Fitch Solutions Country Risk & Industry Research has reported that the Covid-19 pandemic and subsequent movement control order (MCO) period has spurred the growth of several new consumer trends. These include consumers’ preference for specialty stores when purchasing priority goods, increased investment in homes, and the rapid development of e-commerce.
With regard to consumers’ focus on specialty stores, Fitch Solutions quoted data from the Department of Statistics that indicated a 3.4% year-on-year growth in June for specialty stores selling food, beverages, and tobacco products. Meanwhile, retail sales at non-specialty stores declined by 1.2% during the same period.
“We believe this is Malaysia consumers prioritising their basic essentials, making the conscious choice to avoid crowded supermarkets (where goods may be relatively cheaper) and choosing specialty grocery stores to do their shopping. This trend will continue over the short term, as Malaysian consumers choose to limit their exposure to crowded areas,” said the research house.
Aside from that, Fitch Solutions also said that Malaysia is likely to follow a global trend where consumers invest more in their homes now that they are required to stay in for longer periods. The entity believes that this consequently encouraged further purchases for household goods.
“The monthly retail sales data for household equipment (a category that includes household goods) remains in contraction in June 2020 at -16.5% year on year, but this marks a considerable improvement and indicates a road to recovery for this segment, when compared to the -48.3% year on year recorded in April,” said Fitch Solutions.
The research house further said that household goods retailers will have to navigate through a tough time in 2020 and during the first half of 2021, but it is likely to see a stronger growth opportunity over the medium term. Fitch Solutions projects an average yearly growth of 6.5% for this segment between 2022 and 2024, citing government incentives and an expanding property market as reasons. First-time homeowners will be key customers for household goods retailers.
Lastly, Fitch Solutions also pinpointed the rapid development of e-commerce as one of the new consumer trends, driven by consumers’ fear of infection from Covid-19 and pandemic-related lockdowns. This was supported by data that showed online retail sales growing by 28.9% year-on-year in April, during the height of the MCO period. It further expanded by 39.3% and 35.5%, respectively, in May and June, despite lockdown restrictions being relaxed.
In addition to noting these new trends, Fitch Solutions commented that despite having shrunk by 9.2% year on year in June 2020, the recent performance of Malaysia’s retail industry has improved significantly in comparison to the previous months. It said that the industry’s June performance indicated some form of recovery following the substantial contraction of 32.4% in April.
(Sources: The Sun Daily)