With travel restrictions in place at almost all states within Malaysia due to the ongoing COVID-19 pandemic, retailers in Malaysia is expecting retail sales to record a 13.4% contraction for the first three months of 2021.
Based on Retail Group Malaysia’s (RGM) latest Malaysia Retail Sales Report, the Conditional Movement Control Order (CMCO) and MCO rolled out by the government affected nearly all types of retail business within the country during the first two months of 2021, reported The New Straits Times (NST).
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Despite this, department store-cum-supermarket operators are looking forward to a better performance during the first quarter of 2021 (Q1 2021), expecting a lower business contraction of 9.1%, said RGM Managing Director Tan Hai Hsin.
In contrast, department store operators do not expect to see a recovery anytime soon, as this retail sub-sector is forecasted to register a double-digit negative growth rate of 47.4%, he said.
“Similarly, supermarket and hypermarket operators do not foresee their businesses returning to the black during the first quarter of 2021. They anticipate their businesses to record another negative growth of 14% during this period,” said Tan as quoted by NST.
RGM compiled the quarterly survey based on feedback from Malaysia Retail Chain Association (MRCA) and Malaysia Retailers Association (MRA) members.
The Malaysia retail industry registered its worst performance last year since the 1998 Asian financial crisis, when retail sales fell 20%.
The RGM report showed that the Malaysia retail industry posted a growth rate of -19.7% in Q4 2020 over the same period in 2019.
The Q4 2020 results were lower than RMG’s earlier projection of -18.2% as well as MRA members’ estimate of -15.1%.
Retail sale growth rate stood at -16.3% for the whole of 2020.
Tan noted that almost all retail sub-sectors registered poor performance during Q4 2020.
The business of department store-cum-supermarket sub-sector registered a negative growth rate of 26.8% in Q4 2020 and 18.7% for the entire 2020.
The department store sub-sector posted a growth rate of -44.7% in Q4 2020 and -38.3% for the entire year, said Tan.
The supermarket and hypermarket sub-sector also recorded poor results despite being able to operate throughout the pandemic.
The retail sale of this sub-sector fell 19.6% in Q4 2020 and 12% for the whole of 2020.
The mini-market, convenience store, and cooperative sub-sector was least affected, with sales expanding 10.2% in Q4 2020 and 14.8% for the whole of 2020.
Tan revealed that RGM’s growth rate projects for the whole of 2021 has been revised downward to 4.1% from 4.9%, previously, noting that the revision is based on other consideration.
“More retail businesses will be allowed to open from March 2021. Nevertheless, movement restrictions continue to affect shopping traffic throughout the country,” said RGM as quoted by NST.
RGM also expects the interstate travel ban, which has been affecting domestic tourism spending, to remain for a longer period of time.
“The return of foreign tourists will be slow and gradual. Travel bubbles with selected countries will likely begin towards the end of this year. Vaccination on a majority of the population will take a while. Thus, movement restrictions and social distancing measures will remain until the end of this year,” it said.
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