RETAILERS will suffer huge losses if the government keeps extending the movement-control order (MCO) beyond February 4, said Retail Group Malaysia. 

They said since the implementation of MCO 2.0, shopping traffic in major Klang Valley malls has dropped by 95%. 

The government reimplemented a two-week MCO as a measure to break the Covid-19 pandemic on January 13. It has since been extended until February 4. 

Retail Group Malaysia managing director Tan Hai Hsin said the current MCO is hurting the retail industry. 

“Many non-essential retail shops are allowed to open but with few customers during peak shopping hours. 

“At the same time, retailers need to pay rental, salaries, utilities and cost of goods ordered. This situation is worse than retail businesses during the first MCO last year,” he told The Malaysian Insight. 

He said the MCO, which covers Peninsular Malaysia, accounts for 80% of the total retail market in Malaysia. 

There are currently about 340,000 retail outlets in Malaysia and their biggest concern is generating sales. 

“Without sales, you cannot pay salaries, rental, utilities and other operational costs. 

“They will not be able to generate the same amount of business as before.” 

As for the closure of retail outlets, Tan said the group estimated last year 15% of total retail supply or at least 51,000 retail stores will close down due to Covid-19. 

“Closures peaked in April and May last year. It accelerated from October after the bank moratorium ended. The current MCO will lead to more closures from this month. 

“An extension of MCO for a month or more will damage the overall retail industry. 

“Barely a month into 2021, we have already witnessed several closures from both international retailers and local players.” 

Tan said since the MCO started, about 5% of shopping mall tenants in Malaysia had closed down. 

“About 10% of ground floor office tenants have also shuttered. 

“The closures came immediately after the first MCO was lifted (in June last year). It accelerated in October last year when the bank moratorium ended,” he said. 

He said malls were also severely affected as 70% of the retail shops were closed due to MCO. 

“Some retail outlets may have been allowed to open during MCO, but they chose to close it as it is more costly to keep it open, as opposed to a temporary closure. 

“Examples include Sogo and Isetan. They are allowed to open, but they chose to close down their department store sections. They continue to operate their grocery and food sections.” 

Tan also said some food and beverage outlets located at the upper levels or at some corners of shopping malls, have closed as well. 

“This is because it is difficult for both the deliverymen and their customers to access their outlets when the malls are mostly shut.”

Gloomy Chinese New Year 

Tan said they were also concerned about any MCO extension as the current end date of February 4 is one week away from Chinese New Year. 

“The government needs to provide more information in the next few days on their plans after February 4. 

“Issues they need to address include the likelihood of MCO being extended after February 4 – or will it revert to a recovery MCO or a conditional MCO? 

“Malaysian Chinese will rush in droves to shopping centres and shops to buy festive goods, new clothes and new furniture. Will there be another MCO after Chinese New Year due to this?” 

Tan said there was also the issue of retailers being stuck with their stocks due to the MCO.

“What if MCO is extended again after February 4? What will happen to all the stocks retailers had ordered? 

“Should food and beverage operators start ordering more food supplies to cater for CNY celebrations? If the MCO is extended, what will happen to all the extra food supplies?” 

He also questioned if inter-state travel is allowed at the end of MCO because traditionally the Chinese and other races will travel back to their hometowns during the festive holidays. 

“What is the standard operating procedure for Chinese New Year celebrations? Will dine-ins be allowed? Can Malaysians visit other people’s houses? Will the number of people in a house be limited?  

“All these issues will have a major impact on retailers’ businesses in Malaysia.”

Indefinite recovery 

Tan said the recovery of Malaysia’s retail industry this year is highly dependent on two factors – the SOP imposed by the government and the country’s economic development. 

“More movement curbs will lead to lesser shopping traffic,” Tan said. 

“The country needs a broad-based economic recovery in order for the majority of the population to enjoy higher take-home salaries.” 

He said the group had projected a 4.9% positive growth rate in retail sales for 2021, but this projection was made in November last year. 

“This projection may be lower due to the latest development in the pandemic. We will not revise the projection at this moment as things are changing every week. 

“We are referring to the number of reported positive cases on a daily basis as well as reports of temporary closures of many grocery stores and retail stores due to detection of positive cases among staff and customers. 

“We are also seeing frequent changes in government policies and guidelines. Hence, it is difficult to revise the projection at this moment,” Tan said. 

On restaurants being allowed to operate until 10pm, Tan said it will definitely help increase the sales volume for food and beverage operators. 

“I believe this extension will bring about a 10% increase in sales. However, this extension does not help to reduce the number of daily cases.” 

Tan added that the only priority now was to reduce the number of new infections, which are still in four digits since November. 

“To do this, we have no choice but to reduce shopping traffic around the country for a limited period of time. 

“The current MCO is important for us to reduce daily cases. Strict SOP should be enforced and all should abide by it.” – January 25, 2021.