Retailers bank on domestic tourism to boost business

Businesses focus on breaking even or reducing their losses in 4Q21


RETAIL industry players have been anticipating the reopening of interstate borders as it will not only restart Malaysia’s domestic tourism, but help retailers pick up businesses again with the high spending propensity by tourists.

The Malaysia Retail Chain Association (MRCA) said the increasing demand for travel within the country will help distribute the concentration of economy from the central region to other states and stimulate the local economy.

“Also, there are numerous other tourism players and sectors who will immediately benefit from the relaxation of interstate restrictions including hotels, home stays, transportation, local food and beverage, local attractions and entertainment, to name a few,” it told The Malaysian Reserve (TMR).

Although online shopping would still prevail and pick up in term of performance, MRCA strongly believes that people prefer visiting shopping malls or street-front retail outlets since they were restricted from doing so for many months.

However, the association does not expect retailers to make a profit as they would be focused on breaking even or reducing their losses in the final quarter of the year.

“We can expect to see bigger discounts or more generous free gifts being given to shoppers, as the coming festive season will allow retailers to get rid of old stocks due to poor sales during the previous few phases of the Movement Control Order.”

Commenting on which retail sub-sectors would perform better, MRCA believes that it would be a mixed performance.

“Retail sub-sectors that report positive sales growth in the second quarter of 2021 (2Q21) compared to the 1Q21 are department store at 18.2%; fashion and fashion accessories at 17.6%; pharmacy at 10%; and mini-market, convenience store and cooperative at 2.6%.

“The mini-market, convenience store and cooperatives continue to enjoy moderate growth,” it said.

This was based on the Malaysia Retail Industry 2Q21 Report which was published by MRCA, Malaysia Retailers Association and Retail Group Malaysia.

These sub-sectors were also among the few that were still operating throughout the pandemic and anticipated a sales growth rate of 5.9% during the 3Q21.

“With that, we remain positive on our projection of more than 10% growth rate in the 4Q21, provided the government continues to relax movement restrictions.”

MRCA is observing the patterns in countries such as the UK and Europe where restrictions are relaxed, but it expects cases to rise again, especially during the festive periods.

Meanwhile, the association hopes that the government will provide rental relief to small and medium enterprises (SMEs) and retailers.

In some countries, rental relief is given not only to tenants, but also landlords, to ease their burden.

“Policies that support businesses in their recovery whether financial or not must be continued.

“Such examples include government financial assistance and wage subsidy programmes, grants, utilities reduction, deferment of statutory obligations and incentives for rehiring terminated employees should be continued to support the SMEs and retailers throughout the business recovery period,” MRCA concluded.