Retailers expect 80% dip in revenue amid outbreak, appeal for rental rebate


RETAILERS are expecting revenue to fall by more than 80% over the next three months due to the coronavirus outbreak.

This comes after members of the Malaysia Retailers Association (MRA); Malaysia Retail Chain Association (MRCA); Bumiputra Retailers Organisation; Asean Retail-Chains and Franchise Federation; and Branding Association of Malaysia, reported declines of as much as 50% in sales amid the outbreak.

As such, the retail associations are urging all shopping malls and shophouse landlords or owners to provide rental rebates of 30% to 50% from February 2020 for the next six months.

This would help tenants ride out the effects of the Covid-19 outbreak, similar to what shopping malls and landlords have done in Hong Kong and Singapore.

“Malaysia’s retail businesses have been greatly affected since the announcement of the virus outbreak. Many tourists have cancelled their travel plans, but our own locals have become very cautious and shoppers are staying home, shying away from crowded places like shopping malls,” the associations said in a joint statement yesterday.

Apart from dealing with the drop in consumer traffic, retail outlets also incur extra social responsibility costs in engaging more cleaners to wipe down public areas; administration staff to take temperatures; advising staff and customers on good hygiene practices; and providing more hand sanitisers at strategic locations.

“As rent makes up a high proportion of our operational costs, this is the time landlords and tenants have to be in good partnership. Landlords need to be ‘socially responsible’ to help us protect jobs and stir domestic consumption for the greater good of the Malaysian economy,” the associations added.

The retailers are also appealing to landlords to offer holistic support such as the flexibility to operate shorter store hours, to cut down or reduce unproductive operational hours, free parking for shoppers, complimentary booking of atrium areas and marketing support for both retailer-driven promotions and mall-wide marketing initiatives.

“Retailers are not requesting for a long-term rental rebate or cut. We are asking for help to ride through this very difficult time,” they added.

Though there have yet to be any major closures of shopping outlets, many retailers and food and beverage players are “quite empty” as shoppers continue to avoid malls.

The associations hope that businesses will bounce back in six to eight months, should the outbreak be contained and end in the near term.

Last week, the MRA and MRCA called for the government to set up a stimulus budget and relief package that includes measures to cope with the effects of the coronavirus.

Among their suggestions was a temporary reduction in employees’ Employees Provident Fund contribution rate by 3%.

A 50% reduction in electricity tariffs to retailers and shopping malls would also go a long way in lowering and managing operational costs, they said.

Another suggested immediate measure is to halt the levy payable to the Human Resources Development Fund, thus supporting retailers facing slower sales and those saddled with cashflow constraints.