Malaysia Shopping Malls Association (PPKM) president Phang Sau Lian
PETALING JAYA: The retail sector is set to close the fourth quarter (4Q) on a high, supported by strong festive shopping, year-end promotions, holiday travel and improved tourist arrivals.
Typically “the strongest quarter” for the retail industry, noted Malaysia Shopping Malls Association (PPKM) president Phang Sau Lian.
“We expect a more upbeat finish to the year. Despite a softer first half, the industry is expected to stabilise and deliver 3% to 4% growth for the full year compared with 2024,” she told StarBiz.
Phang also said confidence would be lifted by global optimism in South-East Asia, with Malaysia seen as a stable and high-potential market.
“This continues to attract more foreign retail investors and encourages new foreign brand entry. Together with festive-led spending, these factors place the industry on track for a resilient and more encouraging finish to 2025.”
Sunway Malls chief executive officer H C Chan
Sunway Malls chief executive officer H C Chan concurred that 4Q has always been a traditional stronghold for the retail sector, as major festivities begin and year-end holidays take place.
“The festive period is expected to drive up (festive) shopping, a key component of retail spending.
“The outlook is certainly favourable, as Sunway Malls forecasts continued strong patronage and spending in view of its asset enhancement exercises in Sunway Carnival and Sunway Velocity Mall respectively with a year-on-year growth of 5%.”
He added that strong gross domestic product (GDP) growth, a favourable labour market, stable inflationary environment, the 25-basis-point cut in interest rates and ringgit appreciation are all expected to shore up consumer sentiment too.
Chan expects the momentum to continue into 1Q of 2026, especially with a longer buying period for Chinese New Year (which falls in February next year).
This, he said, would be immediately followed by the Hari Raya festive shopping period.
“Visit Malaysia Year 2026 (VMY 2026) is expected to drive up tourist arrivals, which will benefit the retail industry too.
“We will still continue to see strong performance in Asian-based intellectual property-related products, leisure and entertainment and popular homegrown food and beverage (F&B) brands that have shown resiliency and high growth.
“These categories, among others, are expected to continue to drive retail sales performance. With the festive season, we forecast it will be a strong 1Q for Sunway Malls as we head towards 2026.”
Phang remains cautiously optimistic on the outlook of the retail industry in 1Q26. “The segment will be supported by growing global confidence in South-East Asia, particularly Malaysia, which continues to attract more foreign investments.
“These investments are expected to bring in new retail concepts in our industry, create more job opportunities and uplift national income as the ecosystem expands.”
Phang also said she expects stronger tourism inflows as Malaysia enters VMY 2026.
“With more international marketing campaigns and budget by Tourism Malaysia, we hope VMY 2026 will boost shopping tourism and bring more footfall and retail spending into the mall industry.”
She also pointed out that 1Q26 is expected to record strong festive spending due to the combination of Chinese New Year and Hari Raya, which is expected to drive demand across fashion, home essentials, gifts, F&B and lifestyle experiential categories.
“The combined festivals will not only spur robust festive spending, but also offer one of the best opportunities to showcase Malaysia’s rich cultural diversity.
“During this period, most of the malls are beautifully dressed up according to the festive theme to promote festive tourism, attracting both local and international visitors.”
Phang said PPKM is looking forward to deeper collaboration between industry players and policymakers to strengthen competitiveness.
“We remain committed to continuous learning programmes that upskill and grow the industry’s professionals and practitioners.
“Overall, we expect 1Q 2026 to deliver a strong and encouraging start for the retail and mall industry.”
On the performance of the retail industry so far this year, Chan noted that 2025 has been “a year of strong headwinds” from two fronts, namely, increasing business cost and lacklustre consumer spending.
Chan said this has dampened retail performance in 2025.
“Despite these headwinds, Sunway Malls ended 1Q with moderate growth.
“As 2Q saw the escalation of the tariff wars, the volatility and uncertainty sent shockwaves across the globe, fuelling further cutbacks on discretionary spending by corporations and consumers, resulting in lower retail spending and making 2Q the worst quarter of 2025.”
However, Chan said a strong GDP growth of 5.2% in 3Q places the country on track for higher GDP target of between 4% and 4.8% for this year.
“Equally, the ringgit is near a four-year high as the economy strengthens and will eventually see a trickle-down effect on more positive consumer sentiments and spending in the near future.
“Sunway Malls saw a rebound of retail sales of 6% for 3Q 2025 and we expect the growth trajectory to continue to 4Q 2025.”
Phang meanwhile noted that the retail sector was relatively flat in the first half of the year.
“This reflects cautious consumer sentiment and rising operating costs.”
She said key challenges this year include the sales and service tax expansion which has raised leasing, operational and fit-out costs.
“Other challenges include higher manpower expenses from increased Employees Provident Fund contributions for foreign workers, minimum wage adjustments and overall labour cost escalation.
“Retailers also continue to face strong competition from online platforms offering more convenience and aggressive pricing.”
To mitigate the challenges, Phang said malls continue to innovate to meet shifting consumer behaviour.
“The influx of new Asian brands, especially China brands, has added freshness to the market, offering more tenancy options, new concepts and greater variety, which created a more dynamic retail environment.”
Phang said recent entrants include Luckin coffee, Bestore snack, Top Toys and M&G Life from China, Gentle Woman and Harborland from Thailand, Top Ten and Tous Les Jours from Korea.
“At the same time, this wave of Asian brands brings stiffer competition for local retailers, highlighting the need for local retailers to enhance their competitiveness through innovation, stronger value propositions and improved digital and service capabilities.”
