Malaysia’s retail market is predicted to rise by 6.3% in 2022, following the opening of the border on April 1 as part of efforts to restore the country’s economy. Major drivers to increase retail spending in Malaysia include the forthcoming Eid celebrations as well as the government policy.
According to Malaysia Retail Industry Report from Retail Group Malaysia (RGM), the 6.3% growth rate in 2022 has been revised from its estimate in November 2021 at 6%. For the first quarter of 2022, the local retail industry is estimated to pose strong growth of 16.5% due to the Chinese New Year festival and further relaxation of Covid-19 standard operating procedures. During the second quarter, the contribution will be mainly from Eid celebrations and the third quarter will have a 3.4% growth rate due to a low base in the same period in 2021. It was noted that the rising costs of basic necessities, consumer goods as well as oil prices due to the Ukraine-Russia war may translate into a higher cost of living, thus affecting Malaysian households’ spending power.
The report estimates growth in the first quarter (Q1) of 2022 of Malaysia’s retail sectors as follows:
- Department store and supermarket companies to retain their recovery momentum, with a growth rate of 28.2% despite a 6% drop in sales for the supermarket and hypermarket sub-sector. Besides, operators of mini-markets, convenience stores, and cooperatives anticipate a 9.5% growth rate.
- Merchants in the apparel and fashion accessories sector are expected to have another robust recovery, with a growth rate of 34% and retailers of children’s and baby products to see a 14.3% increase in sales. Meanwhile, pharmacy companies are expected to grow by 12.3% with an increase in retail sales.
- Other segments like furniture and furnishing, home improvement, and electrical & electronics operators are predicted to retain their growth pace, with a growth rate of 14%.
- Additionally, the specialty stores sub-sector, which includes picture shops, fitness equipment stores, second-hand goods stores, stores retailing musical instruments, and TV shopping, is expected to decline by19.2% and perform worst among retail sub-sectors.
The second quarter of 2022 is expected to see strong sales, with Eid festivities in the second quarter, higher interest rates, and the government policy on Employees’ Provident Fund withdrawal of MYR 10,000 (USD 2,354) to spur more discretionary spending.
(Sources: The Star Online; Malay Mail; New Straits Times)