Retail continues lacklustre run

By LYDIA NATHAN

The retail sector, which reported a 1.2% decline during the first-quarter of the year (1Q17), continued its sluggish momentum with retailers recording lower sales during the recent Hari Raya festive season.

Mydin Mohamed Holdings Bhd MD Datuk Ameer Ali Mydin said his retail chain’s hypermarket, which caters mainly for the masses, saw a decline of between 2% and 6% in sale.

“The prices of most items have gone up, while monthly salaries stay the same, and that’s why the sales in hypermarkets are either negative or flat. It’s hard for the poorer people to save when they simply can’t,” he said.

He said even though Mydin caters to the middle-and lower-class people, the cost of living has gone up tremendously.

In addition to that, prices of retail goods are on the rise, mainly due to the weaker ringgit as well as the volatile yet higher fuel prices.

He said many from the middle- and upper-class people would much rather spend at bigger retail stores as it is a lifestyle choice and affordable to them, and the ones that cut back the most are people with families.

First-tier malls like Sunway echoed the sentiment by acknowledging that more and more people are vigilant with their spending these days.

Sunway Mall CFO Kevin Tan said the Hari Raya season outcome had softened this year.

“Across the board, spending has been more cautious, there is a mixed bag of attributing reasons to tentative spending surrounding higher cost of living, as well as economic and political sentiments,” he said.

He added that from the feedback he received, the more popular shopping areas had proven to be where people can spend on mass merchandise like Masjid India, Sogo and Jalan TAR, going to prove that with the recent economy, most people struggled. Some people turned to local and smaller outlets, in order to save but still have quality items.

Taking advantage of the situation is Sangeetha Balakrishnan, owner of Zobhana Street, an apparel store that targets lower-income families.

“I have seen a high demand for women’s clothing especially among the Malay and Arab people in Kuala Lumpur, sales usually go up during the Hari Raya season,” she said.

The downturn in retail industry started a year ago, when it contracted by 4.4%, which was mainly attributed to the introduction of the Goods and Services Tax in 2015.

The Chinese New Year sales in January 2017 were also said to be weak, with shoppers being very prudent on how much they spent.

The same was experienced during the recent Hari Raya, with many retailers not seeing any major growth in sales, as they’d hoped for.

One Utama Shopping Centre spokesperson said there is a change in shopper’s lifestyles and habits; they are now wiser with their expenditure and plan ahead of the festive seasons in order not to overspend.

“I wouldn’t say it’s a big cut back. For our Raya, we ran a month-long campaign between June 1 to 28 to reward our shoppers and the response was encouraging,” he said.

The slowdown in physical retail activities is also attributed to virtual shopping or e-commerce, which seems to be the current trend.

A survey on the rising cost of living in Malaysia conducted by 11Street, an e-commerce marketplace, revealed that 90% of the respondents indicated significant increase in their expenditure during the Hari Raya festive season.

11street CFO Chuljin Yoon said online shopping saw a 50% increase throughout the Raya season.

”Malaysians will continue to shop for sought-after items online, such as electronics, home gadgets and clothing apparels. However, what would be worth highlighting is that according to 11street’s findings, there was a significant increase in the purchases of food and beverages, and car maintenance related packages and e-vouchers this year,” Yoon said.

Despite the lacklustre performance during the first-half of 2017, members of the retailers group are still hopeful that businesses will continue to pick up.