Nelson Kwok, who formerly headed the Malaysia Retail Chain Association, said people were no longer spending as much as before, with one reason being because they are more careful with their money.
“They buy only what is necessary, or when prices hit rock bottom or there are extras like buy-one-free-one,” he told FMT.
Kwok’s observation seems to be in line with that of retail tycoon Ameer Ali Mydin, who owns the Mydin Hypermarket chain nationwide.
Ameer, whose company ceased operating the subsidised Kedai Rakyat 1Malaysia budget marts, recently said that consumers could no longer afford to spend like they used to.
He said consumption was largely about basic goods.
“I think people just don’t have the money,” Ameer said.
Ameer’s views were dismissed by Abdul Rahman Dahlan, the minister in charge of the Economic Planning Unit (EPU) at the Prime Minister’s Department, who said private consumption continued to be the biggest contributor to Malaysia’s economy, taking up more than half of the national GDP.
“Retail trade in the first 11 months of 2017 increased to RM410.5 billion from RM367.7 billion in the same period for 2016 – a growth of 11.6%,” said Rahman.
Kwok, meanwhile, said that consumers being more careful with their money had been the trend for the past two years.
He said retailers at malls were hoping the momentum would pick up over the last few days before Chinese New Year, with price drops and promotions.
“After Chinese New Year, sales will go down again until they pick up during another festival,” he added.
Kwok said a similar trend could be seen in the food and beverages sector.
He said many people were now eating at cheaper restaurants or hawker centres in an effort to cut costs.
“There seems to be a shift in spending. Those days, people would spend on high-end restaurants. Now, they are being cautious.”
To deal with the drop in sales, Kwok said, many retailers had been forced to cut down on manpower to reduce overheads, and had trained their staff to multitask.
“Those days, if workers are employed to do sales, they would just do sales work. But now they will have to clean, too. That saves the company RM55 a month.”
Companies were also cutting down on electricity bills by installing fewer spotlights and using more energy-saving bulbs, he said.
“It is now a matter of survival of the fittest,” he added.
With more shopping malls sprouting across the Klang Valley, Kwok said retailers were spoilt for choice in terms of location.
But he advised them to diversify their method of selling goods in order to survive, even if it meant leaving their comfort zone.
“They will have to look at other Asean markets, and sell their products on the internet to capture a wider market,” he said, comparing the region’s 600 million population with Malaysia’s 30 million.
Rahman: Mydin boss wrong on ‘weak spending power’ of M’sians