Retail performance likely to improve in second half

By Vasantha GanesanPublished: 2009/08/03

Consumer spending is expected to recover in the second half of the year after a contraction in the first half, says Malaysia Retailers Association

MALAYSIAN retailers are likely to perform better this year than initially anticipated as the economy shows signs of recovery, says retail association head Eddy Chan.

Chan, the president of the Malaysia Retailers Association (MRA), said that consumer spending is expected to recover in the second half of the year after a contraction in the first half.

"(Consumer spending in) the first quarter was in the negative territory and we also expect the second quarter to be negative, although the results are not out yet," he told Business Times.

"We anticipate that third quarter retail growth will be flat at worst, before we move into positive territory in the fourth quarter," he added.

While signs are that retail business is improving, Chan is not expecting any major improvement over his earlier projection.

In June, Chan had predicted retail sales to contract by 3 to 5 per cent in 2009, but did not discount the possibility that it could be far worse as some retailers saw their business contract by double digits.

"Economic experts are saying that the worst is over and we are hopeful that the government's various measures will help slightly improve sales," Chan said.

Accordingly, he expects full-year retail contraction to be between 3 per cent and 4 per cent. Retail sales in 2008 grew by 5 per cent.

The last time retail industry sales contracted was during the previous economic downturn in 1998 when they shrank by 20 per cent.

Chan added that retail segments that are holding up or performing better than others are the department stores and hypermarkets.

"The mid-upper brands are still finding it difficult (to survive)," he said, adding that some have converted to lower priced items which have seen the department stores benefitting.

Food retailers like hypermarkets are also enjoying better sales as they are able to be competitive and offer reduced prices.