PETALING JAYA: Retail Group Malaysia (RGM) has revised downwards its 2021 retail sales growth projection to 4.1% from 4.9% previously, mainly due to the re-implementation of the movement control order (MCO) in January.
The association said the latest revision is also based on other factors of consideration.
“More retail businesses will be allowed to open from March 2020. Nevertheless, movement restrictions continue to affect shopping traffic throughout the country.
“Interstate travel ban is expected to be enforced for a longer period of time and it has been affecting domestic tourism spending, ” it said in a statement.
RGM said the return of foreign tourists will be slow and gradual.
“Travel bubbles with selected countries will likely begin towards the end of this year. Vaccination on the majority of the population will take a while. Thus, movement restrictions and social distancing measures will remain until the end of this year.
“For this entire year, consumer spending is not expected to recover back to 2019 levels.”
On expectations for the first quarter of 2021, the Malaysia Retailers Association (MRA) and the RGM said the retail sector is expected to contract by 13.4%.
“The MCO and conditional MCO in almost all states of Malaysia during the first two months of this year had affected almost all types of retail businesses.
“The department store and supermarket operators are hopeful of better performance during the first quarter of this year. For this quarter, they expect business contraction to be smaller at -9.1%.”
MRA and RGM added that department store operators do not anticipate a recovery any time soon.
“This retail sub-sector is expected to suffer with another double-digit contraction of 47.4% for the first three months of this year.
“Similarly, supermarket and hypermarket operators do not foresee their businesses to return to black during the first quarter of 2021. They anticipate their businesses to record another contraction of 14% during this period.”
On the performance for 2020, MRA and RGM said retail sales contracted 16.3% last year compared with the same period in 2019.
“Last year, the Malaysian retail industry recorded the worst performance since the Asian financial and economic crisis that took place 22 years ago. In 1998, retail sales in Malaysia dropped by 20%.”
For the fourth quarter of 2020, the associations said the Malaysian retail industry reported a discouraging contraction of 19.7%, as compared to the same period in 2019.
“This latest quarterly results did not meet the earlier projection by RGM in November 2020 at -18.2%. It was much lower than the average estimate made by MRA members (at -15.1%) at the end of last year.”
MRA and RGM said the performances of almost all retail sub-sectors remained poor during the fourth quarter of 2020.