Retail industry remains vibrant, says Pemandu

KUALA LUMPUR (Oct 13): Despite the apparent weak consumer sentiment since the implementation of the goods and services tax in April last year, the Malaysian retail scene remains energetic with more global brands getting a foothold in the country, said the Performance Management and Delivery Unit (Pemandu).

The local retail sector continues to be vibrant as Malaysia is still attracting international retail chain operators, like Abu Dhabi-based LuLu Hypermarket, to open new stores in the country, said Pemandu director of wholesale and retail division Ravindran Devagunam (pictured).

“We have already got LuLu Hypermarket [and] several other large shopping malls; more and more will be coming up. Clearly, the retail scene in Malaysia is very vibrant right now. Despite whatever negative elements out there, we seem to be doing quite well,” he told a press conference at the Retail Congress Asia Pacific yesterday.

Held in Kuala Lumpur for the first time, the two-day event enables retailers to discuss innovative approaches to a rapidly shifting marketplace in Asia, especially in the face of disruptive digital technologies.

Ravindran said domestic consumption continues to be the main driver of the Malaysian economy, contributing more than 60% of the country’s gross domestic product.

“If you visit any of the malls across [the] Klang Valley or [in] any part of Malaysia during the weekends, it’s overflowing to some extent. The food and beverage (F&B) outlets are full, and you will notice that there’s consumer spending actually,” he said.

“We have got many luxury brands as well as other brands that are doing very well in Malaysia. In the F&B scene, anywhere from high-end F&B to mamak or teh tarik stalls, we are thriving. At any given time, you see vibrance happening in the shopping malls,” he said.

Ravindran also highlighted that in 2016, Malaysia is ranked third globally in AT Kearney’s Global Retail Development Index report in terms of retail investment.

“Although Malaysia’s retail market is facing challenges with both a slowing economy and a depreciating currency, investor confidence is still high, with more than 16 million sq ft of retail space being developed over the next few years. Established foreign retailers as well as the local private sector continue to invest in Malaysia,” he said.

Ravindran said the next big thing for local retailers is to improve their Internet sales from online shopping, as the consumer confidence has come back.

“If you look at the Internet space, the Malaysian e-commerce [market] is [worth] close to about US$1 billion (RM4.18 billion). It is expected to grow more than 23% year-on-year in the next five years, to reach about US$2.5 billion by 2021,” he said.

Commenting on Amazon.com Inc’s plan to build brick-and-mortar convenience stores, as well as to develop kerbside pickup locations for food shoppers, Ravindran said this would push traditional retailers to raise their game.

“When someone like Amazon is moving into groceries retail, it is time for the rest of retailers to actually get on with it and start reducing the prices. And if Amazon does come in here, the existing Malaysian retailers, be they local or international brands, will have to step up their game to improve the supply chain and start bringing down the prices of end products,” he said.

Citing unnamed sources, The Wall Street Journal reported on Tuesday that Amazon stores will sell perishable goods, including milk and meats. The Seattle-based e-commerce giant will also build drive-in locations for consumers in a rush where online grocery orders will be brought to the car, the newspaper said.

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This article first appeared in The Edge Financial Daily, on Oct 13, 2016. Subscribe to The Edge Financial Daily here.