Visiting the shopping malls of Kuala Lumpur can be a confusing experience. It is always full of happy people with friends and lovers. And probably businesspeople with their clients too.
As I patiently await my opportunity to take a break from this crazy country, I find myself with an employment that is physically located close to Midvalley Megamall, one of the largest shopping malls in Malaysia. This means I visit the mall on every working day.
I do not notice any let up on visitors to the malls. Amid talks of pessimism regarding the economy and ugly reports, the shopping does not seem to relent.
Perhaps, Midvalley Megamall is an aberration, filled with those belonging to a certain class that is by and large not affected by the economic pain even as experts are predicting that the economy could suffer as much as 4% contraction for the first quarter of 2009. After all, the main victims of the ongoing economic slowdown are those from the manufacturing sector. Most frequenting the mall do not seem to belong to the manufacturing sector.
But I can never be sure without data. It could be that I am looking for pattern that I want to see, even if it is not there.
The Department of Statistics today confirms that the trend in Midvalley Megamall is neither aberration nor isolated. I am not dreaming. Based on year-on-year comparison, the retail trade sector actually grew by almost 8%, in defiance of other sectors.
RETAIL TRADE
1. Sales Value
The retail trade sub-sector posted an increase of 7.8 per cent from the comparative quarter of the previous year. The main catalyst was the group of non-specialised retail trade in stores (such as department stores and supermarket including hypermarket) which registered a double-digit growth of 44.4 per cent and retail sale of food, beverages and tobacco in specialized stores of 16.2 per cent. On a quarterly basis, this sub-sector contracted 1.3 per cent.
2. Employment and Salaries & Wages
The number of persons engaged rose 8.4 per cent from a year ago followed by a 9.9 per cent expansion in salaries & wages paid out. A marginal increase of 0.7 per cent in the number of persons engaged and a 3.3 per cent in the salaries & wages was recorded quarter-on-quarter. [Distribution Trades First Quarter 2009. Department of Statistics. May 26 2009]
I think the growth is likely caused by MNC hypermarket retailers’ aggressive expansion nationwide. As a person once employed in the supply chain industry, I can say with certainty that that expansion is true. The expansion of TESCO for instance and especially, was amazing. Their latest expansion plan includes a superlarge distribution center in Bukit Beruntung.
Indeed, the retail sector has been the most impressive and resilient sector so far. In the fourth quarter of 2008, it grew by over 15% based on year-on-year comparison.
It is true that based on quarter-on-quarter comparison, there is a decline but I think that is mostly due to seasonal effect.
It might have been likely that if there was no expansion, there might be a contract in the retail sector. Expansion in a way opens new market. This expansion may have overwhelm any reduction of sales faced by pre-existing outlets. In any case, this raises two questions: if the expansion factor is controlled for, would the retail sector suffer a decline in line with other sectors? Given the expansion, how good is the retail sector — which typically a good barometer of the real economy — in being an indicator of the real economy?
Regardless, that however does not explain Midvalley Megamall still. Perhaps, like I have mentioned above, class of profession plays a large factor as far as Midvalley Megamall is concerned, thus helping the sector to continue to grow in spite of the environment.
5 replies on “[1993] Of recession? What recession? It is a shopping spree!”
On another point, a day out in the mall is treated by Malaysians as that – a day out.
Take the massive 1Borneo mall recently opened in Kota Kinabalu. It is only one of at least 7 large retail centre development projects to be completed in KK within the last 5 years, and outwardly seems to be successful, being full on most weekends.
But then again, few come to buy, many come to watch.
How many people in MidValley are there simply to be out but are keeping their wallets close?
cheers
moot,
Malaysia’s Department of Statistics is rated a little better than average according to the World Bank. While the coverage of the economy still has gaps (such as unemployment statistics), from a technical perspective, DOS is pretty good.
Hafiz,
I’m thinking the increase in retail sales is basically driven by a “recovery” in spending back to trend. We had a supply side price shock in the first half of 2008 from oil and food, and prices have fallen or at least stablised since then. That results in a boost to real incomes, at least for those who still have jobs.
Also, retailers have responded to the economic slowdown by cutting their own margins. I see sales and discounts going on for extended periods – again boosting customer purchasing power.
Plus, borrowing costs have come down sharply, which again boosts disposable income (for those servicing existing home loans at least).
But on that basis, I don’t necessarily see this as boosting economic growth very much though.
It’s possible that we may have hit the bottom.
From my shipping stats (which is more reliable than any government agency’s), it can’t get any worse.
We just have to ride out the next few months and the indicators should be obvious around Sep / Oct.
I don’t buy conspiracy theories.
It’s easy for those that haven’t worked with the number to dismiss it as irrelevant just because of preconceived belief. If there’s anything reputable left in Malaysia, it’s its economic institutions that produce these data.
Read the history please. Growth figures are rubbish statistics if you can’t scrutinize the details.
Malaysia house numbers of retail chain collapse in the history. Bare in mind that, subprime crisis doesn’t appear overnight.