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Malaysia: Retail sector set for stronger sales growth this year
PETALING JAYA: Malaysia’s retail industry is expected to record a stronger sales growth this year, especially after the conclusion of the 14th general election.
According to Retail Group Malaysia, the retail sector’s total sales is projected to grow by 4.7% or RM104.4bil this year, as compared to the 2% growth seen in 2017.
It said the retail industry performance in 2017 lagged behind the gross domestic product growth of 5.9%.
Retail Group Malaysia also pointed out that the Malaysian consumers have been taking a wait-and-see attitude on their retail spending and that retail sales may rise after the official election campaign started.
“At this moment, the 4.7% growth projection is considered optimistic by Malaysia Retailers Association (MRA) members. The prospect of retail industry this year is still highly dependence on the economic performance and consumer confidence level.
“When campaigns begin, it will lead to many political and social activities throughout the country. This should motivate consumers to spend. Post-election, consumer spending may improve further as Malaysians will focus on their own economic future and release the pent-up demand,” it said in the Malaysia Retail Industry Report.
The domestic retail sector has performed below market expectations in the fourth quarter of 2017.
Retail Group Malaysia said the domestic retail sales grew by 3.1% in the fourth quarter of last year and was significantly below its earlier forecast of 4.5%. Similarly, it was lower than MRA’s forecast of 3.8%.
However, the fourth-quarter 2017 retail sales growth was notably higher compared to the earlier quarter, in which retail sales shrunk by 1.1%.
“Year-end festival and school holiday contributed to the better growth rate during the fourth quarter.
“This latest quarterly result is consistent with Consumer Sentiment Index during the same period published by the Malaysian Institute of Economic Research. Rising cost of living continued to deteriorate the purchasing power of Malaysian consumers.”
In the fourth quarter of last year, the performances of all retail sub-sectors were mixed, with the supermarket and hypermarket sub-sector being the worst performer as sales dropped by 2.7%.
The department store and supermarket sub-sector managed to recover during the last three months of 2017 with a growth of 2.3%, after a disappointing performance in the previous quarter.
Meanwhile, fashion retailers enjoyed a strong rebound with a growth rate of 7.8% during this latest quarter. The pharmacy and personal care sub-sector recorded a sustainable growth rate of 5.4%, as compared to the same quarter a year ago.
The other specialty stores sub-sector, which includes photo shop, second-hand goods store and sporting goods, among others, reported another encouraging growth rate of 7.4% in the fourth quarter.
The sub-sector was the best performer in the domestic retail industry last year.
Source: https://www.thestar.com.my/business/business-news/2018/03/15/retail-sector-set-for-stronger-sales-growth-this-year/#3ZAxac0TPWUdS21j.99