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Impact of Covid-19 on retail sales worse than expected

Impact of Covid-19 on retail sales worse than expected 1

PETALING JAYA: Retail Group Malaysia said the Malaysian retail industry is expected to suffer a decline of 3.9% during the first quarter, compared with the same period in 2019, which is worse than the average estimate of a 0.4% growth.

“Retail Group Malaysia is unable to establish the likely retail industry growth rate for 2020 at the time of preparing this report. This is because of the ongoing and unpredictable changes relating to the Covid-19 outbreak and the new ruling government policies,” it said.

The last time the retail industry recorded negative growth was during the first year of the Asian financial crisis, in which the market size of the retail industry contracted by 20%.

The Retail Group said it is hard to estimate the impact from the prolonged Covid-19 pandemic on the retail industry, as Malaysians have been reducing outdoor shopping activities since the domestic spread of Covid-19 in early February.

In addition, the unexpected change of the ruling party has led to an uncertain future in consumers’ spending and private investment on retail shops. News reports of positive Covid-19 cases coming from shopping centres have also driven Malaysians to avoid these areas.

“Retail Group Malaysia is now working with Malaysia Retailers Association (MRA) to collect more information on the negative impact of novel coronavirus on Malaysian retailers during the last three months. More updates will be given at a later date,” it said.

Meanwhile, for fourth-quarter 2019, the retail industry recorded a growth rate of 3.8%, compared with the same period in 2018, which met earlier estimates by the Retail Group and was higher than the forecast made by members of MRA at 2.7%.

The performances of all retail sub-sectors were mixed, with the supermarket and hypermarket sub-sectors being the worst performers.

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The pharmacy and personal care sub-sector was the best performer, recording a growth rate of 8.8%, compared with the same period a year ago.

The Retail Group said year-end festivals, school holidays and aggressive promotions by retailers had contributed to better growth rate during the quarter.

However, the Consumer Sentiment Index fell to 82.3 points, as Malaysian consumers remained prudent in their monthly purchases while dealing with rising costs of living.

For 2019, the retail sales growth rate was 3.7%, or RM107.5 billion, compared with the same period a year ago.

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