KUCHING: As the digital growth in Malaysia expands rapidly and online shopping becomes a norm, the retail estate investment trust (REIT) retail sector is set to see a long-term impact from these conditions including the upcoming goods and services tax (GST).
A survey conducted by the research arm of CIMB Investment Bank Bhd (CIMB Research) showed a rising interest in Internet shopping among young consumers, indicating that shopping trend for online shopping is increasing.
The survey also prompted the research firm to deduce that a majority of its participants have opted to cut down on shopping as a precautionary effort to mitigate inflationary pressure.
“On average, approximately 75 per cent of the overall survey participants chose to cut down on shopping in an effort to counter the impact of inflation,” it said.
The research firm pointed out that csentiment (index fell to under 100 points) was impacted in the past two quarters due to the forthcoming GST and potentially more subsidy cuts.
“Due to the government’s more aggressive cuts in subsidies post-election, 50 per cent of the respondents felt that the cost of living was rising too fast and starting to hurt. 56 per cent of the respondents said that they will cut down on spending even prior to the implementation of GST in April 2015,” CIMB Research highlighted.
“This does not bode well for the retail REITs as it would directly impact the shopper traffic in malls. While this is a cause for concern, we note that most of the retail REITs are well aware of the impact of GST on their shopper traffic,” it commented.
“Another trend that we see in the survey that would pose challenges to the malls in the future is the rise in internet shopping.
“The survey results clearly indicate that internet shopping is on the rise. The younger the age group, the higher the proportion of participants favouring internet shopping; which are 2.5 per cent of the respondents aged above 51 years old listed internet as the retail channel they spend most on versus 14.3 per cent of those aged below 30 years old,” it explained.
“The clear trend indicates that internet shopping will continue its growth path as newer generations join the workforce.
“Furthermore, the items that participants typically purchase from the internet are mainly apparels and accessories, which are typical items that consumers usually visit shopping malls for,” CIMB Research opined.