Retail sales growth slowed in 3Q13

by **Cals** Thu 16 Jan 2014, 17:34

Business & Markets 2014

Written by Yen Ne Foo of theedgemalaysia.com

Thursday, 16 January 2014 10:11

KUALA LUMPUR: Malaysia’s retail industry sales growth slowed in the third quarter of 2013 (3Q13), dragged down by a slower pace of growth in all retail sub-sectors.

Retail sales grew 3.1% in the July-September 2013 period from a growth of 4.8% in the same period last year and 4.6% in 2Q13.

In its Malaysia Retail Industry Report for January 2014, compiled by Retail Group Malaysia (RGM), Malaysia Retailers Association (MRA) said the latest quarterly result was 70% lower than the earlier estimate by MRA retailers of 10.5% compiled in September last year, as well as 52% lower than the estimate given by RGM of 6.5%.

In 3Q13, the department store-cum-supermarket sub-sector registered a slower growth of 8.4% year-on-year, the supermarket and hypermarket sub-sector at 5%, the fashion and fashion accessories sub-sector at 1.7%, and other specialty retail stores sub-sector at 5.5%.

Additionally, the department store sub-sector suffered a decline of 1.9% in retail sales during 3Q13.

RGM said the Ramadan and Hari Raya period did not lift the overall retail sales as only retailers who were involved in selling festive goods enjoyed better sales.

“During this period, many retailers continued to offer deep discounts and very attractive offers in order to attract shoppers to buy. Once again, their bottom line was severely affected,” it added.

MRA members now expect a 4.2% increase in their business for 4Q13.

“The expected slower growth in supermarket and hypermarket, furniture, electrical and electronics [sectors] as well as personal care led to a lower overall estimate,” said RGM.

“The department store-cum-supermarket operators expect to maintain their growth rate at 8.9% for 4Q13, while department store operators hope for a major turnaround with a positive growth of 9.4% for the last three-month period of last year,” it added.

For RGM, it is more optimistic on the retail industry’s performance for 4Q13, although it has revised downwards its estimated growth rate to 5% from 6%.

It has also revised its growth forecast of the retail industry for the whole of 2013 to 4.9% (to RM92.1 billion) from 6.2%. This is the third revision of the industry growth forecast in the whole of last year.

For 2014, RGM is maintaining the 6% growth rate for the Malaysia retail industry despite the tsunami of price hikes in recent months.

“A review of the growth rate will only be carried out after all the market changes have taken place,” said RGM.

RGM believes that the 1Malaysia People’s Assistance (BR1M), which will be distributed to qualified Malaysians from February 2014, will help boost retail sales during the end of 1Q14.

“In addition, Visit Malaysia Year 2014 will bring more sales to retailers located in major city centres and popular tourist attractions in Malaysia. The target tourist arrivals for 2014 is 28 million with RM76 billion expected in tourist receipts,” it said.

This article first appeared in The Edge Financial Daily, on January 16, 2014.