Retail Insights

Structural changes in the retail grocery sector

07 January 2015
The UKs grocery sector is one of the most fiercely competitive areas in retail. In
2014, Retail Economics forecasts suggest total food sales will reach almost 150
billion. However, the sector is undergoing significant structural change.

At the heart of these structural changes

Rise of the discounters

Although the discounters have c.8% market share they are the fastest growing
part of the market
Aldis pre-tax profits rose 65% in 12 months to December 2013 up 30% year-on-
year
Market share for Tesco, Sainsburys, Asda and Morrisons declined in 2013

Online retailing
Online grocery shopping is estimated to account for just 4-5% of total food
expenditure. However, it accounts for approximately 1 in every 5 spent online
there is significant opportunity for growth in click-and-collect (drive-through grocery
pick-up)
Theres no one model to fit all business models for online grocery retailing. Tesco
use dark stores outlets not open to the public to fulfil their online grocery orders.
Waitrose use their public stores to satisfy orders while Ocado have a vastly
automated process of picking and packing in huge warehouses
Online grocery has changed the way consumers shop for food. Many consumers
buy bulky goods online and top-up shopping at convenience stores a trend
which we see continuing and which is undermining the value of hypermarket
formats

Convenience
Consumer and making fewer large weekly shopping trips and more top-up
shopping leading to lower average basket values. Margins are being squeezed
The insatiable consumer drive for convenience has changed the structure of the
retail sector. Retail property investment is predominantly in smaller format stores

Against the backdrop supermarkets have invested millions of pounds in price wars
as competition has intensified. With investors clearly worried about the impact of
declining industry volumes and profitability, billions of pounds have been wiped off
stock market prices over the last 12 months.

New market entrants, digital technologies and changing consumer habits has left
the UK grocery sector is a period of instability.

The old grocery model is no longer fit-for-purpose. Radical investment is needed in

store infrastructure, multichannel operations (click-and-collect in particular) and
providing service fit for modern day digital living.
http://www.retaileconomics.co.uk/insights/structural-changes-in-the-retail-grocery-
sector.asp

Retail, Wholesale and Distribution

Our multi-disciplinary service approach

Along with the structural adjustment and the slow-down of the economy in China,
retail industry has also started its times of evolution. Wages, logistics and all sorts
of costs in the retailing industry remain high, resulting significant pressure on
profitability. At the same time, e-commerce has quickly taken over the market share
of traditional retail by offering lower prices, convenience payment, door-to-door
delivery and other thoughtful services.

In front of the unprecedented challenges, retailers have actively or passively

adjusted their development modes, in order to survive, develop and even achieve
sustainable success in the ever changing market environment.

Major trends in China

Courage to evolution derives from the forward-looking attitude in striving for

industry development. In the future, there will be five major trends in the
development of retail industry in China:

1. Urbanization will bring new opportunities to the retail industry resulting to the
changes in consumption structure, where proportion of residents in urban areas
has increased, as well as the increasing consumption capabilities of those live
in the third and the forth-tier cities.
 2. Multi-format business has become the mainstream, which will continue to
develop in the next few years.

3. Following the emergence of Omni-channel shopping experience, internet and

traditional retail channels have integrated with each other, which will offer
seamless shopping experience to consumers.

4. Mobile-commerce leads to evolution of brick-and-mortar stores, where

consumers have gradually developed a shopping habit using mobile phones. In
the future, impacts on store sales from mobiles will further increase.

5. Integration of retail industry and capital market remains active. While VC/PE
investment in the online retail sector has been growing rapidly, there are an
increasing number of acquisitions in traditional retail area. Integration of the
retail industry continues.

Deloitte's retail practice is composed of industry experts from audit, tax, consulting,
risk management and financial advisory. We aim to help clients address varied
complicated issues, develop and implement tailored solutions, so as to help your
business stay ahead of the game and achieve sustainable success.

