Mydin sees tough times ahead for retail sector
Erosion of consumer purchasing power to continue weighing on industry
SUBANG JAYA: Hypermarket operator and retailer Mydin Mohamed Holdings Bhd expects the erosion of consumer purchasing power to continue weighing on the local retail industry.
Managing director Datuk Ameer Ali Mydin, who predicts challenging times ahead for the industry, said the hypermarket segment, which mainly targets the low to middle-income group, is already affected.
“The retail business is down ... and so is the hypermarket segment ... and this is scary,” he told reporters after the launch of the iMeriah Takaful coverage plan.
AmMetLife Takaful and Mydin has teamed up to offer iMeriah for eligible Mydin Meriah card members nationwide.
The takaful plan provides coverage against death with takaful benefits in the form of goods instead of cash. Mydin Meriah card members aged between 18 and 49 years old are eligible for iMeriah.
“It’s scary because the hypermarket segment caters to the low to middle-income group ... and if they can’t afford to buy things, then it will have an impact on our economy.”
Ameer said “per basket purchases” within its stores had been going down. “This shows that people don’t even have money to spend on necessities. When there is a slowdown, customers start cutting down on things that they don’t need. Necessities such as groceries don’t usually go down.”
Ameer, however, hopes the gen- eral election (GE) next year boost consumer spending.
“We pray that with the upcoming GE, the Government will do something to boost spending.”
Sales in the Malaysian retail industry contracted 1.1% in the third quarter on eroding purchasing power, according to a report compiled by Retail Group Malaysia will (RGM). For the first nine months of this year, the retail sales growth rate was 1.9% as compared to the same period a year ago, it said.
RGM said all retail sub-sectors suffered decline in sales in the third quarter, except pharmacy and personal care and other specialty retail stores sub-sectors, which reported a 6% growth.
After a short recovery, department store-cum-supermarket sub-sector suffered a dip in sale during the third quarter of this year with a decline of 3.5%. The department store sub-sector slid into the red with a 4.4% decline in the third quarter.
Despite selling basic necessities, the supermarket and hypermarket sub-sector reported the worst result during the latest quarter. For the third quarter of 2017, retail sale of this sub-sector dropped by 5.2%.
Meanwhile, AmMetLife Takaful chief executive officer Noor Azam Mohd Yusof remains optimistic of growth prospects despite the competition.
“There are 11 takaful operators in the country and we are the eleventh. We hope to improve our position, to maybe eighth, within the next three years,” he said.