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Malaysia: Retail bogged down by polls
PETALING JAYA: The impending general election is contributing to the slowdown in the retail sector.
The second quarter is seasonally a tough period for the sector as it comes after the Chinese New Year celebrations.
Malaysian Association for Shopping and High-Rise Complex Management past president Richard Chan said that people were holding back on their purchases.
“It’s cyclical. Furthermore, with the current economic climate and political uncertainty stemming from the forthcoming general election, everyone is holding back purchases,” he told StarBiz.
“By June, after the elections, things will pick up,” Chan said, adding that he expected flat-to-low single digit year-on-year growth for the second quarter of the year.
However, MIDF Research believed that retail sales would further improve in the second quarter of 2018, driven by the Hari Raya celebration and election campaigns.
“We believe that pre-election goodies will further encourage consumers to spend. On a broader note, we expect retailers to benefit from improvement in consumer sentiment and the strengthening of the ringgit.
“However, these factors will be partly mitigated by the influx of competing retail outlets and intense price war among retailers, as observed by the continuous drop in the prices of clothing and footwear year-on-year.”
Chan believed that the Hari Raya, which falls in June, would more likely boost sales in the third quarter of 2018.
“Ramadhan begins in the middle of May. In the first two weeks of the fasting month, the consumers would be adjusting to that period and business would not be picking up.
“It’s only from the third week when things will start to pick up. We expect this to happen from June, by which time the elections should be over. We anticipate the situation to start improving from June.”
Chan said this would bode well for the industry, as June and July were “quiet months” for the sector due to the lack of festive holidays.
Meanwhile, Retail Group Malaysia (RGM) said that the retail sector grew 2% in 2017 and has projected a growth of 4.7%, or RM104.4bil in 2018.
“This projection is considered optimistic by members of Malaysia retailers association. The prospect of the retail industry for this year is still highly dependent on the economic performance and consumer confidence level,” RGM said in its Malaysia Retail Industry Report.
MIDF Research said it was maintaining a neutral stance on the local retail sector as it expected the outlook to be remain challenging in view of intense competition on the local front.
“As a shopping mall operator, Aeon Co 
is in a better position to react to the latest consumer trend. Despite operating in a similar retail sub-sector, Aeon Co’s better performance was partly due to its competitive advantage as a shopping mall operator as opposed to a pure departmental store player like Parkson,” said the research house.
“This enables the group to react faster to the latest consumer shopping trend and spending behaviour as it has the ability to influence tenancy mix in its shopping malls,” MIDF Research said.
Source: https://www.thestar.com.my/business/business-news/2018/03/19/retail-bogged-down-by-polls/#xqcKQkGoblY4qv2t.99