Retailers are concerned about a fourth-wave pandemic and rising living costs

There are several things to look out for in the retail sector this year, according to Henry Butcher Malaysia.

In the Klang Valley, at least seven new shopping malls and one mall extension are expected to open in 2022, with a total nett floor area of more than 4.7 million square metres.

Tang Chee Meng, chief operating officer of Henry Butcher Real Estate, believes that shopping malls set to open in 2022 will struggle to fill the majority of their retail lots.

"To attract permanent tenants to open in their shopping centres, retail landlords will need to lower rental rates and/ or offer longer rent-free periods. A the same time, they need to look for temporary tenants to fill up empty lots, especially at prime locations," he said.

Tang said that Malaysian retailers are fearful of a fourth-wave pandemic because they cannot afford another physical closure.

Furthermore, since November 2021, the prices of necessities and many consumer goods have risen.

The sales tax will be levied on low-value foreign goods sold by online merchants.

Except for food and beverage (F&B) delivery and logistics, e-commerce platforms will be subject to service tax.

Tang said that many F&B establishments have raised their prices and that this trend is expected to continue into the first half of 2022.

He believes that the rising cost of living will have an impact on Malaysian households' purchasing power.

"The Covid-19 pandemic has caused a reduction in take-home pay for a lot of Malaysians. The take-home pay will be highly dependent on the pace of recovery of the Malaysian economy in 2022, which will then determine the amount of money they can spend on the retail sector," he said.

Retail Group Malaysia anticipates a six per cent increase in retail sales in 2022.

Since November 2021, shopping traffic has returned to all major shopping malls across the country, with major malls packed with shoppers and diners on weekends.

When interstate travel became available in the middle of October 2021, retail businesses that had previously relied on tourists began to see an increase in business from domestic tourists from other states.

During the lockdown, small-format grocery-related stores saw an increase in sales. Many popular shopping malls now have specialty snack stores and ready-to-eat convenience stores as tenants, Tang said.

Fixed-price stores such as Eco-Shop, SuperSave, Mr. Dollar, Noko, and Tatsumaki grew in popularity during the Covid-19 pandemic due to their low-cost retail goods, and they are now mini-anchor tenants in many shopping malls throughout the country.

In the Klang Valley, cloud kitchens (food delivery) have proliferated. Some of them are now retail tenants in shopping malls, which include My Ghost Kitchen, Cookhouse, Kitchen Connect, Foodle, COOX, and Foodlab.

Tang said that furniture and furnishing retailers, which require large spaces at lower rents, are returning to shopping malls, and retail landlords are welcoming them to fill difficult-to-lease retail space.

The hospitality and leisure industry has been seen to improve

The Malaysian government's high vaccination rates will boost overall confidence and domestic as well as international travel.

With the resumption of interstate travel on October 11, 2021, the domestic tourism industry is already improving.

The reopening of international borders, beginning with the first international tourism bubble implemented for Langkawi last November, and the establishment of the Vaccinated Travel Lane arrangements, beginning with Singapore on November 29, 2021, and with other countries on January 1, 2022, have improved the situation even further.

Malaysia Airports Berhad has reported a 2.3 million increase in passenger traffic for its network of airports in the country for November 2021. This is the first time it has surpassed the two million mark since the Covid-19 pandemic began in April 2020.

The airport operator also reported an increase in domestic aircraft movements, which increased 43 per cent to 27,084 in November from 18,966 in October, indicating that domestic tourism is on the mend and bodes well for the hospitality industry.

"Some hotels approved as quarantine centres for returnees from overseas or Covid 19 cases with mild symptoms have managed to fill up otherwise empty rooms. With most of the population is fully vaccinated and with proper SOP (standard operating procedures) in place, tourists will feel safer to travel locally," Tang said.

Furthermore, he stated that the Government's allocations in Budget 2022 to assist the local tourism industry will provide a welcome boost to this important economic sector.

Meanwhile, airline fares are currently higher than usual as airlines adjust to the increased costs associated with implementing Covid-19 protocols and SOPs. However, with an increase in passengers expected in the coming year, airlines may be able to reduce costs and make air travel more accessible again, Tang said.

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