Retail recovery hits a snag on MCO 2.0

THE retail sector continues to bear the brunt of rising Covid-19 cases and the reimplementation of Movement Control Order (MCO), as more people are forced to stay home unless for necessary purposes.

Retail Group Malaysia MD Tan Hai Hsin said the growth rate in retail sales for 2021 is projected at 4.9%, but it may be lower due to the latest development

“Several factors will change the retail market performance this year, such as a new wave and additional movement restrictions in the coming weeks, which would damage the entire industry.

“Foreign tourists have been an important sales contributor to Malaysia’s retail industry, and the opening of selected country borders by this year is critical for many retail businesses that had been dependent on foreign tourists,” he told The Malaysian Reserve in an interview recently.

Pic by TMR FILE

He also added that uncertain political movement will reduce consumers’ confidence level.

“Lower consumers’ confidence level will lead to lower spending power,” he added.

On Monday, Prime Minister Tan Sri Muhyiddin Yassin announced the reimplementation of MCO in six states.

Subsequently, King Al-Sultan Abdullah Ri’ayatuddin Al-Mustafa Billah Shah had also consented to a proclamation of emergency, aimed to curb Covid-19 spread in the country.

As daily positive cases have been breaking record highs with 3,309 yesterday, Malaysians are discouraged from going to shopping and commercial centres, resulting in more temporary closures of supermarkets and retailers.

Tan said prior to this upcoming development, the group estimated retail sale growth rate to be at -18.2% in the fourth quarter of 2020.

“Our estimate was based on factors including the third wave of the pandemic and the Conditional MCO (CMCO), affecting shopping traffic since the end of September 2020 due to fear of virus.

“Majority of retailers were also unable to operate at full capacity or at pre-Covid-19 level due to limited shoppers, shorter operational hours and such,” he said.

“When the second CMCO started, the general public started to avoid crowded and enclosed places.

“This fear has caused a significant drop in shopping traffic at most of the shopping and commercial centres, and shopping traffic dropped by as much as 60%,” he said.

Several of the popular shopping malls suffered drop in traffic by as much as 90% and although malls remained open, Malaysian shoppers are still reluctant.

Tan said two weeks before Dec 7, shopping traffic began to show improvement — however, it was short-lived due to increasing cases.

“During the last week of December 2020, positive cases stayed at a high level. Malaysians started to worry about the possibility of infection,” he said.

By NUR HAZIQAH A MALEK – TMR

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