No light at the end of the tunnel for retailers


THE Conditional Movement Control Order (CMCO) has wiped chances of recovery for hypermarkets and convenience stores in the country, as many are forced to pull the shutters due to restricted operating hours.

Savills (M) Sdn Bhd head of retail services Murli Menon said this has deeply impacted 24-hour and late-night businesses.

Moreover, he said, with many companies still on work-from-home or rotation mode, convenience stores have been seeing major drop in sales and performance.

“One word to describe the overall retail performance this year is ‘dismal’. There was some hope for recovery, especially for the food and beverages segment, following the reopening after the initial MCO.

“However, the current CMCO has brought back the fear among consumers as well as the confusion about changes in standard operating procedures,” he told The Malaysian Reserve (TMR) recently.

However, Murli said developments of vaccines have helped to boost confidence among consumers, retailers and business houses.

“Hopefully, this will speed up revival assuming that the vaccines are effective and accessible across the population,” he noted.

Meanwhile, Malaysia Retail Chain Association VP Datuk Liew Bin said most neighbourhood hypermarkets and convenience stores have generally performed better than the ones located in shopping malls.

This, he said, could be because consumers are still apprehensive about visiting shopping malls, as some Covid-19 clusters related to shopping malls began to emerge towards the second half of this year.

“We can say that this has benefitted the stores located within the communities during the pandemic,” he told TMR.

Liew said although vaccines have been developed, they will take months to reach the ordinary Malaysians.

Therefore, the recovery and overall growth of the retail segment can only be seen towards the third quarter of next year (3Q21).

In 3Q20, retail sales of the supermarket and hypermarket subsector dropped by 15.1%.

Retail Group Malaysia (RGM) said the latest results were worse than the first two quarters of the year.

The country’s overall retail industry recorded a poorer than expected growth rate of -9.7% in 3Q20, compared to the same period in 2019.

According to RGM, the latest quarterly results were way below market expectations and there is still no light at the end of the retail tunnel.

Initially, the members of the Malaysia Retailers Association had projected the 3Q20 growth rate at -3.4% in September this year.

The latest results were 185% worse than the earlier estimate. RGM said the third wave of the pandemic and the second CMCO have dampened the spirit of Malaysian retailers.

It added that with strict social-distancing measures enforced during the entire 3Q20, shopping centres and retailers were not able to operate at full capacity, compared to the pre-Covid-19 period.

For the remaining last quarter of this year, the group has revised the retail growth rate downwards further from -2.5% (estimated in September 2020) to -18.2%.

Commenting on next year’s outlook, RGM has projected a 4.9% growth rate for retail sales, adding that 2021 will remain a great challenge to the Malaysian retail industry.

Read our previous report here

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