Retail sales slump to worst showing since 1998 Asian financial crisis

Malaysian retail sales dropped by nearly 20% in the final quarter of 2020, continuing the sector’s dismal performance in the year marked by the Covid-19 pandemic.

(FMT) – In its retail sales report released today, Retail Group Malaysia (RGM) said the industry saw a growth rate of -19.7%, significantly lower compared to the same period in 2019 which saw a positive growth rate of 3.8%.

It said the -19.7% growth rate was much lower than its projections in November of -18.2% and the average estimate by Malaysia Retailers Association members, of -15.1%.

It attributed the dismal performance in the final quarter of last year to the third wave of Covid-19 infections, which prompted the government to announce tighter movement restrictions and a conditional movement control order (CMCO) in certain states.

“Restrictions on interstate and inter-district travel, working from home as well as delays in school openings led to a significant reduction in shopping traffic in malls, commercial centres and food and beverage outlets throughout the country,” it said.

For the entire 2020, RGM said the industry’s growth rate was -16.3%, its worst performance since the Asian financial crisis in 1998 which saw retail sales contracting by 20%.

The final quarter of 2020 also saw supermarkets and hypermarkets’ sales decline by 19.6% despite being allowed to open throughout the pandemic, although mini-markets and convenience stores were the least affected, with a positive growth rate of 10.2%.

“The fashion and fashion accessories sub-sector was the worst performer among retail sub-sectors, reporting a large decline in sales by 49.6%. For the entire year of 2020, this sub-sector achieved an unsatisfactory growth of -37.9%.”

The furniture, home improvement and electronics sub-sectors performed well in this period, expanding by 11.7% compared to the same quarter of 2019.

However, food and beverage outlets were still hit hard, with cafes and restaurants’ sales dropping by 18.8% compared to the same period last year, and kiosks and stalls’ sales declining by 14.9%.

It said it has revised its projections for retail sales in 2021, from a positive rate of 4.9% to 4.1% now, taking into account the interstate travel ban which is still in force nationwide.

It projects a 13.4% contraction for the first quarter of this year, followed by positive growth rates of 7% in the second quarter, 4.1% in third and 13.9% from October to December.

“The return of foreign tourists will be slow and gradual. Travel bubbles with selected countries will likely begin towards the end of this year,” RGM said.

“The vaccination of the majority of the population will take a while. Thus, movement restrictions and social distancing measures will remain until the end of this year. For this entire year, consumers’ spending is not expected to return to pre-pandemic levels.”