by SHAHEERA AZNAM SHAH / pic by RAZAK GHAZALI

RETAILERS have to adopt omnichannel retailing to ensure their businesses survive as the spike in new Covid-19 cases pushes consumers away from brick-and-mortar outlets.

According to the Malaysia Retail Industry Report released in September, the local retail sector suffered a 30.9% sales decline from March until June as a result of the Movement Control Order (MCO).

While the purchasing trend was on the upward trajectory in the Recovery MCO, the recent jump in the local cases may cripple the positive sentiment.

Retail Group Malaysia MD Tan Hai Hsin said retailers are investing in providing more than one purchasing medium to shield their business in case of another lockdown.

“After the MCO is lifted, they have invested more effort and money in technology as retailing today is omnichannel.

“Traditional retailers cannot rely solely on physical stores to grow as they need to provide multiple channels to reach out to modern consumers,” he told The Malaysian Reserve (TMR).

Online retailers, too, are increasing the number of physical stores to expand their business.

“A retailer needs to offer both physical and online stores, so consumers can buy goods and services in multiple ways,” Tan said further.

Malaysia Retail Chain Association president Shirley Tay echoed the multiplatform strategy.

However, she said this strategy will also result in the reduction of their overall business expenses and optimisation of inventory levels to stay afloat.

“The extended movement recovery period will certainly add more pressure on retailers with regard to business sustainability and customers’ sentiment, resulting in potentially more rationalisation exercises.

“Unfortunately, the longer the MCO period is, the higher the casualty will be seen within the retail industry.

“To survive, retailers may have to rethink and adapt their business model to the current situation, including downsizing operations, renegotiating tenancy terms, omnichannel marketing and strategic collaborations with the main objectives of reducing overall business expenses and optimising inventory levels,” she told TMR.

However, she said although some traditional retailers have found success in adopting e-commerce, a majority of them have trouble in keeping a healthy cashflow due to legacy issues related to the costs of running physical stores at the same time.

“The retail business has remained challenging since the start of this crisis and its survival depends largely on public confidence concerning the government’s efforts in curtailing transmission of the coronavirus within the community.

“The recent spike in the number of positive cases showed some initial negative impact on the retail industry across the board due to lower customer footfall reported,” added Tay.

At present, most retailers have seen their businesses rebound by 50% to 70% compared to last year, while surviving on offering discounted prices, said Tan.

“For many retailers to survive during this pandemic period, they introduced more value-for-money goods and carried out more sales with discounted items,” he said.

Tan added that discounted stores, as well as fixed-price stores, such as ECO Shop, Mr DIY and Daiso, have been gaining traction among Malaysians, attracting all income groups, during the downturn of the economy.

“Popular furniture and home furnishing retailers such as IKEA and Kaison have been enjoying strong retail sales since they were allowed to reopen.

“For many food and beverage operators, they started introducing affordable set meals to attract more orders. For many bubble tea shops and dessert speciality outlets, they started offering meals to survive during this partial lockdown period,” he said.

However, with the possible stricter standard operating procedures (SOPs) in the next two months, consumer spending is expected to decline, Tan said.

He added that the anticipated declining traffic, coupled with the integration efforts to merge the retail physical and online stores, will continue to post a challenge to retailers in the next couple of years.

“The integration allows the consumers to be able to buy online and collect at the store, or vice versa, including other purchasing options.

“Consumers must be able to buy online through a desktop computer, laptop, tablet and handphone. So far, Uniqlo Co Ltd has done a good job in this aspect,” he said.

He added that many retailers have started using social media platforms to conduct live broadcasts to sell their products, giving example brands such as Padini, Watsons, Giordano, Shins and Hush Puppies Apparel.

“Since the pandemic started, some shopping centre owners have started order and delivery services for their tenants to generate more sales. Some of the examples include 1 Utama Shopping Centre, Citta Mall, Setia City Mall and 1 Mont Kiara,” he said.