This year's retail sales seen at RM75bil

KUALA LUMPUR: The retail industry in Malaysia is projected to grow by 5.5% this year, according to the Malaysia Retail Industry Report (July 2010) issued by Retail Group Malaysia.

The group also expects a total sales turnover of RM74.9bil this year.

Based on interviews of its Malaysia Retail Association (MRA) members, the industry recorded a positive growth rate of 7.9% in sales during the first quarter of 2010 (Q1), albeit from a low base. Sales in the same quarter last year were down 3.3% due to a decline in consumer demand. However, positive sales growth in Q1 2010 was still below the industry expectation of 10% (at current prices), while the Malaysian national economy continued to expand at a faster pace in comparison during the same period by 10.1% (at constant prices).

Profit margins in the retail industry were only up 2.4% during Q1, although the difficult economic situation during the same period last year had caused a negative growth of 13.7%. In the retail sub-sector, MRA members stated that positive growths were recorded in retail sales during Q1.

Specialty retail stores (for instance those selling optical products, toys, bedding items and sportswear) recorded the highest growth rate at 10.5% and department store cum supermarkets recorded the lowest at 3.9%.

It was a similar story for profit margins in the sub-sector as specialty stores were the biggest growers, improving their figures by 11.2% whilst department store cum supermarkets suffered the most with a decline of 0.3%.

Members of the MRA expect their businesses to improve at a slightly slower pace during Q2 with a growth rate of 7.1%. However, according to the report, Retail Group Malaysia have stated that a growth rate of 3.5% was more likely. This was because sales have started to slow down unexpectedly during Q2.

Q3 sales are also expected to expand by 6% due to the Mega Sales Carnival before maintaining at 3.5% during Q4. The report also stated several factors that would impact the growth of the industry for the second half of the year. These include the economic conditions, cost of living as well as the cost of borrowing.

Retail Group Malaysia is an independent retail research firm in Malaysia.

The report was provided as a service to members of the MRA and the retail industry. Members of the MRA were interviewed on their retail sales performances in 2010 to obtain data for the report.

By ANDREW LEE