PETALING JAYA: The Malaysian retail industry is expected to record a 5.5% decline in sales this year, its first contraction in over 20 years, due to business disruptions caused by the Covid-19 pandemic.
Retail Group Malaysia (RGM) in its latest report said business for the first quarter of this year dropped 18.8%, while sales in April is projected to plunge 60.7%.
“The whole month of April remains under the movement control order (MCO). Essential retailers continue to open with strict social distancing measures implemented by operators.
“A small number of non-essential retailers are allowed to open during the last two weeks of April.
“Assuming the domestic economy will recover from the second half of this year, Malaysia retail industry growth rates for third and fourth quarters will be 2.5% and 3.3% respectively, ” RGM said yesterday.
It noted that the last time the local retail industry had a negative growth rate was 1998, which was the first year of the Asian financial and economic crisis.
“In 1998, the Malaysia retail industry contracted by 20%.”
The MCO, which was implemented on March 18, has been extended to April 28.
In Malaysia, household consumption levels have more than halved since the MCO. The latest statistics released by the Department of Statistics showed that average monthly household expenditure has fallen by more than half from RM6,317 to RM2,817.
RGM said the business of grocery retailers (supermarkets, hypermarkets, mini-markets, provision shops and convenience stores) climbed 20.9% during the first week of the MCO when Malaysians rushed to stock up foods and basic necessities.
“During the second week of MCO, the shopping activities became normalised when Malaysians were able to plan their grocery needs wisely. As more Malaysians started to cook at home, grocery retailers enjoyed higher sales.
“On the other hand, the strict social distancing measures implemented by the retail operators affected the shopping traffic and sale receipt per person. In the second week of the MCO, grocery retailers enjoyed a growth rate of 9.5%.”
RGM added that about 126,000 retailers (including 10% of stalls and markets) remained open during the MCO period.
“They represent 37% of the total retail outlets in Malaysia. Their combined sale turnover accounts for 35% of the total retail turnover in the country.
On the other hand, more than 209,000 retail stores (including 90% of stalls and markets) were forced to shut down during the same period. They represent 61% of total retail outlets and 63% of total retail sale in the country. More than 732,000 retail employees are required to stay at home during this period without work.”
On Monday, the Malaysia Retailers Association (MRA) appealed to the government for further concessions to help keep its members afloat in light of the challenging market situation.
Among them, the MRA called on the government to suspend or defer all Employee Provident Fund contributions for six months starting April 2020, as well as an electricity bill discount of at least 50% for the next six months, irrespective of the kilowatt usage a month.
“Retail is a high-fixed-cost business. Paying electricity bills and rental are two of our top three main concerns.
“Across the country, businesses are having difficulty to stay afloat, with no revenue but much expense to pay. Notwithstanding, a high possibility of business closure and staff layoffs, ” it said.
Source : https://www.thestar.com.my/business/business-news/2020/04/15/retail-sales-expected-to-recover-in-third-quarter