Most retailers are recording a 35% to 50% decline in footfall, while sales fall by almost 70% to 80%, says expert
by FARA AISYAH / pic by MUHD AMIN NAHARUL
THE retail industry, which experienced a respite during the introduction of the Recovery Movement Control Order (RMCO), is back in a downward spiral with major retailers expected to dismiss 60,000 employees by year-end.
Bumiputera Retailers Organisation president Datuk Wira Ameer Ali Mydin said most retailers were recording a 35% to 50% decline in footfall in October and November, while sales fell by almost 70% to 80%, particularly after the introduction of the Conditional MCO (CMCO).
To compare, the third quarter of 2020 (3Q20) saw footfall recover to almost 75% of pre-MCO level, while sales stood at 60% to 70%.
“Major retailers — including shopping malls and hypermarkets — employ about 450,000 people in total. We project that there will be a layoff involving about 60,000 people by the end of this year since many retailers have closed shop,” he told The Malaysian Reserve (TMR).
Ameer Ali said the calculation excludes other sectors in the supply chain such as logistics.
He added that mall vacancies are expected to reduce by 20% to 30%, compared to 13% in 1Q20.
“The association would like the government, particularly the National Security Council and Health Ministry, to sit down with retailers to streamline the standard operating procedures because there is so much confusion regarding the implementation that affects people’s confidence to go out,” he said.
Ameer Ali also requested for more attention on brick and mortar retailers, instead of online players.
“The online retail segment in Malaysia is about 5% of the whole business, even in a developed country like South Korea, the online retail segment is only at 20% of market share. If you aid the online segment, it will grow to 7%; it will not jump from 5% to 50%,” he said.
Ameer Ali, who is also the MD of Mydin Mohamed Holdings Bhd, said the government should be focusing more on offline retailers which will encourage other transactions, including e-hailing drivers, parking management and restaurants, among others.
TMR previously reported that more than 51,000 retail stores in the country are expected to shutter within the next four to five months as businesses fail to cope with the changing retail landscape amid the Covid-19 pandemic.
Retail Group Malaysia (RGM) MD Tan Hai Hsin said the number represents 15% of the total industry supply, adding that the industry may see a rapid number of business closures as the loan moratorium offered by the government ended in September.
“This pandemic crisis will lead to the survival of the fittest. We expect the closure to accelerate from this month due to the just-ended moratorium.
“Closures have already been taking place throughout the country with many looking for buyers for their retail businesses, including retail businesses located in established shopping malls,” he told TMR.
Tan said based on RGM’s observation studies conducted in several parts of commercial centres in the Klang Valley, about 5% of shopping centre tenants in Malaysia had closed since the beginning of MCO.