More than 51,000 retail stores in the country are expected to shutter within the next four to five months as businesses fail to cope with the changing retail landscape amid the Covid-19 pandemic.
Retail Group Malaysia (RGM) MD Tan Hai Hsin said the number represents 15% of the total industry supply, adding that the industry may see a rapid number of business closures as the loan moratorium offered by the government ended last month.
“This pandemic crisis will lead to the survival of the fittest. We expect the closure to accelerate from this month due to the just-ended moratorium.
“Closures have already been taking place throughout the country with many looking for buyers for their retail businesses, including retail businesses located in established shopping malls,” he told The Malaysian Reserve (TMR).
Tan said based on RGM’s observation studies conducted in several parts of commercial centres in the Klang Valley, about 5% of shopping centre tenants in Malaysia had closed since the beginning of the Movement Control Order.
For retail shops located on the ground floor of shop offices, about 10% of the premises had terminated their leases.
He added that the closures are found in both national chains, independent retailers in the city centres, residential townships, large commercial centres, as well as high-income and low-income areas.
“They are from all kinds of retail businesses, including ‘mamak restaurants’, trendy cafes, food courts, fashion outlets, hair salons and beauty salons.
“Retailers who are already struggling with their businesses before the coronavirus outbreak will most likely shut down permanently,” he said.
The plight of the pandemic will also hold back investment for retailers who have been investing to expand their business and force them to shift gears and restructure their plans.
More than 200,000 businesses, from small to large businesses, have ceased operation since the country’s movement restrictions were introduced in March, while consumers stayed away from non-essential purchases, Tan told TMR.
For now, Tan said the retail group maintains its projection for the industry growth in the fourth quarter of 2020, which sees a decline of 2.5% compared to the same period last year.
The figure was a revision from a downward projection of 1.5% made in July.
The retail group also revised the sales growth for the whole year from a decline of 8.7%, also made in July, to a 9.3% drop.
Tan said the estimation takes into consideration the local labour market, which has seen salary cuts until the end of the year, more retrenchment anticipated to take place and the inability for retailers to operate at full capacity as observed prior to Covid-19.
“For retailers to succeed, they need to fully embrace the new norm. The world has changed in 2020, and this change is most likely to stay this way.
“There is no haven for retailers during this pandemic and the current situation may be the new norm in the next few years,” he added.
Source: https://themalaysianreserve.com/2020/10/12/over-50000-retailers-to-close-by-early-next-year/