The Malaysian Insight

POPULAR shopping malls look packed on weekends just like they were before the coronavirus pandemic brought the economy to a halt in mid-March.

Industry groups representing retailers told The Malaysian Insight crowds have also returned to popular tourist spots, such as Malacca, Cameron Highlands and Langkawi.

But retailers said the reality is although shoppers are back, they are still spending far less than what they used to before the pandemic or during the same period last year.

Meanwhile, the end of the blanket loan moratorium on September 30 is also expected to hit independent retailers harder, said Retail Group Malaysia.

National chains will likely get help from banks to restructure their loans but smaller players with fewer than four outlets may have a harder time getting financial support, said Retail Group Malaysia managing director Tan Hai Hsin.

“Most Malaysians are back to shopping malls. Popular shopping malls are fully packed during weekends and public holidays,” Tan told The Malaysian Insight.

“Most F&B outlets are getting their customers back. Although it is still lesser in number due to social-distancing measures.

“The buying and shopping patterns are more or less back to pre-Covid-19 period. However, the quantity is lesser due to reduced purchasing power.

“Many are definitely getting more businesses as compared to the lockdown period. But still not back to 2019 level. Mostly at 50% of the sales level in 2019.

“For retailers, the extension of recovery movement-control order (RMCO) until the end of this year will have the same impact as the current RMCO”.

Gary Chua, who oversees a unit dealing with food and beverage chain retailers, said many operators are scaling down operations because of the gloomy outlook.

“Generally, all are still suffering. But those who are part of a strong group are looking at takeovers and acquisitions,” said Chua, who is the immediate past president of the Malaysian Retail Chain Association.

Chua said sales at food outlets will hopefully improve in the fourth quarter of the year during the Christmas and school holiday season on condition that there is no second wave that forces Malaysians to stay home.

Food operators are also hoping that the government can increase the amount of stimulus spending to businesses and consumers to spur demand, Chua said.

Value for money

The retail industry’s outlook for the second phase of RMCO follows a sharp 30.9% decline in sales during the second quarter from April to June which coincided with the MCO.

Sales between January and March declined by 11.4%. Collectively, sales in the retail sector plunged by 20.2% in the first half of 2020 from January to June.

The eight-week MCO, which shut down malls and most retail outlets, was imposed to curb the spread of Covid-19, which until today has sickened 9,459 and killed 128 in Malaysia.

Describing the impact of Covid-19 as a “bloodbath”, the Malaysian Retailers’ Association said this year was the worst for the sector since 1987.

In comparison, between April and June 2019, sales grew by 4.5%.

The worst hit were department stores, which contracted by 62.3% between April and June, followed by fashion and accessory shops at 44.2%.

Despite opening during the MCO, supermarkets and hypermarkets still reported a negative growth rate of -9.9% during Q2.

Tan, whose group produces research for the association, said retailers hoping to survive the pandemic are coming out with more “value-for-money goods” and holding more sales.

“For many young Malaysians, they are still brand conscious. When JD Sports, H&M, Uniqlo, Adidas and Nike had sales in the last two months, they queued up to buy.

“Discount stores and fixed-price stores are also getting very popular. They attract all income groups and all racial groups. They include ECO Shop, Mr DIY, Ninso, Mr Dollar, Noko, Setia RM2.10 and Mr SAVE.”

The association said overall, the sector expects improved sales in the third quarter but growth will still be in negative territory at -3.4%.

Tan said recreational and entertainment facilities, such as cinemas that depend on crowds, are still not able to get enough customers.

“Retailers that have depended on foreign tourists will not be able to recover this year. We expect many to close down. Retail businesses in Johor Baru that depend on Singaporeans are affected during this period.”

However, tourist spots popular with locals, such as Cameron Highlands, Malacca, Port Dickson, Langkawi, Genting Highlands and Ipoh, are starting to recover, he said. – September 8, 2020.