PETALING JAYA: Reduced consumer spending, coupled with overall uncertainties about the economy, have contributed to a slump in the retail tech sector this year, the National Tech Association of Malaysia (Pikom) said.
Pikom chairman Ong Chin Seong said the prevailing sentiment has been to save, with customers spending only out of necessity.
“Consumers are worried about how the situation abroad, such as the collapse of banks, as well as the Russia-Ukraine war, affects Malaysia.
“As it is, banks are increasing their interest rates, impacting the monthly repayment of loans, which directly decreases the spending power of the consumer,” Ong told FMT.
In 2022, Bank Negara Malaysia (BNM) raised the overnight policy rate (OPR) by 100 basis points between May and November.
Steady increases in the OPR have followed surging inflation, brought about mainly by the Covid-19 pandemic and the Russia-Ukraine conflict.
On May 3, BNM raised the OPR by another 25 basis points to 3%.
Despite a temporary uptick in sales during the Chinese New Year and Hari Raya festive seasons in Q1 2023, Ong said customer spending habits have changed, with many now spending only on necessities, and forgoing “nice-to-have” extras.
“It makes the consumer less likely to buy new items like mobile phones and computers unless they really need a replacement.
“Another increasing trend is the establishment of retail stores selling refurbished computers and second-hand electronic items.
“There is a high demand for these items among the mid- and lower income groups,” he said.
Meanwhile, Scott Lim, 37, a phone retailer at Digital Mall in Petaling Jaya said sales in 2023 had dropped by 40% compared to last year, citing low currency exchange rates and stagnant salaries as potential causes.
“There are still some customers buying flagship models, but most of them are choosing budget phones instead because they don’t want to spend so much money,” said Lim.
Sanjivii Thevan, 29, an Oppo phone retailer, also admitted to a “huge drop” in sales.
“Every month, for you to consider it a good sale, (the outlet) should at least make RM70,000, but we have been struggling to hit (the target). We’ve been hitting RM50,000, which is low, … I would say for two months now. And then maybe this month will also make it three,” Sanjivii told FMT.
Reven Raj, 25, who works at PC Image, a computer store, said sales have been down since April.
“It dropped, from my estimate, 75-80%,” he said.