Retail industry trends for 2019

For the third quarter of 2019, Malaysia retail industry recorded a disappointing growth rate of 1.8%, as compared to the same period in 2018.

A year ago during the same period, Malaysia’s retail industry expanded by 6.7%. The high growth rate was fuelled by the remaining two months of tax break, before Sales and Services Tax (SST) was re-introduced from September 2018.

Malaysian consumers rushed to retail stores to buy more in order to save more. For the month of September 2018, many retailers maintained their prices in order to attract shoppers to buy.

The strong result achieved a year ago contributed to lower growth rate during the latest quarter. Low consumer confidence level also led to poor sales during this period. Unsettled global market environment and slow domestic economic activities discouraged consumers from spending more.

For the first nine months of this year, the retail sale growth rate was 3.6%, as compared to the same period a year ago.

For the third quarter of 2019, Malaysia national economy reported a moderate growth rate of 4.4%. This was attributed to slower growth in almost all economic sectors during the period. The average inflation rate during the third quarter of 2019 climbed higher by 1.3%.

The inflation rates during July, August and September were 1.4%, 1.5% and 1.1% respectively. The main contributors to the higher inflation rates during the last three months were the Furnishing, Household Equipment & Routine Household Maintenance, Food & Non Alcoholic Beverages as well as Alcoholic Beverages & Tobacco sectors

Private consumption growth rate slowed down to 7.0% during the third quarter of 2019. This was partly due to the one-in-a- lifetime reduction of GST from 6.0% to 0.0% that took place a year ago.

During the third quarter of this year, Consumer Sentiment Index (by MIER) declined to 84.0 points. This was the lowest reading since fourth quarter of 2017. Rising cost of living, stagnant purchasing power and weak job prospect contributed to the latest indicator. Unemployment rate during the third quarter of 2019 remained at 3.3%.

Supermarkets and hypermarkets
Department Store sub-sector as well as Supermarket and Hypermarket sub sector continued to suffer from declining sales during the third quarter of 2019.

Department Store cum Supermarket sub-sector recorded a small growth rate of 0.6% during the third three months of this year. Department Store sub-sector reported another disappointing result with a growth rate of -2.3% during the third quarter of 2019.

Store closures and weak retail market continued to affect the performance of the Supermarket and Hypermarket sub-sector. For the third quarter of 2019, retail sale of this sub-sector dropped by 3.2%. This is the worst performing retail sub-sector during this quarter.

Fashion and Fashion Accessories sub-sector continued to experience slow growth during the third quarter of 2019. As compared to the same period a year ago, the business of fashion retailers rose by 1.6% only during this latest quarter.

Retailers in the Pharmacy and Personal Care sub- sector are expecting to maintain their growth at 9.6% during the fourth quarter of 2019. Retailers in Other Specialty Stores sub-sector (including photo shop, toys store, fitness equipment store, optical store, children store as well TV shopping channel) expect their businesses to experience a slowdown in the coming months.

For the last three-month period of 2019, this sub-sector expects its business to grow by 0.8% as compared to the same period a year ago.

source: Malaysia Retail Industry Report 2019