Retail sector will reel from control order, warns group

Some retailers have reported a drop in business of as much as 80% since January as the Covid-19 outbreak takes a toll on the economy.

PETALING JAYA: A retail group warns that Putrajaya’s movement control order (MCO) to curb the spread of Covid-19 will have a severe effect on the sector, with ripples likely to continue even after the order has been lifted.

Retail Group Malaysia said the MCO, which will remain in effect until the end of the month, would see shopping centres, retail shops, cafes and restaurants closed.

Its managing director Tan Hai Hsin said the control order would also affect the cash flow of retailers in maintaining their businesses, especially those who own small businesses, as well as their ability to pay their staff at the end of the month.

“The retail sales growth rate for the first quarter of 2020 may fall into the double-digit red zone,” he told FMT, adding that the decline in number of shoppers had been obvious since the second wave of the virus struck in late February.

He warned that the partial lockdown would also affect those who depend on foreign tourists, predicting that Malaysia would see zero foreign tourist arrivals in the month ahead.

“As a result, we may expect the closures of some retail shops in tourist-dependent areas in the next two months.”

He added that some retailers, mainly in the KLCC, Bukit Bintang and Chinatown areas as well as resort islands, had already reported a drop of as much as 80% since January.

Even after the MCO ends on March 31, he said, it would take the sector some time to get back on its feet as consumer spending is expected to take two to three months to recover last year’s buying momentum.

Even grocery stores and pharmacies which have enjoyed higher sales in the last month might experience a dip after March as consumers would have stockpiled supplies, he said.

Meanwhile, other retail sub-sectors including fashion, electrical and electronics and furniture might not be able to gain back losses incurred during the last two months.

“This is because the disposable income of many Malaysians has been affected due to the Covid-19 outbreak.”