RETAIL sales contracted by 27.8% in the third quarter of 2021 compared to the corresponding quarter last year as most retailers were forced to shut operations for the first half of the third quarter, an industry report said. 

“This latest quarterly result was way below market expectations.  Members of MRA (Malaysia Retailers Association) and MRCA (Malaysia Retail Chain Association) projected the third quarter growth rate at -15.1% in September 2021,” Retail Group Malaysia said in its Malaysia Retail Industry Report November 2021.

“Retailers in Malaysia operated with strict social distancing measures under the Recovery movement control order during the same quarter a year ago. On the other hand, most retailers were forced to shut down during the first half period of third quarter 2021,” it added.

Sub-sectors such as department store cum supermarket, mini-market, convenience store and cooperative, fashion and fashion accessories, children and baby products, pharmacy, personal care, furniture and furnishing, home improvement, electrical and electronics and other specialty stores registered a decline in sales.

The largest retail market in the country were badly hit when the enhanced movement control order was enforced in a large part of Selangor and selected locations in Kuala Lumpur from July 3 2021 to July 16, 2021.

“When the government relaxed restrictions on the number of passengers in a vehicle as well as the limit of travelling distance on August 21, 2021, shopping traffic in major shopping centres gradually returned,” it said.

For the first nine months of this year, retail sales growth rate contracted by 11.9%, as compared to the same period a year ago.

MRA and MRCA members were interviewed on their retail sales performances for the second half of 2021 for the report.

They have projected an average growth rate of 18.3% for the fourth quarter of 2021 as some sub-sectors expect to register moderate to strong recovery while others are less optimistic.

Retail Group Malaysia has revised downwards the full year industry growth rate for 2021 from 0.8% to 0.5% on the back of the worse-than-expected growth registered in the third quarter as well as a revision of the fourth quarter estimate.

“RGM expects the retail industry to gain momentum on its recovery by the end of this year. For the fourth quarter of 2021, the growth rate estimate has been revised upwards from 12.7% (estimated in September 2021) to 18.3%,” it said.

Retailers are hopeful retail sales will climb higher in December this year due Christmas and Chinese New Year,” it added.

As for the outlook for 2022, RGM is projecting 6% growth in retail sales for 2022. 

“Malaysia retail industry looks forward to a recovery from the Covid-19 pandemic of almost two years. However, few challenges remain.

“The high daily positive cases remain worrisome. A potential fourth-wave pandemic is haunting Malaysian retailers. Malaysian non-essential retailers cannot afford further forced closures of physical stores.

“A new Covid-19 variant discovered recently is now spreading rapidly across the world. This will affect the economic recoveries around the world as well as in Malaysia,” it said.

RGM added that the government has decided to  delay the country’s transition into the endemic phase due to uncertainty of the virus pandemic and the arrival of foreign tourists’ may be affected due to the current virus development. This in turn will affect retail businesses which depend on leisure travellers.

It added the recent price hike of consumer goods may also continue next year and the rising cost of living will affect the purchasing power of Malaysian households next year. – December 7, 2021.