KUCHING: Malaysia’s retail sector could get a leg-up from the upcoming Hari Raya Aidilfitri and the possible election campaign set to begin in the second quarter of 2018 (2Q18).
According to the research arm of MIDF Amanah Investment Bank Bhd (MIDF Research), pre-election goodies will further encourage consumers to spend.
“On a broader note, we expect retailers to benefit from improvement in consumer sentiment, and strengthening of ringgit,” it said in a sector outlook recently.
However, it said these factors could be partly mitigated by the influx of competing retail outlets, and intense pricing war between retailers as observed by the continuous drop of clothing and footwears’ prices on year-over-year.
As for the performance of shopping malls, t shopping mall operator Aeon Co (M) Bhd (Aeon Co) – which is opening its branch in Kuching soon – is in a better position to react to the latest consumer trend.
“Despite operating in a similar retail sub-sector, Aeon Co’s better performance was partly due to its competitive advantage as a shopping mall operator as oppose to a pure departmental store player like Parkson.
“This enables the group to react faster to the latest consumer shopping trend and spending behaviour as it has the ability to influence tenancy mix in its shopping mall,” it explained.
It noted that the group has already been actively refurbishing, rezoning the layout and bringing in fresh tenant mix for its older shopping malls such as AEON Taman Maluri.
“In addition, Aeon also operates supermarket, pharmacies (AEON wellness), flat-price shop (DAISO) and premium supermarket (AEON Maxvalu),” it added.
Meanwhile, for 4Q17, MIDF Research noted that the overall Malaysia retail industry sales grew by 3.1 per cent y-o-y due to seasonality factor.
“The recent data compiled by Retail Group Malaysia (RGM) revealed that Malaysia retail industry recorded growth of 3.1 per cent y-o-y in the 4Q17 which mostly due to the Christmas and year-end sales.
“This is an improvement from the negative 1.1 per cent y-o-y growth recorded in the immediate previous quarter,” it said.
Nevertheless, it pointed out that the sales growth came in below the expected 4.5 per cent y-o-y growth. Dissecting further by retail sub-sectors, departmental stores with supermarket and fashion and fashion accessories recorded performance above expectation at 2.3 and 7.8 per cent y-o-y growth respectively.
Meanwhile, pure departmental stores recorded a decline in sales of 0.4 per cent y-o-y which is in contrast to the estimated 9.3 per cent y-o-y growth.
All factors considered, MIDF Research maintained its ‘neutral’ stance on the sector as it expected the outlook to continue to be challenging in view of intense competition on the local front.