Consumers  will not spend lavishly post-MCO

by NUR HAZIQAH A MALEK/ pic by MUHD AMIN NAHARUL

MALAYSIANS are not expected to spend lavishly after the uplifting of the Movement Control Order (MCO) as worries over economic slowdown and savings in cash would remain a priority during this difficult period, said a retail association.

Malaysian Retail Chain Associations VP Datuk Liew Bin said after the MCO, people are likely to stay home as the battle against the Covid-19 virus is not over.

“This will then lead to a more conservative market, where people will still spend money mostly on essential items and still be wary about buying non-essentials,” he told The Malaysian Reserve (TMR).

Liew said it will take around three months before the market starts to pick up, due to the loss of household income during the MCO as well as businesses trying to recover.

“The low-income group, or B40 (bottom 40%), will not have a lot of money to spend, although they are given incentives.

“The middle-income group (M40 or middle 40%) will be cautious, while the high-income group (T20 or top 20%) will want to avoid crowded areas, therefore won’t want to spend as much.

“So, on the retail front, I think we are going to get a slash in sales even in the post-MCO period,” he said.

TMR previously reported that the retail sector is experiencing a drop in sales as people adhere to the MCO to avoid spreading the coronavirus.

Sales dropped by at least 50% to 70% for most retailers with estabishments in shopping malls, with non-essential outlets shuttered, while convenience stores such as KK Super Mart and the likes are thriving.

It was reported that the sales made by convenience stores have increased by 10% to 15%, as people are buying essential goods from stores nearer to home instead of shopping malls.

According to the Statistics Department, businesses are predicting a slower performance in the first quarter of 2020 (1Q20), with the confidence indicator further declining to -2.1% versus the -0.5% recorded in the previous quarter.

The wholesale and retail trade sector also sees less favourable performance in the period as its confidence indicator declined from -4.9% to -5.3% in 4Q19.

However, despite the decline in foot traffic, consultancy company Vase.ai found that a significant number of Malaysians have subscribed to e-commerce platforms so that they can shop safely from home.

However, even with online retailers giving discounts, the survey found that Malaysians are still cautious about spending on non-essentials.

Shopee regional MD Ian Ho said since the start of the MCO, Malaysians are now shopping online mainly for necessities.

“We have seen this robust online shopping activity throughout the country, including rural areas.”

Post-MCO precautions can already be seen with the cancellation of Ramadhan bazaars, a highly anticipated yearly event nationwide. Although saddened, Malaysians in general support the decision as Ramadhan bazaars often attract large crowds and could cause more spikes in Covid-19 infections.

In a bid to support small food businesses, several online Ramadhan bazaar initiatives are in the works.