Buoyed by robust consumption, Malaysia’s retail industry beats Q1 forecasts

MALAYSIA’S retail industry saw better-than-expected year-on-year growth of 18.3 per cent in the first quarter of 2022, said Retail Group Malaysia (RGM) in its latest report on the sector’s performance on Tuesday (June 14).

This beat earlier forecasts of 16.5 per cent by the members of the Malaysia Retailers Association and the Malaysia Retail Chain Association in March.

RGM’s managing director Tan Hai Sin said that shoppers are gradually returning to physical stores and malls, with many of the country’s major shopping districts and commercial centres seeing higher traffic volume in the first 3 months of the year.

“The shopping spree during the Chinese New Year period also contributed to stronger sales for Malaysian retailers. Many non-Chinese also took the opportunity to travel within Malaysia during the holiday season, and this was a boost to the domestic tourism sector,” he said.

Fashion was the best performer of all the retail sub-sectors, with retailers in that space seeing their sales go up by 52.1 per cent in the first quarter. Supermarkets and hypermarkets, meanwhile, was the worst-performing sub-sector for the quarter, with a decrease in sales of 7.6 per cent.

With Malaysia reopening its borders to international travellers from April 1 this year, retailers are generally upbeat that the growth momentum will continue throughout the second quarter and the rest of the year. The full-year forecast is estimated to come in at 6.3 per cent.

For the second quarter, RGM has projected a growth rate of 25.7 per cent, supported by the strong Hari Raya spending in May and the fact that over 5 million people have withdrawn up to RM10,000 (S$3,xxx) from their Employees Provident Fund.

Spending from foreigners is also on the rise. The Tourism Ministry is well on its way to meeting its target of welcoming at least 2 million foreign visitors by December; in the 10 weeks since borders reopened, over 1 million tourists have already visited the country.

Despite the greater optimism, RGM noted that some retailers are still concerned by rising business costs and a shortage of workers.

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“Food ingredients are getting more expensive, and the majority of eateries across the country have increased their prices. Furthermore, the central bank is expected to increase interest rates in the near future, and this will erode Malaysians’ purchasing power,” said Tan.