Magazines Archives - 2012 January

Retail Outlook 2012
Story 4 - Focus

Malaysia’s retailers take a realistic look at the year ahead

Retail Group Malaysia’s Tan Hai Hsin: “Malaysian consumers will be cautious in their spending because they are worrying about their future job prospects.”

The current Eurozone debt crisis and the potential US double-dip recession will affect Malaysia’s retail performance in 2012, says Tan Hai Hsin, managing director of Retail Group Malaysia. He added that a declining export market would affect the employment market. “When the export-oriented manufacturing sector slows down due to low external demand, it will lead to retrenchment. Some Malaysians will be out of jobs this year, many will not get salary increments and graduates will not be able to find jobs. All these will affect consumption.” Furthermore, Tan notes, the uncertain world economy will indirectly affect the general population. “Malaysian consumers will be cautious in their spending because they are worrying about their future job prospects. They will wait for sales before they buy. They will look out for value-for-money promotions.”

The cost of retail goods is also expected to rise despite weak demand. This is due to the rising cost of raw materials and increasing transportation cost. This will continue to affect the purchasing power of Malaysian consumers next year, Tan explains.

“Bank Negara of Malaysia (Central Bank of Malaysia) estimates its national economy will grow between 5% and 6% this year. For us — Retail Group Malaysia — the retail industry is estimated to grow at 6% in 2012,” he continues.

“As compared to 2010, retail business has dropped. In 2010, the growth rate of the retail industry was 8.4%,” says Tan, noting that the estimated growth for last year is 6.5%.

Philippines’ retail all set to hum along

Retail Group Malaysia’s Tan Hai Hsin: “Malaysian consumers will be cautious in their spending because they are worrying about their future job prospects.”

According to Johnson Go, general manager of Robinsons Department Store, 2011 was a very good year for the group under the Gokongwei group of companies, and the retail network sees another “dynamic and spirited” year ahead, primarily due to expectations that foreign and local investors will increase their investments in the Philippines this year.

“2011 was a good year for Robinsons Department Store. Coming from a recordbreaking performance during an election year in 2010, business did well last year, with sales going beyond aggressive projections,” says Go.

As such, Robinsons expects 2012 to be similarly good for the company. Thus it is preparing to take advantage of that growth by continuing to strengthen its organisational structure and invest heavily in information technology to cope with expansion.

Aside from strengthening its internal systems, Robinsons, which has 32 branches nationwide, is also expanding its line of private labels to capitalise on demand for affordable fashion choices and quality household products. It is also modernising its stores so that shopping becomes an enjoyable experience rather than a chore.

Such a growth expectation has prompted the Robinsons group to continue looking for more areas to open retail outlets, both in the Philippines’ Metro Manila and in suburban areas with yet untapped retail markets.

There is increasing purchasing power in the provinces because of remittances or money sent home by Filipinos living and working overseas. Every year, over US$20 billion in remittances are sent to the Philippines and a good chunk of that money finds its way to the families in the provinces, thus providing a market for new malls and retail concepts.

Singapore retailers remain positive despite potential slowdown

Singapore’s retailers are taking a pragmatic stance, scaling down their expectations for the new year to “cautiously optimistic” in line with the country’s projections for a slower economic growth, reports Jolene Klassen.

Projections of a slower economic growth in Singapore this year have led retailers here to revert to their “cautiously optimistic” outlook, as they look forward to higher tourist arrivals and improving consumer sentiment in the city-state.

With the continued uncertainty in the Eurozone and the US, Singapore’s economy is expected to slow down this year, according to forecasts released by the Ministry of Trade and Information. Gross domestic product (GDP) growth for 2012 has been projected to range between 1% and 3%, while recent estimates released earlier this month revealed that the local economy contracted in the fourth quarter of 2011, slipping nearly 5% from the previous quarter after seasonal adjustments.

However, lending a silver lining to an otherwise gloomy forecast is a 3.6% year-on-year GDP growth in 2011 from 2010. Additionally, the latest figures by the Singapore Department of Statistics reflected a retail sales growth of 8.6% last October, excluding car sales.

King & King Wong, which opened its first outlet at the nex mall in the north-east suburb of Singapore, has since garnered close to 7% of the market share.

Meanwhile, tourism receipts surged 12% year-on-year, reaching S$6 billion (US$4.65 billion) in the third quarter of 2011, with a 15% jump in visitor arrivals to 3.5 million, the Singapore Tourism Board (STB) disclosed.

In a bid to boost visitor arrivals to the city-state, the STB has also launched a targeted initiative called “New Discoveries”, to reach out to consumers in various key markets across the region and target their needs rather than simply promote a destination.

Looking forward to the growth in tourist arrivals is consumer electronics and IT retailer, EpiCentre Holdings Ltd, which has stores located along the prime shopping district of Orchard Road and in the Marina Bay area.

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