The message at the pews this holiday season may be about salvation but out on the streets what businesses are really concerned about is their customers’ propensity to spend.
Experienced retailers know that the long queues we see at popular shopping hubs may not be a reliable indicator of a roaring holiday shopping season. As noted by Retail Group Malaysia, Malaysian consumers continue to be cautious with their spending and are finding ways to stretch their ringgit.
That is consistent with the experience of one of Malaysia’s few world-class retail brands, Royal Selangor.
According to Chan Tien Yue, Royal Selangor Marketing Sdn Bhd general manager, better sales in the final quarter of 2012 have helped make up for the generally weak performance this year.
“Malaysia’s sales per retailer have suffered this year from cautious consumer spending, as well as traffic dilution from the opening of new malls or expansion of existing malls,” Chan says, adding that mall traffic hasn’t been able to keep up with the rapid growth in retail space.
Increasing the number of store fronts and baiting shoppers with new product offerings seems to be a requisite strategy to cope with an increasingly competitive market. Royal Selangor opened stores in three new locations over the last four months alone.
“Fortunately, we are having a good December and while I think the retail market has been tough this year for many retailers, we have continued to enjoy double digit growth by increasing our marketing activities and expanding our retail presence.”
Chan also makes an interesting observation about this holiday period spending. “While consumers are being more cautious, I think people are still looking for reasons to celebrate and they are still happy spending on others even if they are spending less on themselves.”
One trend that’s clearly on the rise however, is online shopping. Malaysians are far more confident online shoppers these days than before. The opportunities in online shopping is evidenced with this year’s launch of Rocket Internet GmbH’s Zalora, an online retailer of apparel and footwear. In a move that challenged other online fashion retailers, Zalora offered its customers the option to return unwanted purchases and even offered free shipping regardless of amount.
For more established businesses like Royal Selangor, the online channel has been one way to reach customers in foreign markets. Although it remains a small part of their business, Chan says local customers find the site useful for browsing before visiting the actual stores.
With the year drawing to a close, retailers are looking forward to better prospects ahead as 2013 marks the year where retailers prepare for Visit Malaysia year 2014. Moreover, being named as one of the top 10 shopping destinations in the world may prove helpful.
“I think a lot of work is going into showing tourists that Malaysia is a good place to shop, especially because of the wide range of price points,” Chan says.
He also hoped that more effort is put into addressing matters of security and trade practices.
“We are competing with so many tourist destinations in the region alone, and when people are thinking of taking a holiday here and doing research online or asking their friends, they don’t want to hear about issues with taxis, safety, or over-paying for goods in a tourist trap.”
Obviously, Malaysia still has some tough obstacles to climb before it truly becomes a shopping paradise.
Photo credit: Flickr user Fung Leo