Festive season: A woman taking a photo of a Christmas display in a shopping mall. There is a delicate need for balance between reducing the number of positive cases while returning to a recovery MCO. WITH 13 days to Christmas, retailers are lamenting the large-scaled conditional movement control order (CMCO) is ruining their best and most lucrative festive quarter. While some malls have invested in the usual year-end Christmas and New Year decor, they are uncertain if the decorative festive period firepower is going to attract the normal year-end crowd. The next two weeks will be crucial, according to Retail Group Malaysia managing director Tan Hai Hsin. With the number of Covid-19 cases continuing to spike, it is left to the consumers if they want to throw caution to the wind by venturing out, be it to the mall or to travel interstate, he says. “We hope retail sales will pick up now that rules have been relaxed, ” he says. The government gave the green light for interstate travel on Dec 5, a day after Fitch Ratings downgraded Malaysia’s sovereign ratings. On Dec 5, the government said it needs “to find a balance between improving our economy and our health”. It introduced several flexibilities, including allowing inter-district and interstate travels, except for areas under an emergency MCO which started on Dec 7. Interstate travel is a big contributor to retail sales although the Klang Valley remains the retail cauldron of the country. Comprising the city centre and its suburbs, Selangor and right up to Putrajaya, the Klang Valley is the main driver of the retail market in Malaysia. It accounts for 60% of the total market size in the country. There is a delicate need for balance between reducing the number of positive cases while returning to a recovery MCO. Retailers have noticed a rise in shopping traffic in major retail malls despite reported high number of cases in Kuala Lumpur and Selangor. Tan, who tabulates retail data for the Malaysia Retailers Association (MRA), says retailers are estimating an average rate of negative 15.1% for the last quarter. “We need to observe the crowds in the next two weeks. Based on this year’s experience, anything can happen in the next two weeks. “A sudden big jump in positive cases can instill fear among Malaysians. Another lockdown can turn the retail direction off the road, ” Tan says. Other factors brewing in the political economic sphere and the emergence of new clusters in shopping malls can turn the crowd off.Although the government allowed business and economic activities to go ahead before the Dec 5 flexibilities, “retailers had few customers per day.” They need to pay rental to the landlords. utilities and salaries, he says. Many of them have resumed loan repayment even before the CMCO was announced to curb a third wave of Covid-19 cases. The last quarter, usually the most lucrative for retailers, has turned out to be “a period of disaster for them (retailers), ” he laments. There is a need to introduce more effective action plans to reduce the number of positive cases and to be able to return to recovery MCO as soon as possible. The CMCO is damaging the retail industry, he says. His concern is also that the situation of the last six weeks may be extended. If this happens, Tan says retailers may close in big numbers within the next two months, peaking in January 2021. “This second CMCO in several states will speed up the closures, ” he says. Malaysia Retail Chain Association (MRCA) said the CMCO has been a double-edged sword for business: an insufficient number of shoppers going out as a result of the government directives and high overhead cost that cannot be offset by the lacklustre sales performance.The compounded effect of these factors have affected the cashflow of many businesses operating during the CMCO. In comparison, although businesses were not generating any revenue during the initial MCO in March, they were able to remain afloat due to various assistance provided through government stimulus financial package. To some extent, there were some savings in utilities cost as consumption is zero. “For every extension of the CMCO, more businesses will be dragged into a financial quicksand and eventually drown, ” MRCA says. Businesses go through various economic cycles: the Asian Financial Crisis in 1998 and Global Financial Crisis in 2008 are the major events. “It will not be surprising if this protracted economic crisis brought about by the various restrictions as a result of Covid-19 will lead to the worst quarter since the establishment of the MRCA, ” it says. The collapse of big names in retail such as the Robinsons group illustrates the gravity of this crisis on a company that was established 162 years ago. Without any significant improvement in the trading conditions, more businesses will consider shutting down their operation either temporarily or permanently, he says. Although news of various Covid-19 vaccines has brought fresh hope to the retail community, any economic recovery will ultimately depend on how the government handles the rising number of Covid-19 cases in the country. “It is clear that the re-introduction of CMCO has had a devastating effect on the retail industry and we hope that the government will apply it sparingly, or in a more targeted manner in the future, ” it says. In the interim, the government could assist businesses by adding clarity to the existing standard operating procedures (SOPs) in order to clear the common confusion among the people, it says. Clear SOPs will in turn help businesses to recuperate to a certain extent because the people can then resume their daily activities without the fear of repercussions for SOP violations.
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