Malaysia’s retail sales for the first quarter of 2023 were 50 percent higher than estimated, with a recorded sales growth of 13.8 percent. This has been attributed to the Chinese New Year celebration in January and the 1-month school holiday in February and March.

The Malaysia retail industry has been recovering since the end of 2021, as shopping traffic returned to all major shopping malls and commercial centres in the country. Malaysians also returned to shopping in physical stores, buying non-essential goods and dining in quality cafés and restaurants. As a result of the higher cost of living, the purchasing power of most Malaysians dropped. To maintain the quality of their lives, Malaysian consumers sought out discounts and offers by retailers and F&B operators.

The national economy in Malaysia has also recorded positive growth rate of 5.6 percent. This has been attributed to sustainable household spending, higher number of private and government investment projects, improved labour market condition and higher tourism spending. The average inflation rate during the first quarter of 2023 remained the same as the fourth quarter of 2022 at 3.9 percent.

Food and beverage establishments were able to enjoy sustainable sales with outlets operating at full capacity. The Chinese New Year festival encouraged social gathering among families and friends F&B outlets. Interstate travel during the long Chinese New Year and school holidays boosted food outlets' sales in tourist-dependent towns and resorts. Furthermore, higher foreign tourist arrival contributed to better sales.

Food and beverage outlets (café and restaurants) recorded a sustainable growth rate of 9.7 percent, while the sales of food and beverage outlets (take-away, kiosk and stall) reduced to 21.5 percent in growth rate. Food prices remained at a high level, which led to increasing costs for F&B operators in Malaysia. The prices of restaurants and hotels increased by 7.2 percent, while the prices of food and non-alcoholic beverages rose by 6.9 percent.

Cafe and restaurant operators are hopeful that their business will retain its growth momentum for the next quarter. Their sales are expected grow by 9.6% during the second 3 months of this year, as compared to the same period a year ago. Food and beverage kiosk and stall operators are projecting its business growth to slow down further at 11.7% during the second quarter of 2023.

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Sources:
Malaysia Retail Industry Report (June 2023) - Compiled and Written by Retail Group Malaysia