Retail Group Malaysia cuts the industry’s annual growth rate projection to 2.7% from 4.8% previously.
PETALING JAYA: Retail Group Malaysia (RGM) has lowered its projection for the annual growth rate of the local retail industry to 2.7%, based on a disappointing sales performance in the second quarter of 2023 (Q2 2023).
It had previously estimated in June that the industry will grow by 4.8% in 2023.
In a report released today, RGM noted that the local retail industry contracted by 4% in Q2 2023.
The figure is lower compared to the 2.6% average growth projected by members of the Malaysia Retailers Association (MRA) and the Malaysia Retail Chain Association (MRCA), said RGM.
The disappointing quarterly performance was mainly attributed to reduced sales during Hari Raya and high base effect.
Last year’s Hari Raya season, which was celebrated in April and May, had contributed to an impressive 62.5% growth rate in retail sales in Q2 2022.
“It was one of the highest quarterly growth rates achieved in the history of the Malaysian retail industry,” it said.
“Therefore, the negative growth rate in this quarter was partly due to the high base effect a year ago,” it added.
For the first half of the year (H1 2023), Malaysia’s retail industry grew by 2.6% compared to the same period in 2022, said RGM.
However, several retail segments faced declining growth rates in Q2 2023, falling below market expectations.
The department store cum supermarket sub-sector retail sales were down 9.6% compared to the same period last year.
Meanwhile, the department store sub-sector within the retail business declined 16.7% year-on-year (y-o-y), marking it as the poorest performing segment for the period.
Despite the Hari Raya festivities, the supermarket and hypermarket sub-sector decreased 6.1% y-o-y in sales.
In contrast, the mini-market, convenience store, and cooperative sub-sector was up 11.5% y-o-y in retail sales, making it the top-performing sub-sector of the quarter.
However, several retail segments faced declining growth rates in Q2 2023, falling below market expectations.
The department store cum supermarket sub-sector retail sales were down 9.6% compared to the same period last year.
Meanwhile, the department store sub-sector within the retail business declined 16.7% year-on-year (y-o-y), marking it as the poorest performing segment for the period.
Despite the Hari Raya festivities, the supermarket and hypermarket sub-sector decreased 6.1% y-o-y in sales.
In contrast, the mini-market, convenience store, and cooperative sub-sector was up 11.5% y-o-y in retail sales, making it the top-performing sub-sector of the quarter.
RGM noted that many members of the MRA and MRCA are cautious about their business prospects for the next quarter, estimating an average 1.4% growth rate in retail sales for Q3 2023.
The conservative projection was due to the high base effect as Malaysia’s retail industry had reached an all-time high growth of 96% in Q3 2022.
Correspondingly, RGM has lowered its forecast for Q3 2023 retail sales growth to 1.4% from 3% previously.
The adjustment is based on a subdued outlook among retailers regarding the spending capacity of consumers during the present quarter.
Furthermore, the domestic retail industry still faces significant challenges for the rest of the year, with prices of essential goods remaining higher than pre-lockdown levels, despite a slight easing in monthly inflation rates.
Source: www.freemalaysiatoday.com
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