Most retailers bracing for gloomy 2023, says SME association

Samenta says the projected downturn in 2023 is mainly driven by political and economic uncertainty, the increase in the OPR, and the normalisation of ‘revenge shopping’ post-pandemic.

PETALING JAYA: While the retail sector saw a rapid recovery since the economy reopened in the transition to the Covid-19 endemic phase, most retailers are bracing for a gloomy 2023.

This followed two surveys conducted by the Small and Medium Enterprises Association (Samenta) on the mid-term state of SMEs and retailers’ outlook for next year.

Samenta chairman William Ng said the retail sector saw sales increase by 34.5% year-on-year to RM57 billion in August, and almost all were confident about the rest of the year.

“However, when asked about prospects for 2023, most respondents were far less optimistic. Two out of three retailers expect a drop in both sales value and volume.

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“This is primarily driven by political and economic uncertainty, the increase in the overnight policy rate (OPR) and the normalisation of ‘revenge shopping’ post-pandemic,” he said in a statement.

He said this was also driven by global uncertainty, such as the potential escalation of the Russia-Ukraine conflict, and tensions in the Taiwan Straits.

Ng said SMEs were facing downward pressure on sales, slower recovery than larger firms, a surge in costs, and a shortage of workers.

He said Samenta was working with the Malaysia Productivity Corporation (MPC) and the Malaysia Digital Economy Corporation (MDEC) to help SME retailers digitalise and improve productivity, while cushioning labour and cost issues.

“Typically, we will prefer if businesses are left alone to compete fairly. But these are unusual times and we will need quick government intervention to rebuild consumer and trade confidence, contain costs pressure and ease the labour crunch,” he said. - FMT