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Tag: retail group malaysia

  • Malaysians’ appetite for spending remains poor

    Malaysians’ appetite for spending remains poor

    Malaysian consumers continue to tighten their belts as reflected by the 0.3% year-on-year growth of retail sales in the fourth quarter of 2016 (4Q16), according to Retail Group Malaysia (RGM).

    The quarterly growth of retail sales decelerated for the third quarter after it hit a high of 7.5 per cent in 2Q16, based on data compiled by RGM from members of Malaysia Retailers Association (MRA).

    Retailers are pessimistic about the sales performance for 1Q17. “As consumer confidence remains low, they estimate an average growth rate of only 0.9 per cent during 1Q17,” said the report.

    “The year-end school holiday and festive celebration did not motivate Malaysian consumers to spend more. The weak economic environment and bleak job prospect discouraged shoppers to buy more than usual.

    “4Q16’s growth rate was a let-down taking into consideration the low growth rate of 1.3 per cent during the same period in 2015,” said RGM in its latest quarterly report that was released over the weekend.

    For 2016, domestic retail sales expanded by 1.7 per cent, which was not much stronger compared with 1.4 per cent growth in 2015 — the year when goods and services tax was introduced in April that year.

    “After almost two years, the retail industry has yet to recover. Economic condition remains tough for retailers,” said RGM.

    In view of the lacklustre growth pace in 4Q16, RGM has slashed its forecast annual retail sales growth to 3.9 per cent to RM101.6 billion (US$22,921,609,224) for 2017 from RM97.8 billion (US$22,064,304,942) in 2016, compared with its initial forecast of 5 per cent.

    RGM pointed out that the latest quarterly result was way below market expectations. “It was 95 per cent below the estimate made by members of MRA in November 2016 [at 5.5 per cent],” RGM wrote in the report.

    The weak retail sales are quite a sharp contrast to the growth of private consumption, which had been above 6 per cent for three consecutive quarters since April last year.

    Among the sub-sectors, the other specialty stores, which include photo shops, optical shops, children-related stores, second-hand goods stores, toy stores, TV shopping as well as restaurants, were the worst-performing retail category in 4Q16. This sub-sector suffered a contraction of 7.7 per cent — the second consecutive quarter of declining sales. For the whole year, this sub-sector suffered a decline of 2.2 per cent in its business.

    In contrast, the fashion & fashion accessories sub-sector was the bright spot among all. The sub-sector continued to fare well in 4Q16.

    “It managed to sustain its business with a growth rate of 6.9 per cent compared with the same period a year ago. This retail sub-sector was the best-performing retail sub-sector in 2016 with a growth rate of 5.8per cent,” said RGM.

    Moving forward, for the first-quarter growth rate, RGM predicts a 1.5 per cent improvement in overall retail business.

    “The weak ringgit has affected the costs of a large number of retail goods sold locally. Many retailers have begun to raise prices, including prices of food and beverages, household goods as well as other daily necessities.

    “Malaysian consumers are expecting to be cautious about their spending on retail goods during the first half of this year. Their cost of living has risen and their purchasing power has reduced during the last one year,” said the quarterly report.

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  • Malaysia’s retail industry may grow by 6% this year

    Malaysia’s retail industry may grow by 6% this year

    Malaysia’s retail industry is expected to grow by 5.9% in the third quarter of this year, boosted by the timing of the Hari Raya holidays, according to Retail Group Malaysia (RGM) in the latest Malaysia Retail Industry Report.

    RGM said the projected growth would also be spurred by the Minimum Wages Order 2016 that was implemented on July 1.

    “For civil servants in Malaysia, the minimum wage increased to RM1,200 per month. This has raised the average purchasing power of the Malaysian working population to some extent,” RGM said.

    It added that the Pokemon Go app launched in Malaysia this month had also attracted more visitors to shopping centres and retail outlets throughout the country.

    “Nevertheless, it is not expected to contribute significantly to retail sales. Food and beverage outlets and grocery stores located near to Pokestops will benefit the most from this craze.”

    Mall operator Sunway Malls, in a recent statement, said Pokemon Go had resulted in a surge in traffic and sales numbers at its shopping centres locally.

    “To date, we have seen traffic increase by an average of 10% for Sunway Pyramid (pic), 8% for Sunway Giza, 6% for Sunway Putra Mall, and 4% for Sunway Carnival Mall,” said Sunway Malls chief operating officer Kevin Tan.

    “It is widely known that malls in general have high traffic during the festive period and school holidays, but the introduction of Pokémon Go has certainly spiked up the footfall for the non-peak season.”

    Meanwhile, RGM said retailers in the fashion and fashion accessories sector expected their business to slow down again, with a positive growth of only 0.2% during the third quarter of this year.

