KUALA LUMPUR (BERNAMA) – Retail Group Malaysia (RGM) has revised downwards its earlier forecast of the retail industry’s performance this year, projecting a larger sales contraction of 8.7 per cent compared to the 5.5 per cent forecast in April.
It said Malaysia Retailers Association (MRA) members interviewed had projected an average year-on-year (y-o-y) growth rate of -28.8 per cent during the second quarter (Q2).
“This is worse than the projection made by RGM in April 2020 at -9.3 per cent,” the independent retail research firm said in its July report provided as a service to MRA members.
RGM is forecasting the industry to shrink by 3.5 per cent and 1.5 per cent in the third and fourth quarter.
These latest projections are in contrast to the positive growth estimated earlier for both quarters in its Preliminary Report on Malaysia Retail Industry During COVID-19 Pandemic (April 2020).
For the first quarter of 2020, Malaysia’s retail industry posted a negative y-o-y growth of 11.4 per cent, RGM said.
On Q2 performance, RGM said the department store and supermarket operators expected a dismal performance with a negative growth of 40.9 per cent for the quarter.
The department store operators were expecting the worst in their businesses with a contraction of 62.8 per cent and this sub-sector would be the worst performer among the retail sub-sectors during the quarter, it said.
RGM said the least-affected retail sub-sector during the trying times was supermarket and hypermarket operators.
However, they expected to remain in the red zone with a 14.8 per cent contraction in Q2, it added.
“Retailers in the fashion and fashion accessories sector expect their businesses to suffer a drop of 39.3 per cent in growth rate during Q2 2020, as compared to the same period a year ago,” it said.
Retailers in the pharmacy and personal care sub-sector and in other specialty stores sub-sector such as optical products and second-hand goods expect their businesses to record negative growth rates of 18.4 per cent and 55.5 per cent.
RGM said retail sales were expected to suffer a moderate decline of 3.5 per cent for the third quarter of 2020 compared to the same period last year. It said in the event of Movement Control Order was fully lifted before October, Malaysian retailers should expect business to begin its recovery, with a slight 1.5 per cent drop in sales in the fourth quarter.