Market Info
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Retail Group Sees Lower Growth Rate in 2021 The Retail Group Malaysia (RGM) has revised Malaysia’s annual retail industry growth rate for 2021 from 4.1% to 4.0% due to the re-introduction of the Movement Control Order (MCO) on May 3 as well as the latest Full Movement Control Order (FMCO) nationwide on 1 June 2021.
T
he first phase of FMCO which was supposed to last until June 14 was extended until June 28.
(Table 1) During this period, a majority of retailers suffered from poor sales when Malaysian shoppers avoided enclosed places. RGM, in its June report, added that any extension of the two- week complete lockdown will damage the retail industry further and delay on the re-opening of non-essential retailers after two weeks will lead to more closures. The report by RGM was based on inputs by the Malaysia Retailers Association (MRA), Retail Group Malaysia (RGM) and MRCA. The second quarter growth estimate of 18.4% given by members of MRA and MRCA is no long attainable, the report stated. A majority of retailers gave their estimates before the announcements of MCO 3.0 and FMCO. In addition, RGM revised the growth rate for the second quarter of 2021 from 7.0% (estimated in March 2021) to 5.6%. “The Malaysian government will continue the lockdown beyond the 2-week FMCO with revised movement restrictions and ban on the opening of certain retail trades. Retail sales during the third quarter of 2021 will be affected as well. RGM revises the growth rate from 4.1% (estimated in March 2021) to 3.5% for this quarter,” it added. Malaysia Retailer Vol 9 No 2
TABLE 1: MALAYSIA RETAIL INDUSTRY QUARTERLY GROWTH RATE, 2021 Quarter
Growth Rate%
First
(e) -13.4
Secon
(e) +7.0
Third
(e) +4.1
Fourth
(e) +13.9
Whole Year
(e) +4.1
(e) - Estimate Source: Retail Group Malaysia
It pointed out that interstate travel ban was also expected to be enforced for longer period of time and it has been affecting domestic tourism spending. “Travel bubbles with selected countries is likely to begin towards the end of this year. Malaysia will witness rising foreign tourist arrivals only from the first half of next year. Vaccination on majority of the population will take a while. Thus, movement restrictions and social distancing measures will remain until end of this year.” RGM expects the retail industry to begin its gradual recovery by the end of this year. For the fourth quarter of 2021, the retail industry is expected to grow by 12.7% instead of 13.9% estimated in March 2021, as compared to the same period a year ago.
For the first quarter of 2021, Malaysia’s retail industry recorded a negative growth rate of 9.9% in retail sales, as compared to the same period in 2020. (Table 2) This latest quarterly result was better than the estimate made by members of MRA and MRCA at -13.4% in March 2021. During the implementation of MCO 2.0, shopping traffic in major shopping malls in Malaysia dropped by 90% as compared to December 2020. During this lockdown, many nonessential retail shops were allowed to open but with few customers during peak shopping hours. Shopping traffic recovered when MCO 2.0 ended on 5 March this year. Shopping malls in all major cities received large crowds on the first weekend after MCO 2.0 was lifted. Some tourist areas had
