Slower retailing as consumers turn cautious on bearish global economy

PETALING JAYA: Local retailers may experience slower growth next
year, particularly because global economic developments are likely to
affect Malaysia's export-oriented manufacturing sector.
Consulting firm Retail Group
Malaysia (RGM), in its latest Malaysia Retail Industry report, said
manufacturers in Malaysia were expected to face slowing external demand
in 2012 due to the eurozone debt crisis, a potential double-dip
recession in the United States and a decline in China's exports.
This would indirectly trigger caution among Malaysian consumers, hampering their spending as they worry about job prospects.
“Some
Malaysians may be out of jobs next year. Many will not get salary
increments and graduates will not be able to find jobs. All these will
affect retail spending,” RGM managing director Tan Hai Hsin said in the report, adding that consumers would seek value-for-money promotions.
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The
firm estimated a retail industry growth of 6% next year, taking into
account that 1.2 million government servants will receive salary
increments of between 7% and 13%, and households getting RM100 cash each
for the purchase of school books and related items for schoolchildren.
Furthermore,
a one-off RM500 aid will be given out to families in Malaysia with
household income of less than RM3,000 per month beginning January.
“About 80% of the families in Malaysia qualify for this subsidy. All these will boost retail spending next year,” Tan said.
Retail
result for the third quarter this year was lower in growth at 7%
compared with 9.8% in the corresponding quarter last year. Over the
three quarters, the local retail sector achieved 6.8% growth this year.
For
the whole of 2011, RGM maintains its growth rate for the retail sector
at 6.5%, with the last quarter to hit an estimated 5% expansion.
The first quarter recorded a 5.1% growth while the second and third enjoyed 9.1% and 7%.
A
retail analyst said the 5% estimate for the fourth quarter was
reasonable against the backdrop of global economic performance and
rising costs in raw materials and logistics.
“Spending in the
last quarter is traditionally high, with all the festivities, school
holiday, employee's bonus and retail promotions going on,” he added.
Malaysia
Retailers Association members held a more optimistic view of the
industry in the last quarter of 2011, expecting an overall 10% rise in
sales.
The departmental store-cum-supermarket operators are
expecting business to maintain a 9.4% growth while departmental store
operators expect operations to recover slightly with 3.7% growth.
Fashion
and fashion acccessory retailers projected a 14.9% growth while those
in other specialty stores expect fast expansion pace at 15.9%.
RGM
further reported that costs of retail goods will continue to rise in
2012 albeit at a slower pace than in the past two years due to higher
raw material and transportation costs.