RGM: Retail industry grows slower than expected in 4Q18

The sector fails to meet market expectation of 4.7% growth in the quarter, as it records only 2.7%


The Malaysian retail industry reported a disappointing growth rate of 2.7% in the fourth quarter of 2018 (4Q18) from 3.1% a year ago, failing to meet market expectation of 4.7% projected in November 2018, said Retail Group Malaysia (RGM).

“Year-end festival and school holidays did not contribute to a better growth rate during this quarter,” it said in the Malaysia Retail Industry Report (March 2019) yesterday.

RGM added that the performances of all retail subsectors were mixed during the quarter.

“The supermarket and hypermarket subsector was the worst performer with a 4% decline in sales. For the whole year, its sales dropped by 5%,” it noted.

The department store-cum-supermarket subsector expanded by only 3.2% during the last three months of 2018, while it recorded a moderate growth rate of 4.5% for the year.

Meanwhile, the department store subsector continued to experience slower quarterly growth of 1% this year. It also remained flat for the whole year with a 0.5% growth rate.

As for the fashion and fashion accessories subsector, RGM said the sales reported a growth rate of 1.2% during the last quarter, and 3.3% for the whole year.

The best performer in 4Q18 was the pharmacy and personal care subsector, with a sustainable growth rate of 8.7%. The subsector expanded by 10.2% in 2018, it said.

Other speciality stores subsector — including photoshop, second-hand goods’ store and fitness equipment store — reported a moderate growth rate of 5.2% during the three-month period. For the entire year, it achieved a growth rate of 11%.

RGM said retail sales growth rate for 2018 was 3.9% at RM103.7 billion, compared to 2% at RM99.8 billion for the whole of 2017.

“Despite the three-month tax holiday, it failed to lift the sluggish retail industry,” it added.

Members of the retailers’ association are hopeful that their businesses will stabilise in 2019, projecting an average growth rate of 3.1% for 1Q19.

Based on the first quarterly projection of retail sales for 2019, RGM estimates a 4.5% (RM108.3 billion) growth rate in retail sales for the year.

RGM added that retail sales were lacklustre in the first two months of 2019, despite the Chinese New Year festival celebration.

However, it noted that Malaysia’s retail industry is expected to recover during 2Q19 with the Hari Raya celebration taking place during the period.

Meanwhile, RGM said retail sales are expected to expand by 3.9% in 3Q19 as more economic activities during the second half of the year would boost sales during 4Q19.

“Retail sales should rise by 5.8% during the year-end period,” it added.