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Will Malaysian retail recover from GST in 2018?

Sita Subramony: Poor retail performance and what should retailers focus on 2018

The retail sector has been reporting disappointing performances in 2017. Is it the GST that is affecting growth in retail? Arguably, Malaysians have accepted the GST as a necessary evil. And the dust has settled on whatever price ‘adjustments’ retailers had to make to accommodate GST (many taking the opportunity to raise prices beyond the 6%, and blaming their suppliers of course!)


In MARKETING Magazine’s end-January issue, we featured Sita Subramony. She speaks on Malaysia’s current retail performance and what should retailers focus on instead in 2018.

So, what is causing poor retail performance?

‘The retail sector is becoming increasingly fragmented,’ says the Marketing Director of a leading retailer. Sita explains that this means that retailers, both off and online, have to fight harder for the share of wallet of a consumer base that is either shrinking and/or becoming extremely price conscious.

The consumer base I refer to is the lower and middle class; the high-end consumers continue to spend, in fact, experiential luxury is the new buzz for this group. Shoppers are becoming very savvy as they look for bargains to stretch their ringgit and maintain lifestyles. Hanging out with some millennials, I noticed they were constantly on their smartphones searching for bargains in order to maintain their lifestyles.

In Quarter 3 2017, the Consumer Sentiments Index fell to 77.1 (as shown in the above table)

Retail Group Malaysia says that the recovery of the Malaysian retail market in 2018 is highly dependent on the general elections, external economic demand and the ringgit’s performance. Really?

How will GE14 impact retail?

Consumers HAVE to spend on necessities regardless of election results. Ad agencies say that the 2018 World Cup will help too – sure it will, the media owners obviously.

Instead, what should retailers focus on?

The key challenge for retailers is relevant content and constant engagement. Increase User-Generated-Content to strengthen the brand-consumer relationship. Use Facebook targeting to influence existing and new customers. Be innovative and super-creative in social media; a high-end ice-cream retailer had a 3-km queue when they INSTA-d ‘a free scoop between 7-9pm’.

The result – they doubled their usual sales by offering an additional scoop for just RM5!

Sita Subramony is an LSG Exponent – by LEARNING an issue, she SHARES her expertise to GROW a business sustainably.

Interested to read more? Click here!


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