    “Retailers in the pharmacy and personal care sub-sector are expecting to maintain their recovery with a growth of 11.4% during the third quarter of 2016.”

    MIDF Research, in a report earlier this month, said it was optimistic that the launch of the new Perodua Bezza and Proton’s new batch of models, combined with the launching of new smart devices, will boost retail sales in the second half of 2016.

    Moving forward, RGM said the Malaysian retail industry’s fourth-quarter growth rate estimate remained at 5.5%, taking into consideration the growth of 1.3% achieved during the same period a year ago.

    “The projected retail sales growth rate of Malaysia’s retail industry in 2016 by RGM stays at 3.5% or RM99.5bil in values.”

    The Malaysian retail industry reported a lower-than-expected growth rate of 7.5% in the second quarter of this year compared with the same period last year.

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  • Malaysia retail sales fall

    Malaysia retail sales fall

    While Malaysia retail sales for the first quarter have taken a tumble, a decline was on the cards following the introduction of GST on April 1 last year.

    This boosted sales of big-ticket items in last year’s first quarter, and a year after the introduction of the tax consumers are still holding back on spending, according to a report by retail consulting firm Retail Group Malaysia.

    “Further increases in the cost of living in the near future will worsen the situation,” says the report, which shows a 4.4 per cent fall in sales for the retail industry in the quarter compared to 4.6 per cent growth a year earlier.

    As well as the high pre-GST sales last year, weak Chinese New Year sales in February led to the dramatic comparison. While negative first-quarter growth was expected, the results were below the industry expectation of a 4 per cent drop, says the report, based on interviews with members of the Malaysian Retailers Association (MRA).

    Further undermining Malaysian consumer spending power has been a gradual increase in the prices of retail goods and services this year, partly attributable to the weak ringgit.
    “Retailers continued to depend on heavy price discounts,” says the report. “As a result, their profits were eroded.”

    During the first quarter, the only sub-sector not to record a decline in business was “Other Specialty Retail Stores”. The “Department Store cum Supermarket” sub-sector had negative growth rate of 7.3 per cent – the worst performance among the retail sub-sectors. Supermarkets and hypermarkets had their fourth consecutive negative quarter with a 4.2 per cent dip.

    Retail Group Malaysia says MRA members expect their businesses to return to black during the second quarter of this year with an average growth rate of 9.9 per cent. The estimated growth rates for the third and fourth quarters are 5 and 5.5 per cent.

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  • Local retail sector seen growing 4% this year

    Local retail sector seen growing 4% this year

    Retail Group Malaysia (RGM) is projecting a 4% growth rate for the local retail sector this year, as it believes that consumers will still continue to spend in spite of the global economic uncertainty.

    RGM managing director Tan Hai Hsin said while consumers are cautious, they will continue to spend on goods and services that are important and relevant to them.

    “People are still spending on their children’s education even though it is not cheap. The MATTA Fair is also still doing well as people are still traveling,” he said in a talk in conjunction with the StarProperty.my Fair 2016 i-City edition yesterday.

    Tan said the outlook for the local retail sector this year is expected to be challenging.

    “There is no major stimulus. It’s also not an election year, this year. Right now, we’re relying on the global economy and if it’s down, it will affect us.”

    According to RGM’s Malaysia Retail Industry Report last month, the local retail industry recorded a measly year-on-year sales growth of 1.3% in the fourth quarter of last year.

    RGM said the year-end school holiday and festive season did not lift the buying spirit of Malaysian consumers, adding that the higher cost of overseas travelling due to weaker ringgit did not encourage more domestic spending.

    “The weak ringgit performance during the last quarter of 2015 had resulted in higher import costs. Higher import costs led to increased retail prices. Increased retail prices had further deteriorated the purchasing power of Malaysian consumers.

    “Despite heavy price discounts and aggressive promotions, retailers could not raise the consumers’ spending.

    “During this latest quarter, they suffered further decline in profit margin growth,” he added.

    For the full-year 2015, RGM said the Malaysian retail industry grew by a mere 1.4% as compared to the same period a year ago. The total retail sales turnover for 2015 was RM96.2bil.

    “Last year was the worst annual retail growth rate since 2010. In 2009, the retail industry growth rate was 0.8%,” RGM said.

    According to National Property Information Centre’s (Napic) 2015 Property Market Report, the retail sub-sector recorded a slight improvement in occupancy to 82.4% in 2015 from 81.8% in 2014, with a take-up rate amounting to more than 780,000 sq meters.

    The StarProperty.my Fair 2016 i-City edition, which is being held at i-City from April 22 to 24, will feature projects including i-Soho, i-Suite, Liber­ty Tower and Parisien Tower in i-City, and 8Kia Peng at Kuala Lumpur city centre.

    Besides talks and fun activities, 1,000 visitors will receive complimentary theme park tickets given daily.

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