AN estimated 35,000 retail stores have closed down since the onset of the Covid-19 pandemic, said Retail Group Malaysia. 

The group said that an estimated 70% to 80% out of the 51,000 retail stores they had predicted to suffer closures had shuttered for good. 

It expects for more closures to take place in the short run before things slowly meander towards recovery in 2023. 

There are about 340,000 retail outlets in Malaysia.

Retail Group Malaysia managing director Tan Hai Hsin said they had witnessed a high number of closures in May last year, and another round after the bank moratorium ended in October last year. 

“The third round was during the second movement-control order this year. Then there is a new wave of closures since MCO 3.0 started,” he told The Malaysian Insight. 

However, he said the pace of closures has slowed down since the full MCO from June 1 this year. 

“The reason is not because there are fewer closures, but retailers who want to close are unable to do so. 

“Due to the current travel and work restrictions, they cannot move out. Due to the current work restriction, property agents cannot hang up ‘for sale’ or ‘for lease’ banners. 

“Agents are unable to bring prospects to view the available units. So they are not able to rent them out regardless of the rental.” 

He also added that many landlords dare not chase the current tenants away because they know they will not be able to rent out immediately. 

“This is quite similar to MCO 1.0 in March and April last year. Closure only took place after MCO 1.0 ended.” 

Other factors, he said, were due mainly to the outlets not doing well even before the lockdowns. 

“They were already not doing well before. They struggled during the pandemic. The repetitive lockdowns just led them to close down permanently. 

“The current situation also proves that a food and beverage outlet cannot rely solely on takeaway and delivery for long-term survival. Since the full lockdown, many F&B outlets have suffered greatly despite offering takeaway and delivery.“

Recovery to start in 2023 

He said the retail sectors are expected to recover to pre-pandemic days three years from now in 2023.  

The recovery period, Tan said, takes into account the various lockdowns and the MCO imposed by the government to curb the spread of the coronavirus. 

Tan said the fastest time to reach the same sales level as 2019 will be in 2023. 

“This is provided we achieve high growth rates in 2022 and 2023. Conservatively, it will most likely be 2024.” 

Tan said if the enhanced MCO in Selangor and Kuala Lumpur is extended or placed under the same lockdown again in the near future, then the retail recovery would take even longer. 

He said that Selangor accounts for 28% of the market share for the retail industry in Malaysia, while Kuala Lumpur stands at 33%.  

“The total retail market share of Klang Valley (excluding Putrajaya) is about 60%. 

“Selangor accounts for 18.4% of the total supply, while Kuala Lumpur accounts for 15.3% of the total supply.” 

On July 1, Defence Minister Ismail Sabri Yaakob said several sub-districts and localities in Selangor and Kuala Lumpur would be placed under EMCO. 

Ismail said the EMCO was decided upon based on risk assessments, which showed that these areas had high infection rates. 

Malaysia’s daily Covid-19 cases yesterday numbered 9,105, bringing the overall number of cases closer to 830,000, with a bulk of the cases coming from Selangor and Kuala Lumpur. The death toll has surpassed 6,000. 

Tan added that it would be difficult to estimate the losses suffered by the retail sector as some sectors are still open while others are not. 

“Some trades remain open during this entire lockdown period, while others open and close.

“Then there are those that are closed for most of this year. Although some remain close, they carry on their businesses online.” 

On their chances of survival, he said that it would depend on when they would be allowed to open their businesses. 

“Many retail trades are only allowed to open in phase three of the National Recovery Plan. 

“This may only happen towards the fourth quarter of this year. This is also applicable to dine-in for F&B outlets. The outlets cannot survive solely on takeaway and delivery.”

Selling online to survive

Tan also said that in order to survive, retailers should try selling their goods online as e-commerce today was taking place in many forms. 

“To save the high commission from third-party platforms, we find many national chain retailers and F&B operators are using WhatsApp to receive orders from their customers. 

“Recently, some have set up their own shopping platforms instead of relying on third-party online platforms. One example is Padini. 

“Tealive, Sports Direct and Uniqlo have also launched their own shopping platforms for a while now.” 

Tan said as a short-term measure, the government should look into wage subsidies to extend to all non-essential retailers and retail landlords, regardless of size and turnover. 

“Automatic moratorium also applies to all non-essential retailers and retail landlords, not just micro businesses and small and medium enterprises.” 

He said that loan moratoriums have helped ease the burden for some businesses when the first lockdown started. 

“Last year, the government negotiated with the banks to grant automatic moratorium and for subsequent lockdowns, a similar strategy was implemented. 

“As a result, retailers (big and small) have not been pressured by the banks to pay back their loans immediately. They can continue their businesses.” – July 12, 2021.