Q4 retail sales up a disappointing 3.1%
PETALING JAYA: The Malaysian retail industry reported a modest growth rate of 3.1% in the fourth quarter of 2017 compared with the same period in 2016, coming in below expectations due to the rising cost of living which the eroded purchasing power of Malaysian consumers, said independent retail research firm Retail Group Malaysia.
“This latest quarterly result did not meet market expectations. Members of MRA (Malaysia Retailers Association) projected the fourth quarter growth rate in November 2017 at 3.8%. It was also below Retail Group Malaysia’s forecast of 4.5%,” the firm said in its March 2018 Malaysia Retail Industry Report.
It said the quarterly result is consistent with the Consumer Sentiment Index for the same period published by the Malaysian Institute of Economic Research (MIER).
“During the latest quarter, the Consumer Sentiment Index (by MIER) improved to 82.6. Malaysian consumers remained cautious in their monthly spending while juggling with higher cost of living.”
During the fourth quarter of 2017, the performances of all retail sub-sectors were mixed. The supermarket and hypermarket sub-sector was the worst performer.
For the whole of 2017, the retail sale growth rate was 2.0% (or RM99.8 billion) compared with the same period a year ago. The retail industry’s performance last year lagged the gross domestic product growth rate of 5.9%.
“After a rollercoaster ride in 2017, members of the retailers’ association are hopeful that their businesses will begin to recover in 2018. They estimate an average growth rate of 5.4% during the first quarter of 2018, due to the Chinese New Year period.”
Based on its first quarterly projections of retail sales for 2018, Retail Group Malaysia estimates 4.7% growth in retail sale this year (or RM104.4 billion).
“At this moment, this projection is considered optimistic by MRA members. The prospect of the retail industry this year is still highly dependent on the economic performance and consumer confidence level,” it said.
It explained that the upcoming Malaysia general election is one of the main reasons Malaysian consumers have been taking a wait-and-see attitude on their retail spending. Retail sales may rise after the official election campaign starts. When campaigns begin, there will be many political and social activities throughout the country. This should motivate consumers to spend.
“Post-election, consumer spending may improve further as Malaysians will focus on their own economic future and release the pent-up demand.”