Malaysian retailers are expected to perform better this year, despite the woes in Europe and the United States.

Overall, retailers ranging from groceries to jewellery and clothing to furniture, are expected to chalk-up a total of RM82 billion in sales this year, following an upward revision of 0.5 per cent for the year to 6.5 per cent sales growth.

Managing director of Retail Group Malaysia Sdn Bhd (RGM), Tan Hai Hsin, said the upward revision comes following a better-than-expected showing in the April to June 2011 period, where sales grew by 9.1 per cent, bringing the first half growth to 8.2 per cent.

According to Tan, should inflation be taken into account, the actual retail growth would stand at three per cent for the year.

The high single digit in the second quarter was a result of retailers offering attractive discounts to lure shoppers. However, as retailers continued to absorb rising costs and offer discounts, they also saw this impacting their profits.

The quarterly retail data tabulated by RGM for the Malaysia Retailers Association (MRA) does not take into account big ticket items like houses and cars.

The third and fourth quarters of 2011 are expected to see a seven per cent and a five per cent growth in retail sales, respectively.

“The rest of the year remains very challenging for Malaysian retailers. While consumers continue to be prudent in their spending, they are also facing declining purchasing power.

“At the same time, retailers are facing continuous surges in both cost of goods and cost of operation,” Tan said in the latest Malaysian Retail Industry report.

The report, which focused on the second quarter retail sales, saw the fashion and fashion accessories segment grow by 15.3 per cent, followed by specialty stores (such as photographic equipment, optical products and sportswear).

The department store cum supermarket segment grew by 8.8 per cent but suffered from lower profit due to rising cost of raw materials, mainly in the food division.

The department store category rose 8.6 per cent in the second quarter compared with a year ago, which translated to healthy profit for the quarter.–BTimes