The Malaysia Retail Chain Association (MRCA), which expects retail sales growth to come in at 4.9% for 2018 in line with the country’s gross domestic product growth, has pointed out that some of its members face difficulties in retailing online amid the push for e-commerce.
MRCA, in releasing its first quarterly retail sales survey for the third quarter (Q3) today, highlighted that online sales make up only 3.9% of its retail revenue.
The sample of respondents for the survey include 10% of MRCA’s members, representing 59 brands and 2,266 stores across a variety of trade categories, including food & beverage (F&B), fashion, health & beauty, supermarket & department stores, entertainment, optical, education, home improvement and more.
MRCA president Datuk Seri Garry Chua said the association constantly reminds members to bring their businesses online and be part of the digital ecosystem, adding that MRCA also has digital membership for players like Lazada, Lelong and 11street, which are all its members.
“We can also work closely with them (digital players) to reinforce and increase the market share for online. We’re confident the (industry) sales from online retail is going to be double-digit growth every year as more brick and mortar retailers go online, as with many start-ups,” Chua said.
MRCA vice-president Datuk Liew Bin said although all members have an online presence, most of its members rely on the brick and mortar model and “survive happily on brick and mortar”, whereby online sales is regarded as a bonus to them.
“With so many years in brick and mortar, it’s difficult for our members to turn to online. This is one of the challenges that our retailers face because (the) online (wave) is coming on strongly. This should be an alert to our members, as 3.9% is still a small figure,” Liew said, adding that MRCA expects online sales to grow 5% next year.
Individually, he said some retailers have seen a 20% growth in their online retail sales.
MRCA projected retail sales growth to grow 6.1% year-on-year in Q4 this year as year-end school holidays and the festive season are expected to bolster consumer spending; while an increase in the number of outlets is also expected to boost sales growth.
It said retail sales grew 5.7% year-on-year in Q3 with the tax holiday between June and August that had encouraged consumers to spend.
In Q2, retail sales grew at a slower rate of 2.1% year-on-year, affected mainly by the general election in May, where consumers held back on spending due to economic uncertainty.
Retail sales grew 5.7% year-on-year in Q1 due to Chinese New Year sales and promotions.
F&B, health & beauty and other retailers reported encouraging growth rate of 5.4%, 3.1% and 21.3% year-on-year respectively. However, fashion retailers suffered a negative growth in Q2 and Q3 at -2.2% and -2.8% year-on-year respectively.