PETALING JAYA: Christmas and year-end festivities are usually a retailer’s dream but this year will be different.
Instead of crowded malls and bustling sales, the Malaysia Retailers Association (MRA) has further revised its negative 2.5% retail growth rate for the October-December quarter to negative 18.2%.
The downgrade of the last quarter – normally a retailer’s most-profitable – does not augur well for the coming year.
In its latest November 2020 Malaysia Retail Industry Report, Retail Group Malaysia Sdn Bhd said the larger-than-expected drop is due to the prolonged movement control order (MCO).
Retail Group managing director Tan Hai Hsin who is tabulating data for MRA members, pointed out that the conditional MCO imposed on the Klang Valley, the largest retail market in the country, had led to “a significant reduction in shopping traffic in malls, commercial centres and food and beverage (F&B) outlets.”The CMCO was extended to other states from Oct 14, impacting the entire country, the report said.
Considering the already-poor performance recorded during the July-September third quarter, and the double-digit negative growth expected for the fourth, Retail Group Malaysia is revising the retail industry’s annual growth rate from negative 9.3% to negative 15.8% for 2020.
It is projecting a 4.9% growth rate in retail sale for 2021.
“Next year will remain a great challenge for the Malaysian retail industry, ” Tan said in the report.
He said the third wave of the Covid-19 pandemic, which resulted in the second CMCO, has dampened the spirit of Malaysian retailers.
“There is still no light at the end of the retail tunnel, ” the report said.
The July-September quarter performance was “poorer-than-expected” with a negative growth of 9.7% compared with a year ago.
The drop is higher than the projected negative 3.4%, or 185% worse than expected.
Over a nine-month period from January to September 2020, the the sector saw a negative 18.4% drop in growth.
Although retailers were allowed to open for business during this period, consumers were wary of the Covid-19 spread, the report said. The reduced take-home pay during this July-September quarter also limited purchasing power of Malaysian consumers.Comparing retail sales with other economic indicators, the report said the national economy reported a smaller contraction of 2.7% for the third quarter measured at constant prices adjusted for the vagaries of inflation but retail sales, at current prices, was at negative 9.7%.
The average inflation rate during the third quarter stayed in the negative zone at 1.4%.
The monthly decline was due to the reduction in price of transport, housing, water, electricity gas and other fuels.
On the other hand, the prices of food and non-alcoholic beverages rose during this period.
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