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Many retailers see downtrend in spending in M'sia

The Star, Monday November 1, 2010.by DAVID TAN
GEORGE TOWN: The consumer retail market is expected to be weak in the second half as consumers are becoming more cautious with their spending.

Although the latest Nielsen Global Consumer Confidence Survey showed that consumer confidence in Malaysia has risen to 99 index points in the second quarter from 98 in the first quarter, the rise in confidence level was not reflected in purchasing pattern.The Nielsen Co managing director Kow Kuan Hua said in a recent report that consumers were cautious about the economy in general, with 78% saying they continued to change spending habits to save on household expenditure.

“For now, consumers are likely to be prudent, particularly on discretionary items such as out-of-home entertainment, upgrading of personal computers and mobile devices,” he added.
Consumer products makers and retailers such as Pensonic Holdings Bhd, Senheng Electric (KL) Sdn Bhd, Star Electronics Sales and Services Sdn Bhd and Ban Hin Bee Sdn Bhd reported disappointing sales during the recent Hari Raya festive season.Pensonic managing director Dixon Chew told StarBiz that the company expected challenges for the coming two months.
“Generally, the crowd and walk-in customers dropped drastically after the Hari Raya season due to weak buying power. It is time now to see which brands will command the market share during the slowdown,” he said.Star Electronics managing director Joseph Hon said the group had initially planned to establish 10 new outlets this year.However, due to discouraging sales in July and August and during the Hari Raya festive season, the expansion plan is held back.

“In July and August, our sales dropped 4.5% to about RM13mil compared with the corresponding period in 2009.“So far, we have set up only one outlet in Taiping. We will wait till next year before deciding on whether to set up the remaining nine planned outlets,” he said.Hon said for the whole of 2010, the company expected its revenue to rise to RM88mil from RM77mil last year due to robust growth in the first half.

“From January till June, the company posted a 26% growth in revenue over the corresponding period in 2009.“Last year, there was not enough supply of consumer electronic products such as LCD televisions and notebooks but this year, suppliers are overstocked,” Hon added.Ban Hin Bee general manager Wilson Yeoh said the fourth quarter looked weak, as consumers were not spending.“For our company, there was a 5% drop in sales in the third quarter this year compared with the same quarter of 2009. From January till August, there was about a 10% rise in sales over last year’s corresponding period.

“We will try to boost sales through promotions that we will have soon in conjunction with the company’s 50th anniversary celebration this year,” he added.Senheng Electric managing director K.H. Lim said a slower trend was expected in the second half which would continue into 2011.“However, we will carry out our plan to establish 10 new outlets over the next couple of months. These outlets will be in the north and central regions.“We also plan to set up 20 to 30 outlets in the country in 2011. The rationale is to take advantage of lower rental in better locations during an economically challenging period,” he said.

Courts (M) Sdn Bhd country director Chris Yong said despite consumers’ cautious mindset, Courts recorded a 27% year-on-year growth in sales of digital products in June and 33% growth in sales of electronic items.He said its small domestic appliances segment experienced a 43% year-on-year increase in sales in the same month.

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