More gloom than expected as MRA predicts MY retail to fall 28.8%

The Malaysia Retailers Association (MRA) has expecting an average fall of 28.8% in growth rate for retail industry in the months of April to June of 2020. According to MRA, this is worse than the projection made by Retail Group Malaysia in April 2020, which predicted 9.3% decrease in growth rate.

In an industry report by Retail Group Malaysia, it said department store cum supermarket operators are expecting a negative growth of 40.9% for the second quarter of 2020. Department store operators are also expecting the worst in their businesses with a 62.8% decrease in growth rate for the second three-month period of this year. This sub-sector will be the worst performer among the retail sub-sectors during this quarter, according to Retail Group Malaysia.

The sub-sector of supermarket and hypermarket remains the least affected business among the retail sub-sectors during this period. However, operators in this sub-sector will not see big improvement in their businesses in the coming months. They expect to remain in the red zone with a negative 14.8% growth rate for the second quarter of 2020. 

Retailers in the fashion and fashion accessories sector expect their businesses to suffer a drop of 39.3% in growth rate during the second quarter of 2020, as compared to the same period a year ago. Retailers in the pharmacy and personal care sub-sector are expecting their businesses to record a fall of 18.4% in growth rate for the second quarter of 2020. Meanwhile, retailers in other sub-sectors (including retailers selling photographic equipment, optical products, children-related goods, second-hand goods, toys as well as arts and craft) are equally pessimistic. They expect their businesses to decline by 55.5% during the second three-month period of 2020.

For the next three months, retail sale is expected to suffer a decline of 3.5% as compared to last year. The decrease is predicted as retailers will not be able to operate at full capacity due to continued social distancing measures implemented. In the event that the Movement Control order (MCO) is lifted fully before October, Malaysian retailers should expect retail business to begin its recovery. In that case, for the fourth quarter of this year, retail sale is expected to decrease slightly by 1.5%.

Retail Group Malaysia projected a 8.7% decrease in annual retail growth rate for Malaysia in 2020 as compared to last year. This is a bigger decrease than it had previously predicted a decrease in 5.5% in April.

For the first quarter of 2020, the Malaysia retail industry recorded a negative growth rate of 11.4% in retail sales, as compared to the same period in 2019. However, this result was better than the estimate made by Retail Group Malaysia in April 2020, which predicted a negative growth rate of 18.8%. 

The report also said during the second month of this year, retailers began to suffer from declining sales due to the rapid spread of COVID-19 and the drastic drop of foreign tourists. It is added that retailers badly affected were those non-essential retailers, which saw zero revenue during the last two weeks of March, with the implementation of the MCO. 

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