Beyond retail trends and conventional wisdom

Introducing the Deloitte Retail Volatility Index

Since 2010, volatility in the retail industry has increased 250 percent, resulting in
$200 billion more of retail sales being traded among competitors. Our latest study
measures disruption in the industry through results of the Deloitte Retail Volatility
Index (RVI). This index quantifies the volatility and fragmentation in the US retail
market, revealing that small and mid-level players are collectively stealing share
from big retailers. Explore retail market share distribution changes in the top 100
retailers, how you can use RVI to predict the future of the industry, and ways to
create a strategy for staying afloat during these tumultuous times.

Deloitte Retail Volatility Index

Retail volatility is now being driven by fragmentation of market share. Small and
mid-level players are collectively stealing share from traditional retailers. The
industry is no longer dealing with the consolidation of the big getting bigger, which
has driven the industry for the last 100 years. To increase market share, larger
companies must adjust their go-to-market strategies, but first they must consider: Is
this volatility cyclical? Could it be structural? Is technology to blame for
transforming the way we shop? Is it a lack of style innovation?
To help our clients more clearly understand the drivers of our current market
dynamics, we used our Retail Volatility Index (RVI) to study these issues more
closely.

Our research was based on the following ideas:

We are in the midst of massive and unprecedented structural changes
impacting the retail industry

Exponential advances in technology and consumer adoption is causing

disruption

In this study, we measured retail volatility by looking at how the distribution of retail
market share has changed from 2007 to 2015 for the top 100 retailers in terms of
revenue. Understanding market share trends allows us to take a big picture view
of the retail industry.

Since retail executives are moved by data, not by theory or opinions, our report
helps to uncover empirical data to support these ideas. The report also provides
insight into how retailers can prepare and respond to the market dynamics of retail
trends.

Report highlights include:

Why we measure retail volatility

Testing our hypothesis

Retail volatility index findings

Retail spend fragmentation

Understanding stock market correlation

Expectations for the future

Winning in a highly volatile retail market

Volatility in different retail sectors

Read the latest news about Deloitte's Retail Volatility Index.

Download the report.Deloitte Retail Volatility Index

What is the volatility in different sectors?

While assembling this report, we had the opportunity to explore volatility, not only
in the retail market overall, but also within a number of key retail sectors. Our goal
was to determine how these retail trends play out in different areas of the industry.

Our research tells us that while volatility has impactedand will likely continue to
impactall sectors, not all sectors have been impacted at the same pace or in the
same way.

For example volatility in the clothing, footwear and jewelry sector has been driven
by smaller players with a lifestyle-targeted offering, increasing number of retailers
presenting offerings on tech platforms, as well as the decline of many traditional
apparel namesakes. Though the superstore we all know and love has retained the
number one position for the past five years, it has lost market share in three of
those years.

Keep in mind that volatility does not mean the end for retail. In fact, a changing
marketplace may spell opportunity for retailers who are informed, prepared and
perhaps most important in a fast-changing competitive environmentadaptable.

Cultivating choice, experience, and trust

John Hagel, John Seely Brown, Tamara Samoylova, Kasey M. Lobaugh, Neha
Goel

June 16, 2015

New technologies and new ways to connect with consumers are

transforming the retail sector. To compete effectively, traditional retailers

should reimagine how they create and capture value, thinking past

omnichannel positioning to find the best uses for their assets.

Executive summary

Todays retail landscape is changing rapidly and dramatically. Driven by the Big
Shifts forces, consumers are becoming far more informed, and product choices are
proliferating rapidly. Technological advances and public policy liberalization are
contributing to new flows of information, knowledge, and resources. As a result,
retailers face new pressures:

Lowered barriers to market entry are bringing in many new small players and
fragmenting the retail landscape.

Online marketplaces are transcending geographic proximity and expanding

market demand for highly specific offerings. Small niche players can reach
consumers regardless of physical location.

Technologies such as on-demand fulfillment are changing how and where

retailers hold inventory.

New retail models are arising out of new technologies and new ways to
connect with consumers.

Amid all this change, the retail value chain is unbundling, and even remapping.
Design, sales, and support are less strongly linked, with small, niche entrants
drawing from a range of flexible options to execute these activities. To compete
effectively, traditional retailers should reimagine how they create and capture
value, thinking past omnichannel positioning to examine, and find the best uses for,
their assets. Digital marketplaces with on-demand fulfillment can be incredibly well
suited to providing low prices and extensive choice. Brick-and-mortar assets can
serve as a stage for customized consumer experiences that go far beyond ambience
to surprise and educate the consumer. Done right, these experiences can become
so valuable that they inspire consumers to choose to pay for them in themselves.

