Kuala Lumpur Retail 1H/2021

CURRENT SITUATION

Total retail sales increased by 1.6% year on-year (YoY) to RM134.92 billion in the first three months of 2021, according to the Department of Statistics Malaysia. The increase was mainly attributable to the retail sales of automotive fuel in specialized stores, household equipment and other goods in specialized stores such as clothing, footwear, and pharmaceuticals & medical goods. This was driven by consumers’ extra disposable income derived from the Malaysian government’s financial assistance programmes, i-Sinar and i-Lestari. Compared to the first three months in 2019, which was before the first Movement Control Order (MCO), total retail sales showed a higher growth of 3.7% (YoY).

Since the lifting of the MCO in early of 2021, shopper traffic in major and suburban malls have returned to pre-pandemic levels. Cafes and restaurants experienced good crowds of dine-in customers. However, sales of all other retail categories still struggled due to the reduction in household incomes which resulted in lower purchasing power. The physical distancing laws also reduced entry capacity, which somewhat affected the retailers’ sales as well.

Nevertheless, the continued increase in the number of COVID-19 cases recently forced the government to reimplement its third lockdown, now known as MCO 3.0. Malaysia was placed under the first phase of a full lockdown for the course of two weeks, from 1 to 14 June, 2021. During the period, all sectors are not allowed operate except for essential economic and service sectors. Restrictions were also observed on operating hours, dine-ins, carload limitations and travel restrictions. This is expected to further affect the sales revenue of the retailers as many people have refrained from going to public places such as shopping malls. Retail segments that will continue to suffer would be the fashion and entertainment category that include cinemas and family indoor entertainment. With the ongoing restriction on dine-ins, F&B outlets are expected to be severely affected.