English
Malaysia: Retail group sees lower growth rate in 2021
KUALA LUMPUR: Retail Group Malaysia (RGM) has lowered its retail sales growth rate from an earlier 4.9% to 4.1% for 2021 due to the re-implementation of the Movement Control Order (MCO) in the January to February.
In its report issued on Monday, it said the forecast was also based on other factors where more retail businesses will be allowed to open from March.
“Nevertheless, movement restrictions continue to affect shopping traffic throughout the country, ” it said.
It pointed out interstate travel ban was expected to be enforced for longer period of time and this has been affecting domestic tourism spending.
The return of foreign tourists will be slow and gradual. Travel bubbles with selected countries will likely to begin towards end of this year.
“Vaccination of a majority of the population will take a while. Thus, movement restrictions and social distancing measures will remain until end of this year.
“For this entire year, consumers’ spending is not expected to recover back to 2019 level, ” it said.
The statement was prepared by the Malaysia Retailers Association (MRA), Retail Group Malaysia (RGM) and the Malaysia Retail Chain Association (MRCA).
Members of MRA and MRCA were interviewed on their retail sale performances for 2020 and the first quarter of 2021.
In the fourth quarter of 2020, Malaysia’s retail industry reported a contraction of 19.7% compared with a year ago.
The latest quarterly results did not meet the earlier projection by RGM in November 2020 at -18.2%.
It was much lower than the average estimate made by MRA members (at -15.1%) end of last year.
For 2020, the retail sales shrank -16.3% as compared to the same period a year ago.
Last year, Malaysia retail industry recorded the worst performance since the Asian financial crisis 22 years ago. In 1998, retail sale in Malaysia dropped by 20%.
RGM said the department store cum supermarket sub-sector suffered a sharp decline in the 4Q with a contraction of 26.8%. For the entire year, it shrank 18.7%.
As for the department store sub-sector, revenue fell in 4Q as its business contracted 44.7% For 2020, the department store sub-sector contracted 38.3%. It was the worst retail performer among the retail sub-sectors.
Despite being able to open throughout the Covid-19 pandemic, the supermarket and hypermarket sub-sector reported yet another poor result during the last quarter.
In 4Q, retail sale of this sub-sector declined by 19.6% and for the whole year, sales fell 12.0%. The mini-market, convenience store and cooperative sub-sector was least affected as compared to many other retail sub-sectors.
In 4Q, it grew by 10.2% and for the entire year, its business expanded by 14.8%.
However, bearing the brunt of the pandemic was the fashion and fashion accessories sub-sector, which was the worst performer among the retail sub-sectors.
In 4Q, fashion retailers reported a 49.6% decline in sales. For 2020, this sub-sector reported a contraction of 37.9%.
The children and baby products sub-sector shrank 28.2%in 4Q. For the whole year, its business declined by 20.2%.
RGM said the pharmacy and personal care sub-sector stayed in the negative growth zone during this last quarter.
During 4Q, this sub-sector contracted by 11.7% from a year ago. For 2020, this sub-sector suffered a decline in business by 11.8%.
The Furniture & Furnishing, Home Improvement as well as electrical & electronics sub-sector performed well during the last quarter of 2020.
It expanded by 11.7%, as compared to the same quarter a year ago. However, it managed to grow by 0.4% for 2020.
The other specialty stores sub-sector (including photo shop, second-hand goods’ store, fitness equipment store, optical store, shop selling baking ingredients, store retailing musical instruments, arts & crafts store as well as TV shopping channel) reported a negative growth rate of 5.2% during the fourth quarter of 2020. For the entire year, its growth rate was -11.7%.
Food & beverage outlets (cafe and restaurant) were allowed to open throughout the Covid-19 pandemic. Nevertheless, in 4Q, its business still shrank by 18.8%. For 2020, the business of this sub-sector reported a decline of 12.8% in terms of growth rate.
For food & beverage outlets (kiosk and stall) that focused on take-away and delivery reported sales dropped by 14.9% in 4Q and contracted 18.3% in 2020.
For 1Q, members of the two retailers’ associations estimate a contraction of 13.4% as the MCO and CMCO in almost all states in January to February affected almost all types of retail businesses.
The department store cum supermarket operators are hoping for a better 1Q performance during the first quarter of this year and contraction to be smaller at 9.1%.
However, the department store operators do not anticipate a recovery so soon. This retail sub-sector is expected to suffer a contraction of 47.4%in 1Q.
Supermarket and hypermarket operators do not foresee their businesses to return to black1 in Q as they expect a contraction of 14%.
Source: https://www.thestar.com.my/business/business-news/2021/03/08/retail-group-sees-lower-growth-rate-in-2021