PETALING JAYA: Malaysian consumers remain selective despite improving economic conditions, with households continuing to favour cheaper alternatives and essential purchases.
BIMB Research said this came as consumers shopped less frequently, compared prices more actively and increasingly opted for discounts, vouchers and lower-priced alternatives.
According to recent data from Retail Group Malaysia (RGM), Malaysia’s retail industry recorded softer-than-expected growth of 2.5% year-on-year (y-o-y) in the second quarter of 2026 (2Q26).
“RGM also noted that consumers are increasingly trading down to generic brands and prioritising essential purchases over discretionary spending,” BIMB Research said.
The overall consumer sector delivered modest earnings growth of 13.5% y-o-y, with consumer staples earnings rising 27.8% y-o-y, while consumer discretionary earnings fell 10.3% y-o-y.
“This reflected more cautious spending behaviour and a continued reprioritisation towards necessities,” the research house said.
According to CIMB Research, consumer staples are expected to remain resilient, supported by recurring demand for daily necessities and relatively inelastic consumption.
It added that companies with expanding capacity, wider distribution and affordable price points should be better positioned to sustain volume growth within the staples segment.
Meanwhile, CIMB Research expects performance across the discretionary segment to remain uneven.
“Value-focused retailers should remain relatively well positioned as consumers continue to prioritise affordability and trade down to lower-priced alternatives.”
Convenience operators should also sustain top-line growth, supported by network expansion, modest same-store sales growth and recurring daily purchases across ready-to-eat food, beverages and tobacco, it said.
However, it pointed out that categories exposed to aspirational, lifestyle and higher ticket spending are likely to face a more challenging demand environment as consumers scale back non-essential purchases.
That said, analysts also expect consumer spending to improve in the second half of 2026, supported by government assistance, targeted subsidies and tourism-related spending.
RGM forecast retail sales growth to improve to 4.7% in 3Q26 from 2.5% in 2Q26, while CIMB Research expects a stronger recovery in 4Q26.
CIMB Research added that potential fiscal measures ahead of the election cycle could temporarily lift household disposable income and spending, particularly among lower- and middle-income households.
It also said the government is studying a potential increase in the minimum wage, with the next mandatory two-year review due around February 2027.
Both research houses maintained a “neutral” stance on the consumer sector.
