PETALING JAYA: The Malaysia Retailers Association (MRA) and Malaysia Retail Chain Association (MRCA) are looking for the retail sector to grow by 3.6% year-on-year (y-o-y) for the current quarter (3Q24), and 3.2% for 4Q24.
The retail associations also reported that in June, Retail Group Malaysia (RGM) maintained a 3.6% growth rate forecast in retail sales for 2024, taking into consideration the softer retail market during the second quarter and higher estimate for the third quarter.
In a statement released yesterday, MRA and MRCA said Malaysia’s retail industry posted a weaker-than-expected growth rate of 0.6% y-o-y for 2Q24 retail sales, which they deemed as below market expectation.
“In June 2024, members of MRA and MRCA projected an average growth rate of 1.7% for 2Q24. Thus, this latest result was 65% below estimate,” they commented pointedly.
Although the attractive ringgit and as well as the visa-free condition for visitors from China and India had brought in a large number of foreign tourists during the quarter in review, the associations said persistently rising retail prices meant that Malaysian consumers needed to manage their monthly expenses carefully to maintain their lifestyles.
MRA and MRCA revealed that for the first half of 2024, the retail industry had expanded by 4.6% y-o-y, before adding that the prolonged Israel-Palestine conflict had also affected businesses of certain international retail brands.
This was especially evident in the food and beverage (F&B) sub-sector, where the conflict continued to affect sales of several international F&B franchises with alleged ties to Israel or that had declared its support for the Jewish state.
After a robust recovery two years ago when the country made a significant recovery from the lockdowns, the associations revealed that many retail sub-sectors continued to suffer from negative growth rates in 2Q24.
“The retail sales of department stores cum supermarket sub-sector declined by 3.9% during the quarter, as compared to the same period a year ago.
“In spite of Hari Raya festival, retail business of department store sub-sector shrunk by 13.8% during the second 3-month period of this year,” said MRA and MRCA.
Conversely, however, the mini market, convenience store and cooperatives enjoyed a healthy growth rate of 7.0% in retail sales during 2Q24, they said.
On the other hand, they pointed out that a majority of their members are hopeful of better retail prospects for the next three months.
“They estimate an average growth rate of 3.6% y-o-y in retail sales during 3Q24, as the department store cum supermarket operators are predicting their sales to recover with a growth rate of 7.3%.
Similarly, the department store operators are counting on their shoppers to return with a growth rate of 5.8% for the third three-month period of this year, although the statement did not attribute any reason for the 3Q24 optimism.
Moving forward, MRA and MRCA said the rising cost of living continues to be the biggest challenge for Malaysia’s retail industry for the rest of this year.
“It has affected Malaysian consumers from all income groups. Prices are expected to climb further during the second half of this year.
“According to Bank Negara, inflation is expected to rise between 2.0% and 3.0% for the entire year,” they said.
They predicted that the boycott of several international F&B franchises due to the Israel-Palestine conflict is likely to continue, probably leading to more temporary and permanent closures of these F&B outlets across the country.
Overall, however, cafe and restaurant operators anticipate their businesses to stay healthy in 3Q24, expecting a 7.2% growth rate as compared to the same period a year ago.
