Malaysia's 1Q retail sales growth worse than expected at 3.7%, association cuts full-year forecast

KUALA LUMPUR (June 12): Malaysia's retail sales grew 3.7% in the first three months of the year compared to the same period in 2025, according to Retail Group Malaysia.

The result, however, fell short of market expectations, as members of the Malaysia Retailers Association (MRA) and Malaysian Retail Chain Association (MRCA) had forecast a 4.4% growth rate in March 2026, according to a statement.

The first quarter also saw the celebration of the country's two largest festivals: Chinese New Year in February, followed by Hari Raya Aidilfitri from March 21.

Consequently, the retail association cut its projection for the annual growth rate of retail sale in 2026 from 4.0% to 3.8%, taking into account the current and likely negative impacts on the purchasing power of Malaysian consumers since the outbreak of the Middle East war.

The first quarter featured Chinese New Year in February and Hari Raya Aidilfitri from March 21, alongside government cash handouts totalling RM4.6 billion that sustained retail spending.

Phases 1 and 2 of Sumbangan Tunai Rahmah (STR) distributed RM2.4 billion to five million eligible Malaysians, while a one-off RM100 Sumbangan Asas Rahmah (Sara) payment amounting to RM2.2 billion reached 22 million people.

Despite Middle East tensions, Malaysia attracted 10.65 million foreign tourists in the first quarter, making it Southeast Asia's most visited country for the second straight year.

Retailers expect an average growth rate of 4.8% in the second quarter of 2026, primarily due to a low base effect. This follows a 3.0% decline in Malaysia's retail industry during the same period a year ago.

Mixed performance across sub-sectors

The sales performances of retail sub-sectors during the first quarter were mixed.

Despite the two major festival celebrations, the department store cum supermarket sub-sector recorded a negative growth rate of 1.0%.

The department store sub-sector achieved a near-zero growth rate of 0.3% in terms of sales, while the supermarket and hypermarket sub-sector reported a marginal growth rate of 1.4%.

The fashion and fashion accessories sub-sector achieved a promising growth rate of 4.2%. The pharmacy sub-sector saw sales rise by 4.2% as compared to the same quarter a year ago.

On the other hand, the personal care sub-sector suffered another decline in sales, contracting by 0.7%.

The furniture & furnishing, home improvement as well as electrical & electronics sub-sector enjoyed an uplifting performance, growing by 9.3% in sales — the highest growth rate achieved among the retail sub-sectors during this quarter.

Meanwhile, other specialty stores sub-sector recorded a 16.5% drop in sales during the first quarter, making it the worst performing retail sub-sector during the quarter.

..........

Read about emerging trends, data-backed insights, growing subsectors, and expert commentaries in EdgeProp print. Subscribe now for your free copy!