The omicron wave has hindered the retail industry's revival in Malaysia, but retailers are confident about a recovery this year, according to Retail Group Malaysia (RGM) managing director Tan Hai Hsin.
As a result of the omicron wave and Covid-19 developments in recent weeks, Tan said the future of the retail industry has become questionable.
"On February 11, when daily positive instances reached a new high of 20,000, Malaysian consumers became concerned about the increased risk of viral infection. Although the country's largest retail malls are still packed on weekdays and weekends, car traffic has gradually decreased as daily cases have stayed above 20,000.
"A large number of daily positive cases and rising hospitalisation rates are concerning. This fourth-wave virus pandemic is haunting Malaysian retailers again," he said.
Furthermore, the delay in reopening international borders for all nations has dampened foreign tourists' entry into Malaysia, he said.
Malaysia's foreign tourist admittance restrictions, he claimed, are inconvenient and hinder leisure travellers from other countries.
According to Tan, this has had an impact on retail businesses that rely on foreign leisure travellers.
The good news is that on April 1, Malaysia will reopen its borders to international travellers.
Malaysian merchants have a bullish outlook
Malaysia Retailers Association (MRA) and Malaysia Retail Chain Association (MRCA), according to RGM's latest Malaysia Retail Industry Report (Q1 2022), expect the Malaysia retail industry to grow by 16.5 per cent in Q1 2022 due to the Chinese New Year festival and further relaxation of SOPs.
The industry is expected to increase at a rate of 4.2 per cent in Q2 2022, owing mostly to the Hari Raya event.
Due to a low base in the previous quarter and the fact that Malaysia would have entered its endemic phase of Covid-19, Q3 2022 growth rate is expected to be 3.4 per cent.
Following a strong performance a year ago, the industry expects a 3.6 per cent growth rate in Q4 2022.
Members of MRA and MRCA were interviewed on their retail sales performances for the entire year of 2021 and Q1 2022.
The Malaysian retail industry experienced a promising growth rate of 26.5 per cent in retail sales in Q4 2021, compared to the same time in 2020.
Tan said the most recent quarterly result exceeded market expectations. MRA and MRCA members forecasted an 18.3 per cent fourth-quarter growth rate in November 2021.
Despite strong growth in the last three months of the year, the industry as a whole decreased by 2.3 per cent in 2021.
The dismal sales performance in the first nine months of 2021, according to Tan, pulled down overall growth.
He said the sales turnover created in the last three months of 2021 was insufficient to make up for the previous year's significant losses.
This year, department store and supermarket operators anticipate retaining their recovery momentum in Q1 2022, with a growth rate of 28.2 per cent.
"Department store owners expect their businesses to increase at a rate of 29.9 per cent in Q1 2022. The supermarket and hypermarket sub-sector, on the other hand, expects a six per cent drop in sales in Q1 2022," Tan remarked.
Operators of mini-markets, convenience stores, and cooperatives anticipate a 9.5 per cent growth rate in Q1 2022.
Tan said that based on the report, merchants in the apparel and fashion accessories sector will have another robust recovery in Q1 2022, with a growth rate of 34 per cent over the same time a year ago. "This retail sub-sector is expected to increase at the fastest rate for the next three months once again," he said.
Retailers of children's and baby products anticipate a 14.3 per cent increase in sales in Q1 2022, while pharmacy operators hope for a 12.3 per cent increase in retail sales.
Furniture and furnishing, home improvement, and electrical & electronics operators, according to Tan, anticipate retaining their growth pace in Q1 2022, with a growth rate of 14 per cent.
The specialty stores sub-sector, which includes picture shops, fitness equipment stores, second-hand goods stores, store retailing musical instruments, and TV shopping, is expected to be the weakest performer among retail sub-sectors in Q1 2022.
This sub-sector is less bullish, expecting their businesses to fall by 19.2 per cent Q1 2022, Tan said.