Retailers expect difficult 2023 from political, economic uncertainties

KUALA LUMPUR, Oct 28 — Retailers are expecting a drop in business in 2023 despite recording a recovery this year, according to two surveys conducted by the Small and Medium Enterprises Association Malaysia (Samenta).

In a statement today, Samenta Chairman Datuk William Ng said that the negative outlook is caused primarily by political and economic uncertainties, an increase in the Bank Negara Malaysia’s overnight policy rate (OPR), and reduction in "revenge shopping” in recent months.

"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 per cent to RM57 billion.

"Almost everyone surveyed is bullish about the rest of 2022.

"However, when asked about prospects for 2023, most respondents were far less optimistic. Two out of three retailers expect a drop in both sales value and volume,” he said.

The two surveys Ng referred to are Samenta’s "Mid-Term State of the SMEs Survey” — conducted in July in partnership with Affin Bank — and a September survey titled "Retail Outlook and Predictions 2023”.

"Revenge shopping” is a term used to describe the act of people aggressively spending after a period of frugality, such as in the case of over two years of Covid-19 induced lockdowns.

Ng added that other factors for the tough year ahead include continued global uncertainty, such as a potential escalation of the Russia-Ukraine War, tensions in the Taiwan Strait and a prolonged sell-down in most stock exchanges.

"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 a vibrant retail sector as one of the cornerstones of our economy,” he said.

Ng also said that Samenta is working with government agencies, including the Malaysia Productivity Corporation (MPC) and Malaysia Digital Economy Corporation (MDEC), to help support affected SME retailers to go digital.

This includes initiatives such as the SME Digital Transformation and Productivity Programme, done in partnership with MPC, which Ng said would improve the SMEs productivity as well as cushion their labour and costs issues.