Tuesday 28 May 2024
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This article first appeared in The Edge Financial Daily on June 6, 2017

KUALA LUMPUR: For the second year in a row, Malaysia came in third spot among 30 developing countries for worldwide retail expansion in the 2017 Global Retail Development Index (GRDI), after China and India, according to the latest survey by A T Kearney.

The global management consulting firm said Malaysia’s high ranking is driven by an influx of tourists, higher disposable income and government investments in infrastructure, all of which have provided a boost to the retail industry.

“Malaysia’s retail market continued to grow despite a slight dip in overall gross domestic product growth and short-term pressures of currency fluctuation and inflation. The long-term prospects of the sector continue to remain strong,” it said in a statement yesterday.

The GRDI, now in its 16th edition, analyses 25 macroeconomic and retail-specific variables. The study is unique in that it not only identifies the markets that are most attractive today, but also those that offer future potential, said A T Kearney.

“Malaysia’s successful performance in this year’s index is consistent with the increased interest foreign retailers are showing in this market, in both traditional and online channels. Aggressive moves are being made into the convenience segment by companies such as Japanese retailer AEON Co (M) Bhd, which is set to triple its number of stores in Malaysia to 150 within the next three years,” said A T Kearney partner and head of Southeast Asia, Soon Ghee Chua.

He pointed out that FamilyMart Malaysia is aiming to open 1,000 stores by 2025 and 7-Eleven also plans to expand. “Guardian opened its first concept store in Kuala Lumpur City Centre in November 2016 and it plans to open 30 more stores and refurbish 70 stores this year,” he added.

Soon also noted that Malaysia’s online retail is expected to grow at 23% per year through 2021, driven by electronics and media.

“The growth in online retail, along with the rise in mobile phone adoption across the nation, will continue to provide momentum to the sector’s growth and attract further investment.

“The government’s continued efforts to position Malaysia as a hub for cross-border e-commerce is another factor that is playing an important part in Malaysia’s retail growth story,” he added.

A T Kearney noted that retail sales in Malaysia grew by 3.8% in 2016, driven in large part by a 6.1% increase in private consumption. This was despite the headwinds of a depreciating currency and the 2015 rollout of the goods and services tax.

“Tourism is a cornerstone of the government’s long-term growth plan, and the number of tourists is projected to grow from 26 million in 2016 to 36 million by 2020. The numbers are expected to be boosted by Chinese travellers, who have been granted visa-free entry since March 2016,” it added.

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