INVE$T | Market Sentiments
According to the Department of Statistics Malaysia’s (DOSM) chief statistician Datuk Seri Dr Mohd Uzir Mahidin, businesses remain positive about their prospects for the second quarter of 2022 (2Q22) as well as for the six-month period to September 2022. Going into 2Q22, businesses are positive albeit at a slower pace, with a confidence indicator of +3.5% for the quarter against +7.6% in 1Q22. Despite the reopening of Malaysia’s international borders, which is anticipated to spur economic activities, businesses stay cautious about their prospects amid inflation pressure, supply chain and labour shortage issues. Except for construction, all sectors surveyed anticipated better business conditions in 2Q22. The wholesale and retail trade sector is the most optimistic on its business outlook. The sector’s confidence indicator has increased for three quarters in a row, with +15.5% in 2Q22 from +4% in the preceding quarter. Based on the quarterly business tendency survey, brighter sentiment in both the wholesale trade sub-sector as well as the retail trade sub-sector led to this improvement. Meanwhile, the services sector predicted the business situation to improve at a moderate rate, posting a confidence indicator of +5.6% compared with +11.1% in 1Q22. As for the industry sector, it expects its business performance to grow at a slower pace in 2Q22 with an indicator of +0.8% compared with +12.2% in the preceding quarter. The agriculture and mining sub-sectors, in particular, anticipated unfavourable business conditions in 2Q22. Meanwhile, the construction sector remained pessimistic but its confidence indicator improved to -23.2% compared with -40.4% in 1Q22. He added that 45.2% of the survey respondents predicted that their gross revenue would rise in 2Q22, while 19% expect a reduction, leading to a net balance of +26.2%. The rest of the respondents (35.8%) anticipated gross revenue to stagnate. For the same quarter, 72.2% of the businesses expect their manpower to stay the same despite showing a net balance of +10.8%. Of the businesses, 19.3% intend to hire more manpower in 2Q22, while 8.5% have planned a reduction. On expectations of business performance for the upcoming six months (April to September 2022), businesses also remained optimistic about their outlook with a net balance of +25%, up slightly from the +18.9% recorded previously. This was attributed to better sentiments in the wholesale and retail trade, industry and services sectors.
Sub Title: Businesses need tech-enabled shopping experiences to woo Malaysian consumers, some of the most discerning in the world – ADYEN
According to Priyanka Gargav, ADYEN’s Head of Commercial, Southeast Asia & Hong Kong, despite challenges posed by the pandemic, the Malaysian retail industry proved its resilience in 2021, with 71% of Malaysian businesses across the retail, food and beverage, and hospitality sectors growing their revenue by 20%. Malaysian companies that outperform competition are those reaping the benefits of investing in digital transformation – an opportunity now worth MYR 334 billion. The Adyen Malaysia Retail Report 2022, commissioned by Adyen and sponsored by KPMG, interviewed over 40,000 consumers across 26 markets, including 1,000 from Malaysia, to understand how they feel about the state of retail. It also surveyed 11,500 businesses across 23 countries, including 500 from Malaysia, to learn about their concerns, aspirations, strategies, and investments for 2022 and beyond.
One key finding from the report was that over 1 in 4 businesses connected payment systems to other parts of the organization, such as inventory management and supply chain, to improve operations and break down silos in backend processes. As a result, 60% of businesses are now in a better position. This is 11% above the global average and the highest in APAC. Specifically, companies that connect payment systems with other sections of their business grow 18% more than those that do not. This shift has given Malaysian consumers a real taste for technology. 80% of consumers believe retailers used technology well to make their products available during the pandemic. The majority believe that retailers should deliver the same cross-channel flexibility they provided during the pandemic (77%) and use technology to improve loyalty/rewards schemes (90%). These figures are both 16% above the APAC average. Falling short of these expectations could spell trouble, as 81% of consumers will not shop with businesses that have a bad shopping experience, either online or in store, 11% above the global average.
Businesses intend on continuing to ride the digital wave, with 97% planning to invest in business improvement over the next year. The acceleration of digital transformation will contribute an additional 5.6% to the total growth of Malaysia’s retail sector over the next five years. Malaysian businesses have proven their resilience and adaptability during the pandemic, and their future is bright. Malaysian consumers’ love for tech-enabled, seamless shopping experiences stands out on a global level and the time is ripe for retailers to capitalize on the MYR 334 billion opportunity in digital transformation. Many retail players have unlocked the promise of unified commerce as a strategic growth driver and its exciting to see the retail industry in Malaysia reach greater heights in 2022.
Physical stores will stay — but the role of the store is changing
The untapped potential in real time payments data
In line with Malaysians’ preference for digitized shopping experiences, they are above the average in wanting more tailored and personalized interactions. 67% prefer retailers who remember preferences and previous shopping behaviors to create a more tailored shopping experience and 66% like personalized adverts or suggestions. This is 20% and 21% above the global average respectively. Fortunately, Malaysian businesses are among the best at using data to inform decision making and engage customers. Currently, 39% of businesses use payments data to build a better picture of their customers, 12% above the global average.
When doing so, businesses must prioritize safeguards to protect customer data and address consumer concerns around privacy. Half of Malaysian consumers will only allow their data to be stored and used by retailers if there are assurances around security and privacy, while almost half of them (45%) believe retailers shouldn’t be able to use their data/purchase behaviour information unless they give permission. With more businesses looking to embrace digitalization and Malaysian consumers’ preference for technology to permeate the in-store experience, businesses in 2022 are optimistic about the future. The impressive resilience and adaptability of Malaysia’s retail industry will likely be key themes even beyond the pandemic
Eye On The Markets
This week, on Friday (27May), the Ringgit opened at 4.3925 against the USD from 4.3893 on Monday (23May). Meanwhile, the Ringgit was 3.1993 to the Sing Dollar on Friday (27May). On Monday (23May), the FBM KLCI opened at 1553.15. As at Friday (27May) 10:00am, the FBM KLCI is down 15.67 points for the week at 1537.48. Over in US, the overnight Dow Jones Industrial Average closed up 516.91 points (+1.61%) to 32,637.19 whilst the NASDAQ added 305.91 points (+2.68%) to 11,740.65.
