MCO sparks retail market bloodbath in 2Q, could drag sales down by 9.3% in 2020 — report

KUALA LUMPUR (Sept 2): Retailers in Malaysia recorded their worst-ever quarterly performance in the April to June 2020 period, with sales contracting by 30.9% as the movement control order (MCO) forced a majority of retailers to remain shut for a prolonged period during the quarter.

The contraction was worse than expected by retailers, who had estimated their sales to shrink by 28.8%.  Following this second straight quarterly sales contraction, poorer sales and the extension of the recovery MCO (RMCO) until Dec 31, retail sales for the year are now expected to contract by 9.3%, more than the 8.7% projected earlier.

The contraction in the April to June 2020 period was far worse than the country’s economy, which saw second-quarter (2Q) gross domestic product (GDP) shrink by 17.1%.

“This year has been the worst period for retailers in Malaysia since 1987. The retail market turned into a bloodbath since the middle of March with the implementation of the MCO,” the Malaysia Retail Industry Report (September 2020) released today said. The report was compiled by Retail Group Malaysia (RGM) on behalf of the Malaysia Retailers Association (MRA).

The retail sub-sectors that were worst hit included the department store category, such as retailers like Parkson Holdings Bhd whose sales shrank by 62.3%, followed by fashion and fashion accessories stores whose sales fell by 44.2%.

Fashion retailers in Malaysia that have shut down over the past few months included Germany-based Esprit, which has closed all stores, and US-based NYX Cosmetics.

Meanwhile, sales at specialty retail stores shrank by 40.9%. These are stores that sell items like toys, photographic equipment and opticals, which had been performing well over the years.

The department store cum supermarket category declined by 34.6%. AEON Co (M) Bhd, for example, swung into a net loss of RM9.56 million for the period.

The pharmacy and personal care segment, which was allowed to open throughout the MCO period for consumers to pick up medical supplies, also saw retail sales contract by 26.2%. This retail segment has not been immune to the impact of Covid-19 as it saw outlets within malls experiencing the biggest decline in sales during the MCO period, while many retail pharmacies had to shut to cap losses.

Meanwhile, the supermarket and hypermarket category — which was also allowed to operate as usual to sell essential goods — contracted by just 9.9%.

Retail data tabulated by RGM does not include big-ticket items such as cars and houses. The data also does not include retail sales concluded via mobile phones or computers unless they are shopping sites of brick-and-mortar stores.

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