By : Vasantha Ganesan

And that does not include purchases of cars and houses. The spending spree is expected to continue this year with total sales projected to hit a whopping RM64,000,000,000…

MALAYSIANS, it appears, are big spenders. And tourists are not too far behind. They splurged close to RM60 billion last year on a variety of goods, sending retail sales nationwide up to the highest level in six years.

Among their favourite purchases were clothes, jewellery, gift sets, electronic goods, foodstuff and sports equipment.

Consumers cited the good economic situation and the holding of mega sales as the main reason for the bigger spending, while retailers said shopping had become a stress reliever for many consumers.

And the shopping frenzy is likely to steam on further this year, according to the Retail Group Malaysia which tabulates quarterly retail data for the Malaysia Retailers Association.
RGM predicts retail sales will grow by eight per cent this year, with the total sales value of goods surpassing RM64 billion.

Last year, improved consumer confidence and better economic sentiment spurred retail sales by 8.4 per cent to RM59.5 billion. In 2005, the spending amounted to RM54.9 billion.

"The mega sales carnival and discounts offered on a larger number of items helped attract consumers who were otherwise holding back on their expenses following the fuel price increase in February last year," RGM managing director Tan Hai Hsin said.

"Despite the haze in October and the severe floods in Johor in December, retailers managed to stimulate consumer spending with heavy price discounts and attractive promotional activities.

"The strong performance in Malaysia’s stock market at the end of the year, to a certain extent, did boost retail spending. The recent pay rise of more than one million civil servants may stimulate, to some extent, retail spending during the year," Tan said.

Except for retailers located at tourist zones, retailers in Malaysia are generally dependent on the domestic market for sales growth, as the locals account for up to 90 per cent of total revenue.

However, there is likely to be a shift in this trend this year, as a higher contribution is anticipated from tourists.

Tourism Malaysia has projected that Malaysia will receive at least three million more tourists this year in conjunction with the Visit Malaysia Year 2007.

Last year, tourists spent RM36.2 billion in Malaysia. This year, about 20.1 million tourists are expected to spend RM44.5 billion. Of this, some RM9 billion is expected to go into shopping alone.

In the Klang Valley, shops located in the Golden Triangle, Jalan Masjid India and Petaling Street are the usual beneficiaries of the tourists’ shopping dollar.

In the past, tourists were more likely to visit retailers located in shopping complexes such as Sungai Wang Plaza/Bukit Bintang Plaza and Suria KLCC.

According to the Malaysia Retail Industry Report released yesterday, all retail sub-sectors recorded positive growth with the speciality store category (including jewellery, gifts, toys, fitness equipment, golf equipment) performing the best, recording a 13.4 per cent jump in sales this year.

The supermarket and hypermarket category, such as Giant and Carrefour, saw sales increase by 9.5 per cent.

However, the department store category (which includes retailers such as Parkson and Metrojaya) only grew 1.9 per cent last year.

The fourth quarter report revealed that performance in the October 2006 to December 2006 period was better than expected, improving 7.8 per cent as major festivities and the school holiday, drove sales.

In the first quarter of this year, MRA members estimate that the retail business grew by an average 9.5 per cent, supported largely by the supermarket and hypermarket category (up 16.4 per cent), furniture and electrical and electronics (up 7.2 per cent) and department store cum supermarket (up 6.4 per cent).

Data showed that retailers tend to do at least two per cent better than gross domestic product growth of any given year. GDP, the barometer used to gauge the health of the economy, is expected to grow by about six per cent this year.

The biggest beneficiary of ‘retail therapy’

KUALA LUMPUR: Last year started out financially tough for Wong Siew Lee.

She struggled until a few stock market investments paid off. By Christmas, the 30-year-old office administrator and mother of two found she had a little extra to splurge on.

She bought a RM1,000 Playstation Portable game console for her 8-year-old son.

"It was hard to adjust to the higher cost of living at first but the bull run last year really made up for it."

Last year, consumers nationwide like Wong went on a shopping spree and helped the retail sector to register a 8.4 per cent growth in sales.

Software engineer Dev Subramaniam, a self-professed avid shopper, said: "I love shopping for clothes, shoes and tech gadgets. That’s why the annual sales really help. It helps make branded or more expensive items affordable at least once a year."

Accountant Joy Lim said the good fiscal year was a reason for her spending spree.

"Last year was good for my company and the increments and bonuses were higher than expected," said Lim, who considers clothes, shoes and fashion accessories as her main expenditure.

Meanwhile, retailers attribute the spending growth to "retail therapy".

"Shopping has become a form of stress release for consumers and that, coupled with good customer service, are reasons why our business is doing well," said Adeline Lim, general manager of Blook Sdn Bhd, a fashion boutique line.

Kevin Tan, general manager (marketing and leasing) of Sunway Pyramid, said people no longer shopped out of necessity.

"People no longer shop just for a shirt. They shop for shirts to match their shoes. It’s about making fashion statements now."

The Malaysia Retailers Association also forecasts a bigger growth for the retail sector by the end of this year.

"Last year was good for retailers. We have allocated RM500 million this year to expand our complex so we can accommodate more shops," said Tan, who was referring to the Sunway Pyramid 2 project.

Jusco department stores, which is managed by Aeon Co (M) Bhd, recorded RM1.76 billion in revenue last year from its 18 outlets.

Its general manager (finance), Poh Ying Loo, said the strong support from loyal customers had helped boost retail sales.

Poh said two more Jusco stores would be open for business in Bandar Sunway and Bukit Tinggi by the end of the year.