Riding the Waves of Resilience and Reinvention – Malaysia’s Retail Sector Posts 3.8% Growth

By The Malketeer

Mini-Markets, Mega Sales, and the Road Ahead: Retailers Are Adapting to New Challenges

Malaysia’s retail industry has demonstrated remarkable resilience in 2024, posting a solid 3.8% growth in the third quarter despite persistent challenges.

The Retail Group Malaysia’s latest November 2024 Report reveals a nuanced picture of consumer behaviour and economic adaptation in a complex marketplace.

The Cost of Living: A Persistent Challenge

Rising living costs continue to cast a long shadow over the retail sector.

Malaysian consumers across all income groups are feeling the pinch, with household expenditures climbing due to increased prices on goods and services.

Yet, remarkably, shoppers have not retreated—they’re simply becoming more strategic in their spending.

Sub-Sector Surprises: Winners and Strugglers

Not all retail segments are created equal in this challenging landscape.

The Mini-Market, Convenience Store & Cooperative sector emerged as a bright spot, achieving an impressive 8.7% growth—the highest among all retail sub-sectors in the third quarter.

In contrast, Other Specialty Stores experienced a significant downturn, with sales dropping by 5.5%.

Standout Performers

• Fashion and Fashion Accessories: 5.7% growth
• Pharmacy Sector: Maintained a steady 6.3% increase
• Personal Care: Showed resilience with a 4.7% expansion

Sectors Under Pressure

• Department Stores: Struggling with a -4.7% decline
• Furniture & Electronics: Continuing a negative trend with -3.3% growth
• Children and Baby Products: Experiencing a -2.0% contraction

Looking Ahead: Cautious Optimism for 2025

Retail Group Malaysia projects a 4.0% growth rate for 2025, with the government expecting the national economy to expand between 4.5% and 5.5%.

Several upcoming policy changes will shape the retail landscape:

• Minimum wage increase to RM1,700
• Mandatory EPF contributions for non-Malaysian workers
• Expanded sales and services tax coverage
• Changes in fuel subsidies

Global Influences and Local Impact

The ongoing Middle East conflict has unexpectedly impacted the Food & Beverage sector, with many international franchises experiencing reduced patronage.

This geopolitical ripple effect demonstrates how global events can dramatically influence local retail dynamics.

Strategic Bright Spots

The Malaysia Year End Sale 2024 offers a glimmer of hope, featuring over 100 deals across 60+ shopping centres.

Additionally, relatively cheap currency and government initiatives are expected to attract foreign tourists, potentially boosting retail spending in major cities and tourist destinations.

The Digital Transformation Challenge

A significant milestone arrives in July 2025 with mandatory e-invoicing for small businesses with annual turnovers of RM150,000.

This digital leap will pose challenges for traditional retailers and online sellers, demanding rapid technological adaptation.

Adaptability is Key

As Malaysia’s retail sector moves forward, the key to success will be adaptability.

Retailers must navigate rising costs, changing consumer behaviours, and technological disruptions while maintaining competitive pricing and customer experience.

The resilience shown in 2024 suggests that Malaysian retailers are up to the challenge, ready to innovate and transform in an ever-evolving marketplace.