Wednesday May 14, 2008
Growth forecast for retail industry maintained at 7%
PETALING JAYA: Retail Group Malaysia is maintaining its earlier forecast of 7% growth for the retail industry despite the surging costs of living.
Malaysia, it said, was facing a “new crisis” – a food crisis.
“Nevertheless, this is not a Malaysian problem; it is a worldwide problem,” it said in its latest note to Malaysian Retailers Association (MRA) members and the retail industry.
Retail Group, which tabulates quarterly retail data for the MRA, expects the retail industry to be affected towards the second half of the year.
“One of the important factors in consumer spending is the ‘feel good’ factor. Malaysian consumers in general do not have a high consumer confidence level – this has been affecting retail sales,” the report said.
It said retailers, who had better control of their overall costs, would “ride through” this latest crisis. More importantly, retailers must understand shoppers’ current consumption patters as these had changed over the last 10 years, it added.
For the whole of 2007, the Malaysian retail industry recorded “surpassingly” strong growth rate of 12.8% in sales compared with 2006 – the highest growth rate in the local retail industry since 1992. This was mainly attributed to Visit Malaysia Year 2007 and salary increments of civil servants.
This, however, was not an indication of recovery in the retail industry, Retail Group said, noting that although prices of food and groceries increased last year due to higher raw material prices, Malaysian consumers did not cut back their spending significantly.
Retailers in all retail sub-sectors reported encouraging results last year, it said, adding that sales growth was stronger for national chain retailers than small-scale retailers.
All retail sub-sectors were expected to record positive growth in business during the first quarter, it added.
In comparing retail sales with other economic indicators, Retail Group noted that the inflation rate was maintained at a reasonable 2% during the year despite soaring food prices while private consumption expenditure grew 11.7% last year.
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