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Retail Group Sees Lower Growth in 2021
Market Info
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.
Quarter
First Secon Third Fourth
Whole Year
(e) - Estimate
Source: Retail Group Malaysia
Growth Rate%
(e) -13.4 (e) +7.0 (e) +4.1 (e) +13.9
(e) +4.1
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
also received good crowd during the weekends. (Table 3)
For the first quarter of 2021, Malaysia’s national economy recorded a contraction of 0.5% as compared to -9.9% for retail sales (at current prices). The high demand for export products, especially E&E products, contributed to the economic growth during this quarter. The relaxation of the Movement Control Order since February also led to higher domestic demand for goods and services.
After three consecutive quarters of declines, the average inflation rate during the first quarter of 2021 turned positive at 0.5%. During the quarter, Malaysian consumers were faced with higher prices of Food & Non-Alcoholic Beverages (1.5%) as well as Miscellaneous Goods & Services (1.5%).
Private consumption declined by 1.5% during the first quarter of 2021 due to MCO 2.0.
During the latest quarter, the Consumer Sentiment Index (by MIER) achieved a 10-quarter high of 98.9 points. However, it was still below the 100-point threshold level of optimism. Unemployment rate during the first quarter of 2021 remained unchanged at 4.8%.
On the Food & Beverage sector, the report added that it recorded a negative growth rate of 6.2% during the first quarter of 2021, as compared to the same quarter a year ago. Those that focused on take-away and delivery, recorded a drop in business as well. (Table 4)
With the introduction of FMCO that required a majority of Malaysians to stay home, cafe and restaurant operators are foreseeing their businesses to maintain for the second 3 months of this year. They expect their food business to grow marginally by 0.5% as compared to the same period last year.
“On the other hand, food and beverage kiosk and stall operators are pessimistic of their business performance during the second quarter of 2021. They had projected sales to drop by 11.6% prior to the introduction of MCO 3.0. The final results are likely to be worse off,” the report said.
TABLE 2 : YEAR ON YEAR PERCENTAGE CHANGE IN RETAIL SALES (WEIGHTED), 2020/21
Type
Retail sales
Period
Jan-Mar 2020
Oct-Dec 2020
Jan-Mar 2021
Source: MRA/ MRCA/ Retail Group Malaysia
% Growth
-11.4
-19.7
-9.9
TABLE 3 : COMPARISON OF RETAIL SALES WITH OTHER ECONOMIC INDICATORS, 2020/21
Economic Indicator 4th Qtr 2020 1st Qtr 2021
GDP (%) -3.4 -0.5 Inflation rate (%) -1.5 0.5 Private consumption (%) -3.5 -1.5 Retail sales (%) -19.7 -9.9 Consumer Sentiment Index 85.2 98.9 Unemployment rate (%) 4.8 4.8
Source: Bank Negara/ Department of Statistics/ MIER/ Retail Group Malaysia
TABLE 4 : MALAYSIA FOOD & BEVERAGE INDUSTRY QUARTERLY GROWTH RATE, 2020/21
Growth Rate (%)
2020 2021 4th Qtr 1st Qtr 2nd Qtr (e)
Cafe and restaurant
-18.8 Take-away, kiosk and stall -14.9 -6.2 0.5 -9.5 -11.6
Notes: • Cafe and restaurant include fast food restaurant, cafe, coffee cafe, bakery cafe, restaurant, full-service restaurant and caterer. • Take-away, kiosk and stall include food outlet caters for takeaway only, bakery without seating, kiosk and food stall.
(e)- estimate
Source: MRA/ MRCA/ Retail Group Malaysia
