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KUALA LUMPUR: Retail Group Malaysia (RGM) has revised downwards its sales growth forecast for 2021 to 0.8% from 4% initially, mainly due to the business disruptions caused by the various movement restrictions imposed this year.
In its latest Malaysia Retail Industry Report, RGM said retail businesses were hit hard by the numerous lockdowns that were implemented to curb the rise in Covid-19 cases.
“In June this year, RGM estimated a 4% growth rate in retail sales for 2021. However, this projection needed to be revised downwards again, taking into consideration the lower growth in the second quarter and estimates revision in the third quarter.”
RGM noted that the enhanced movement control order (MCO) was enforced in large parts of Selangor and selected locations in Kuala Lumpur from July 3 until July 16.
“Businesses in the largest retail market of Malaysia were badly hit during this critical period.”
With the gradual opening of the economy, RGM expects the retail industry to gain momentum and recover by the end of the year.
“For the fourth quarter of 2021, RGM maintains its sales growth estimate of 12.7%, as compared to the same period a year ago.”
On the retail industry’s performance during the second quarter of this year, RGM said the sector recorded a growth rate of 3.4%, compared with the same period in 2020.
“The positive growth rate during the quarter was due solely to the low base effect a year ago. During the second quarter of 2020, Malaysia’s retail industry suffered a year-on-year decline of 30.9% because of business closures.
“Retail performances during the second quarter of this year had been affected by a series of lockdowns,” it said.
RGM added that shopping traffic recovered when the MCO 2.0 ended in March 2021.
Although Malaysia was under the conditional MCO during the first month of the second quarter, shopping malls in all major cities received large crowds on the first weekend after MCO 2.0 was lifted.
It also noted that some tourist areas received good crowds during the weekends.
“After Covid-19 cases began surging, MCO 3.0 was imposed from May 3, 2021 and ended on May 31. During this period, the majority of retailers suffered from poor sales when Malaysian shoppers avoided enclosed places.
“Starting from June 1, the full MCO was imposed for a period of two weeks. During this time, non-essential retailers had been ordered to shut down. Malaysians nationwide were asked to stay at home.”
Subsequently, RGM pointed out that the National Recovery Plan was implemented from June 15, 2021.
“Non-essential retailers remained close and Malaysian consumers were asked to stay at home.”
For the third quarter of 2021, RGM expects retail industry sales to plunge 15.1%.
