WHILE news of a Covid-19 vaccine has been a breath of fresh air in a year filled with negative news, it may still take a while before shopper spending is spurred.
As Malaysia grapples with its third Covid-19 wave, shopping malls have once again been left in the lurch, pondering how long it will take for the footfall to go back up once again.
One retailer is hopeful things will start showing signs of improvement come Chinese New Year next year. However, he then shrugs his shoulders, as if unsure of whether to keep the faith.
“Maybe when we’re back to reporting single-digit numbers (new infections), ” Tan, who operates a tiny food and beverage outlet at a mall in the Klang Valley, says.
“When we were reporting single-digit numbers, especially from about late June to mid-July, business was back up to around 90%. Now, it’s less than 50%. Some days, it’s not even 20%.”
Tan says that news of the vaccine “hasn’t changed anything”.
“It’s good news, definitely. But until it’s available to the masses, it’s not going to bring customers back in droves to my shop.”
According to a Reuters report earlier this week, shares in a number of retailers rallied on Monday as a result of optimism that a Covid-19 vaccine will help the economic recovery in the months ahead.
“The thinking is that effective vaccines will translate into positive performances for discretionary, ” it says, citing CFRA chief investment strategist Sam Stovall.
With United States retail sales figures for October due next week, Reuters says investors will be especially eager to hear guidance and commentary from retail executives on consumer spending.
“Investors also are watching whether upcoming holiday sales data can support hopes for retailer shares despite a surge in Covid-19 cases and increased restrictions across the US and in Europe.
“As long as the job market holds up and we see (unemployment benefit claims) continuing to go down, that helps consumer optimism.”
Earlier this week, Moderna Inc said its experimental vaccine was 94.5% effective in preventing Covid-19 based on interim data from a late-stage trial. Pfizer Inc said last week its experimental Covid-19 vaccine was more than 90% effective, based on initial trial results.
Meanwhile, CNBC.Com in a recent article warned that a Covid vaccine could mean a slowdown in growth for grocers that benefited from shuttered restaurants.
“Grocers have won more of Americans’ stomachs and wallets as people cook meals at home during the coronavirus pandemic.
“Yet those gains could evaporate quickly in the year ahead, unless grocers refresh their approach and create lasting customer loyalty, ” it says, citing a recent Bain & Co report.
Citing Steve Caine, a retail expert at Bain, the report says grocers will need to ramp up their creativity to stay competitive in an environment where a vaccine is already available.
Likewise on the local front, former Malaysian Association for Shopping and High-Rise Complex Management president Richard Chan concurs that local retail operators will need to start getting creative if they want to continue remaining competitive, if not, just to stay alive.
“Now is the time for mall operators to get creative in increasing their footfall, but in a safe and conducive manner, ” he tells StarBizWeek.
He says mall operators have been looking at bringing in customers in “smaller groups”.
“This includes having special promotions for individuals or families, or offering special gift vouchers to regular customers.
“Whatever it is, life still needs to go on. But we need to carry on creatively. Otherwise, you will perish.”
The Malaysian Retailers Association (MRA) in a recent statement says that with the reinstatement of the conditional movement control order (MCO) until Dec 6, all retail businesses and retailers are suffering as most of them are already cash-strapped from the MCO since March.
“The decline in sales for the month of October 2020 alone ranges between 60% and 80% across different sub-sectors of the retail industry. Therefore, we expect more retailers to close down and many have actually shut down their stores in the last few months.
“With the expectation of more store closures among the retail businesses, unemployment will increase and salary cuts will continue until the end of this year. We are anticipating more retrenchment exercises to take place as retailers are unable to operate at full capacity as prior to Covid-19. As reported by Socso, their organisation had received reports of 89,596 cases of loss of employment as of Oct 22, with an average of nearly 10,000 cases every month.”
Compounding the challenging operating environment is the fact that the six-month loan moratorium has come to an end, adds MRA.
“Retailers not only have to deal with having to service their loans, but also declining sales, as consumers tighten their belts as they too would have to start servicing their loans.”
Among the retail businesses that have closed down and/or shut down include Robinsons, Speedy Video, bubble tea shops, Esprit, MPH Bookstore, Esquel Group, Muji and H&M.
In the latest September Malaysia Retail Industry Report, Retail Group Malaysia managing director Tan Hai Hsin says 2020 can be distinguished as “the worst period for retailers in Malaysia since 1987” as a result of the mid-March MCO.
On a quarterly basis, the April-June quarter is expected to be “the worst” quarter in the history of Malaysia’s retail industry, he says.
“During the 1997/97 Asian Financial Crisis and the 2008 Global Financial Crisis, stores were never asked to shut completely and people were never asked to stay home.”
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