Retailers cautious on CNY spending

Spending is largely based on the economic conditions during the period, according to RGM

By NUR HAZIQAH A MALEK / Pic By MUHD AMIN NAHARUL

Retailers are cautious on the upcoming Chinese New Year (CNY) celebration spending as the weak ringgit, Sales and Services Tax (SST) and slower pace of the economy may prevent people from departing with their cash in a big way.

Festivities like CNY have always been a boon time for retailers, as consumers flood shopping complexes and retail shops to prepare for the celebration.

Retail Group Malaysia (RGM) MD Tan Hai Hsin said spending is largely based on the economic conditions during the period.

“For this year, it will be affected by the slow economy at this moment, the higher import cost of festive goods and higher retail prices — which are further tagged with SST, thus also raising prices,” he told The Malaysian Reserve.

Last year, it was reported that retailers posted a drop in CNY sales, with declines hitting 50% highs versus the sales in 2017.

The fashion and clothing segment received the brunt last year as consumers shied away from extravagant spending — despite the stronger ringgit, better than expected economic growth and higher crude oil prices.

Sales of Mandarin oranges were lower last year due to a marginal hike in prices, as the ringgit was weaker against the yuan during the CNY period.

Malaysia Retail Chain Association council member Raymond Woo said he is cautiously optimistic, as people will still want to change their wardrobes despite the currently slow-moving economy.

“Typically, eating out to treat family and friends will boost spending in the food and beverage sector.

“A perk up in spending is expected during the run-up preparations for CNY, so we hope the sales and spending don’t dip too much post-festival as well,” he said.

Traditional brick-and-mortar retailers have also been hit by the rising interest in online shopping.

Online retailers have been posting encouraging sales based on transactions and traffic tomarketplaces. However, no official figures are available for a combined total of sales.

Meanwhile, consumers are also turning to sales sites abroad for their shopping needs.

Shopee Malaysia business head Zed Li said he expects its CNY 2019 sales to be bigger, driven by the growth of brands and users on the platform.

“That is in addition to the fact that more and more consumers are adopting online shopping,” he said.

During the CNY sales last year, Shopee’s mobile application registered a 32% increase in traffic compared to that of an average day.