UP to 51,000 retailers, mostly small businesses, may have to close for good following the impact of the Covid-19 pandemic and the ongoing movement-control order (MCO), said Retail Group Malaysia.

This is about 15% of the total number of retail outlets nationwide, said its managing director, Tan Hai Hsin.

Business has fallen by about 80% with customers prohibited from venturing outdoors for non-essential items, he said.

“This crisis has been building up since the end of January 2020. Some of these retailers reported drop in sales by as much as 80%.

“There are about 340,000 retail outlets in the entire country, so the number of closures may range from 34,000 to 51,000 (10%-15%),” he told The Malaysian Insight.

“We expect small-scale retailers to be affected the most and will likely to close down within one to two months.”

Tan said during the MCO, grocery stores, convenience stores, pharmacies and bakeries will have almost normal business.

However, other types of retailers, including fashion and fashion accessories, electrical and electronics, books and stationery, furniture and furnishing, will suffer from zero sales.

“Retailers already offering online shopping facilities (their own or through third parties) will enjoy some sales.

“Services, such as hair and beauty salons, spas, foot massage, and dental and cosmetic surgery clinics will have zero sales as well,” he said.

Similarly, for the food and beverage industry, he said, outlets with food delivery services will not be affected badly.

“Sales should only be down by 15%-25%, depending on operators. Trendy cafes, dessert cafes, upscale restaurants should be the most affected.”

Sole proprietors hit most

He said revenue from tourism spending has also stopped, affecting mostly retailers in major shopping districts, such as KLCC, Bukit Bintang and Chinatown area in Kuala Lumpur, plus others on the holiday islands, such Penang, Langkawi and Sabah.

“Theme parks and attractions, such as Genting Highlands as well as retailers in international airports nationwide, also will be affected.”

However, he said Malaysia only receives about 10% contribution from retail sales by tourism shopping.

Tan added that small, solely owned shop owners are most likely to be cash strapped because of this crisis.

“The partial lockdown will affect this type of retailers as foreign tourist arrivals will drop to zero in the next month.

“Malaysians have also been told not to travel locally. As a result, we may expect closures of some retail shops in tourist-dependent areas in the next two months.”

Long recovery

Tan said although the retail sector will be affected severely due to the partial lockdown, they supported the MCO because the main purpose is to prevent further spread of Covid-19.

“After the MCO, it will take time for the businesses to recover as we expect consumer spending to take some time, perhaps two to three months, to return to the same buying momentum as last year.

“We may expect closures of some retail shops in the next few months.”

He said there is nothing much the retailers can do now because the situation is beyond their control.

“For retailers who have an online platform, they need to focus now on promoting this channel of distribution, while retailers who have been reluctant to invest in online shopping facilities will miss this opportunity.”

He added that retailers will have to appeal to the banks for delays in loan repayment.

Last week, Prime Minister Muhyiddin Yassin announced a RM250 billion economic stimulus package to mitigate the effects of the Covid-19 pandemic.

Of the RM250 billion, RM128 billion will be spent on welfare, while another RM100 billion has been earmarked for businesses, including small and medium enterprises.

There were 150 new Covid-19 infections yesterday, with 80 of those testing positive linked to the Sri Petaling tabligh cluster, bringing the total number of infections to 3,483 cases, said director-general of health Dr Noor Hisham Abdullah.

He said four fatalities were reported in the past 24 hours, taking the total death toll to 57. – April 5, 2020.