SHOPPING traffic in the majority of the shopping centres in Malaysia has returned to pre-Covid-19 levels since the second movement-control order (MCO) was lifted in March but spending is still slow, said Retail Group Malaysia.

Spending has not returned to 2019 levels due to the various stages of the MCO, low purchasing power and ban on interstate travel.

Retail Group Malaysia managing director Tan Hai Hsin said after long periods of lockdown, Malaysians from all parts of the country are eager to return to shopping centres.

“They want to go for their shopping, dining, recreational and entertainment activities.

“However, due to reduced take-home salaries, their purchasing power is not comparable to 2019,” he told The Malaysian Insight.

The second MCO started on January 13. It was extended for selected states until March 5.

Currently areas under the conditional MCO are Selangor, Johor, Kelantan, Kuala Lumpur, Penang and Sarawak while the remaining states are under the recovery MCO.  

On February 9, Senior Minister Ismail Sabri Yaakob said all the remaining retail sectors will be allowed to open including dine-in at restaurants.

Among them are, apparel, photography, second hand, nursery stores, flower shops, handicraft, souvenir shops, sports equipment store, household appliances and kitchen utensils, vehicle accessories and others.

Tan added that cafes and restaurants have also been enjoying good numbers of dine-in customers since the second MCO was lifted.

“However, sales at eateries are still below 2019 level due to social distancing measures.

“Cineplexes have been enjoying good response from moviegoers since it was allowed to open. Similar to F&B outlets, their sales are still below 2019 level due to social distancing measures.”

He said there are still five sectors that will take a longer time to recover, namely entertainment related outlets.

“They are recreational outlets, bars and nightclubs, shops in airports and bus terminals and those that are highly dependent on tourists.

“The earliest to reach the same sales level as 2019 will be 2023. This is provided we achieve high growth rates in 2022 and 2023.

“Conservatively, it will most likely be 2024. That’s three years later, Tan said.

Suburban malls doing well

Tan said currently, suburban malls in Klang Valley are enjoying better shopping traffic as compared with shopping malls located in Bukit Bintang and KLCC shopping districts.

“The main reason is many shopping malls in Kuala Lumpur city centre rely on tourists for about 15 to 20% of their retail sales.

“Since the first MCO in March last year, foreign tourists have not been able to travel to Malaysia.”

He also added that since the interstate ban, Malaysians are not able to visit the high quality malls in Kuala Lumpur that are not found in their own hometowns.

Tan, however, said those that had been depending on foreign tourists are not getting the crowd like in 2019.

“They include shopping centres located in Johor Baru and Malacca. Many of these shopping centres had been depending on Singaporeans. The border has been closed for more than a year.

“Central Market and Chinatown in Kuala Lumpur have also been affected severely due to lack of foreign tourists for the last one year.”

He said with the interstate ban, retail businesses located in Genting Highlands and Cameron Highlands will not recover due to lack of domestic tourists from Klang Valley.

“Foreign tourist spending accounts for not more than 10% of the total retail market. Hence, the lack of foreign tourists does not have a significant impact on Malaysia’s retail market.”

On the percentage of the 340,000 retailers that have shut their business for good, Tan said their earlier prediction still stands.

“Last year, we anticipated 15% of total retail supply or at least 51,000 retail stores will close down due to covid-19 pandemic. The pandemic is not over yet. Hence, this estimate remains.

“We witnessed a high number of closures immediately after MCO. A second round of major closures took place after the bank moratorium ended in October 2020. The third round was during the second MCO in 2021.”

He said that despite many closures during the last one year, there are also new openings every week. – April 15, 2021.