RGM: Major brands spared in Malaysia so far

Foreign brands are still coming into the country with few committed to open even before the Covid-19 pandemic, says its MD

by DASHVEENJIT KAUR / pic by MUHD AMIN NAHARUL

INTERNATIONAL brands in Malaysia have mostly remained unaffected with the unprecedented global pandemic amid mass closures of operations abroad.

Retail Group Malaysia (RGM) MD Tan Hai Hsin (picture) said foreign brands are still coming into the country with few committed to open even before the Covid-19 pandemic.

“We should not blame the Covid19 pandemic solely as the cause of closure for these international brands. Prior to the pandemic, many brands were already facing declining sales due to the very competitive retail market and the ever-changing consumers’ buying behaviour,” he told The Malaysian Reserve (TMR).

Tan was referring to brands like Zara, Esprit, GAP, NYX and Victoria’s Secret, which have either downsized or closed down a large number of their operations abroad.

He emphasised that many big players, including department store chains and fast-fashion retailers that are headed into this downturn without a financial cushion, are already feeling the toll of the abrupt downturn with the pandemic only punctuating a years-long reckoning brought about by a boom in online shopping.

Most recently, Zara-owner Inditex SA said it is permanently closing as many as 1,200 stores — 16% of its global outlets — and will pivot more aggressively toward selling online, as the fast-fashion giant maps out its post-pandemic future.

Inditex said in a statement last month that it will invest €2.7 billion (RM13.5 billion) over three years to develop a “fully integrated store and online model”.

Meanwhile, American retailer Gap Inc also posted a first-quarter loss of US$900 million (RM3.78 billion). The company, which owns Banana Republic and Old Navy, announced it would close 230 stores prior to the pandemic.

Reuters reported in late April that the company stated it was suspending rent and needed to borrow more money.

As for Victoria’s Secret, the company planned to permanently close approximately a quarter of its 1,000 stores in the US and Canada in 2020.

“Zara is still operating in Malaysia. Gap was closed in Malaysia before the Covid-19 outbreak and Esprit has been facing difficulty in their sales performance for several years now.

“Victoria’s Secret in Malaysia will not be disappearing anytime soon because the stores in Malaysia sell mostly cosmetics and perfumes. Generally, personal care stores are doing well in Malaysia,” Tan told TMR.

He suggested that despite shutting down most of the outlets in the US, it does not necessarily mean that Victoria’s Secret will close in Malaysia as well.

“This is similar to Borders. This bookstore chain had closed down in the US, while its Singapore outlets was shut down as well. Yet, Borders are still operating in Malaysia,” he added.

Tan also emphasised that foreign brands are still committed to entering the Malaysian market.

“Calia from Australia has opened in Pavilion Kuala Lumpur recently. Five Guys from the US will be opening in Genting Highlands. Taco Bell from the US too will be opening in Tropicana Gardens Mall,” he said.

As for NYX Cosmetics which recently announced that it will be closing down its stores in Malaysia soon, Tan believes the negative impact will be very minimum.

“The market shares of NYX are not too big in Malaysia, so it is with Esprit. Their loyal customers can still buy them online,” Tan said.

NYX Professional Makeup Malaysia said it will continue to do online sales until Sept 30, 2020.

As for apparel group Esprit, it closed all its stores in Asia, except those in mainland China, at the end of June 2020.

The decision came after an appalling slump in sales during the last nine months, which worsened during the March quarter when the Covid-19 crisis hit, forcing retail stores to close or reduce trading across many markets.

All 56 company-run stores located in Singapore, Malaysia, Taiwan, Hong Kong and Macau will close, but the company said the sales through those shops represented less than 4% of group turnover during the nine months to March.

For the quarter ended in March, Esprit sales in Asia were down by 52.2%61.3% in its stores and 54.9% at wholesale level. Online sales, however, rose by 13.9%.