Bumper Christmas sales raise hope for retail sector

Retail sales grew between 30%-40% in December compared to November 2017, says MRCA


Malaysians spent 40% more on shopping during the recent period than they did the year before, raising expectations of a good year ahead among retailers.

The Malaysia Retail Chain Association (MRCA) said members reported their sales grew between 30%-40% in December compared to November 2017 due to several factors including the improved consumer sentiment.

MRCA VP Datuk Liew Bin (picture) told The Malaysian Reserve (TMR) that some of the improved sentiment may be due to the strengthening of the ringgit at the end of the year.

“Overall, purchasing power among the consumers is getting stronger in line with the world economy,” Liew said.

He said the encouraging sentiment could be an early indication that retail sector might just recover in 2018, after a lacklustre performance in the last two years.

Since 2016, retailers have been experiencing slower growth due to weaker consumer spending, low consumer confidence level and rising costs of operation for the participants.

In an earlier report by TMR, Retail Group Malaysia (RGM) MD Tan Hai Hsin said the currency depreciation since early 2016 has impacted retailers’ profit margins due to higher import costs of raw materials, unfinished goods and retail goods.

In its report, RGM also revised the industry’s annual growth forecast for 2017 down-wards from 3.7% to 2.2% for a total sales turnover of RM100 billion, slightly lower from the previous projection of RM101.4 billion.

As it is, the local currency closed at a 16-month high against the greenback at RM4.016 for the New Year supported by a hawkish US Federal Reserve position and overall weaker US dollar narrative.

Liew, who is also Bagman Corp Sdn Bhd group CEO, is positive that the good performance in the sector during the year-end and Christmas period will continue at least until the upcoming 14th General Election (GE14).

The performance would also be spurred by higher government spending as additional to the expected bigger number of tourist arrivals.

“From the New Year until Chinese New Year, there will be a lot of people coming into Malaysia who would encourage spending.

“Tourists, especially the Chinese, will help improve the market sentiment. The rally would then continue through the election period where the government tend to spend more leading up to the GE14,” he said.

Overall, Liew said that the retail sector is expecting a stronger 2018 on improved consumer confidence, disposable income and tourist numbers.

RGM revised retail sales growth from 5% to 6% rate for this year, against the modest growth of 3.7% last year, on the back of stimuli from the GE14, external economic demand and the ringgit’s performance.