HIGH living costs have led to Malaysian consumers spending less on retail goods and services, severely affecting outlet owners’ revenue, Retail Group Malaysia said.

Its managing director Tan Hai Hsin said this was evident in how consumers haved dined out less in recent months.

“Higher supplier costs and rising labour prices have led to less profit for retailers,” he said.

But Tan said mall visitors have not declined in number since the post-pandemic reopening early last year.

“Shopping traffic is back to 2019 levels. This is nationwide, not just in the Klang Valley.

“The recent Deepavali weekend led to high shopping traffic in tourist areas and small towns.”

The Malaysia Retail Industry Report 2023, for the second quarter of this year, showed the local sector recording a poorer-than-expected growth of -4% in retail sales, compared with the same period in 2022.

It said the latest quarterly result was below market expectations, as in June, the Malaysia Retailers Association and the Malaysia Retail Chain Association estimated an average growth of 2.6% for the second quarter of this year.

The report also said many members of the two retailers associations remain conservative about their business prospects until year-end, estimating an average growth of 1.4%.

As for the upcoming Christmas and New Year holidays, Tan said 2023’s shopping traffic would be similar to last year’s.

“Malaysian consumers will still be spending, but holiday sales won’t be the same as pre-Covid-19 due to the shorter school holidays.

“This year, school holidays are only two weeks’ long. Families with young children would not spend as much during this period as they did before Covid-19.”

Tan said the closure of shops in shopping centres have not been as apparent this year.

“More retail closures have been found among office lots due to declining sales, intense competition, rising rental and high manpower costs.

“Generally, there could be more new shops opening than closing.”

“Cafes and restaurants are the drivers in shopping centres, especially for new food and beverage (F&B) concepts started locally and new overseas F&B outlets.

“We have also witnessed many online retailers setting up physical stores after the Covid-19 pandemic.” – November 28, 2023.