Malaysia’s Retail Sector Takes Big Hit From Pandemic
Jul 18, 2020

The retail sector in Malaysia will face a contraction of sales of 8.7 per cent this year, Retail Group Malaysia said in a recent forecast. The group has revised its earlier prediction in April of a 5.5-per cent contraction.

“The retail market turned into a bloodbath since mid-March with the implementation of the Movement Control Order [Malaysia’s coronavirus lockdown scheme],” the group noted in a report paper.

It stated that the retail industry suffered a negative growth rate of 11.4 per cent in sales in the first quarter of the year, a massive plunge compared with the corresponding period in 2019, which saw a positive 3.4-per cent growth.

The second quarter will likely see a year-on-year plunge of 28.8 per cent, the report said, while the third and fourth quarter would be relatively better off with a contraction of 3.5 per cent and 1.5 per cent, respectively.

Fashion outlets suffer the most

“This year has been the worst period for retailers in Malaysia since 1987,” the group said, adding that those most badly affected were non-essential retailers and those catering to tourists. Fashion and fashion accessories retailers topped the worst performers by sub-sectors, shrinking by a staggering 30.5 per cent, the report found.

Department stores came in second at minus 17.5 per cent, while supermarkets posted a negative growth rate of 8.5 per cent compared to the same period last year, although the report said food and beverage businesses were spared the full impact of the partial lockdown.

The retail group’s managing director Tan Hai Hsin said that at least 200,000 small businesses that could not operate during the lockdown are now facing an uncertain future. About 90 per cent of these were stall-based businesses, and he added that he was uncertain if these businesses – which represent 61 per cent of total retail outlets and 63 per cent of retail sales in the country – have resumed business or closed permanently.

The group said it expects the fallout effect of Covid-19 to stretch until next year.