Political stability, economic certainty keys to retail sector revival
Driven by continued global uncertainty, including a potential escalation of the Russia-Ukraine War, tension in the Taiwan Strait and a prolonged sell-down in most bourses; retailers are expecting a difficult year ahead.
This insight follows SAMENTA’s two recent surveys, a Mid-Term State of the SMEs Survey in July in partnership with Affin Bank and a September survey on Retail Outlook and Predictions 2023.
“Our retail sector is seeing a rapid recovery since the re-opening of the economy. In August, for example, sales value climbed year-on-year by 34.5 percent to RM 57 billion. Almost everyone surveyed are bullish about the rest of 2022,” said Datuk William Ng, chairman of Small and Medium Enterprises Association of Malaysia (SAMENTA).
“However, when asked about prospects for 2023, most respondents were far less optimistic. 2 out of 3 retailers expect a drop in both sales value and volume. This is primarily driven by political and economic uncertainty, increase in the Overnight Policy Rate (OPR) and normalisation of ‘revenge shopping’ post-pandemic,” Ng added.
“Our retailers, especially the SMEs, are facing a quadruple whammy of downward pressure on sales, slower than larger firms’ recovery, a rapid increase in costs and severe shortage of workers. This is not only hampering growth and recovery, but is debilitating to our quest to have vibrant retail sector as one of the cornerstones of our economy,” he said.
Ng explained that SAMENTA is working with the government including the Malaysia Productivity Corporation (MPC) and Malaysia Digital Economy Corporation (MDEC) to help support affected SME retailers to digitalise, improve their productivity and cushion their labour and costs issues.
These include initiatives such as the SME Digital Transformation and Productivity Programme launched in partnership with MPC to transform 1,000 SME retailers into digital-ready and digital-first businesses.
“Typically, we will prefer if businesses are left alone – to compete fairly. But these are unusual times, and we will need quick government intervention to rebuild consumer (and trade) confidence, contain costs pressure and ease the labour crunch,” Ng said.
Ng was speaking at the SAMENTA Retail Outlook Forum held at Menara KLK in Petaling Jaya today. Also present was Timothy Liew, SAMENTA’s chairman for retail and food and beverage and over 50 SME retailers and F&B operators.
Formed in 1986, SAMENTA is Malaysia’s oldest and largest association for small and medium enterprises.
