

“Furthermore, they were waiting for the new government to announce the abolition of GST. They stopped buying high-value goods until the government reduced the GST to 0%, ” Tan said in an email.

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