Another opportunity for many large retailers is to become industry infrastructure

providers. Because sourcing and procurement, inventory management, store
operations, marketing, and fulfillment become more efficient as they scale,
established retailers can extend these capabilities to support smaller, more
fragmented niche players.

Traditional retailers can also move to transform into consumer agentsnew entities
that use deep understanding of consumers to help them navigate product choices.

Change is seldom easy, especially when the future is uncertain. Big changes,
especially, require commitment and can attract organizational antibodies. To
effectively scale new business models, established retailers should pursue small
moves, smartly madetesting, scaling, and incorporating the most successful
ideas as foundations for their evolving businesses.

Back to the future

Looking for something? Make a request and well find it for you, promises
Operator, a new shopping app, on its website. The service, developed by Uber
cofounder Garrett Camp and former Zynga executive Robin Chan, offers a
personalized, on-demand shopping experience that blends the benefits of virtual
and physical retail. The Operator app responds to customers natural-language-
based questions and requests with pictures and descriptions of suggested products.
The customer can buy desired products automatically using a credit card on file.
Operator is now in private beta stage, with more than 85,000 signup requests. 1 A
wealth of such innovative sales models are expected to emerge as the retail
landscape evolves.

Operator is just one manifestation of what is arguably retails most fundamental

transformation in a century-long string of changes. In the early 1900s, retail was
dominated by local mom-and-pop stores, each providing its community with a
highly personalized shopping experience. Choices were limited by both shelf space
and the amount that shoppers could carry home. The invention of the automobile
increased the volume of items shoppers could carry on any one trip, contributing to
the rise of larger general stores and department stores. The postwar population
boom and increasing suburban sprawl, supported by TV advertising, prompted retail
locations to consolidate further into indoor and open-air malls, strip malls, and mass
retailers. The status quo was again disrupted in the 1970s and 80s, this time by big-
box retailers. Over the next quarter century, club stores, category killers, and value
players joined big-box stores to drive more and more smaller merchants out of
business. Then, at the turn of the century, as Internet access became mainstream,
e-commerce retailers shook up the sector yet again. The level of disruption has
been significant: By 2000, seven of the eight largest US retailers in 1980 had filed
for bankruptcy, been acquired, or lost their places as major industry players. 2

Thats a lot of change for one century. But each of the transitions described above
was driven by larger technological and social shifts, and each led to fundamental
changes in how people shopped. And every one of them increased consumer choice
while reducing consumers total cost in terms of money, time, and opportunity.

Today, we are on the cusp of yet another transformation. Technology improvements

coupled with shifts in consumer mind-set are again changing the nature of retail.
Consumers have more options, and both switching costs and brand loyalty are low.
To survive, many retailers are finding ways to serve individual consumers in ways
tailored to their needs and desirestransforming both their value propositions and
their business models. The retailers most likely to survive the current shift are those
that can provide a tremendous variety of offerings while maintaining, or reviving,
the personal touch of a mom-and-pop corner store.

https://dupress.deloitte.com/dup-us-en/industry/retail-distribution/retail-
transformation-choice-experience-trust.html

Retail Trends 2017

Accelerating change

Added to the perfect storm of cost pressures, rising inflation and slowing wage
growth could impact consumer confidence and therefore dampen demand.

Retailers will also have to contend with ongoing disruption from the next wave of
digital technologies and will need to prioritise investment in the technologies that
will really add value for their customers or increase the efficiency of their
operations. Retail has been through a period of unprecedented upheaval in the last
10 years, however in 2017 retailers will need to focus on accelerating change in
their businesses.

Christmas 2016

2016 proved to be a surprisingly good year for consumers and retailers.

Unemployment, interest rates and inflation all remained low, while earnings,
confidence and spending continued to rise. These benign conditions created the
perfect backdrop for a strong year for retail, culminating in a very merry Christmas!

It all started on Black Friday: not only the biggest ever, but also the best managed
as retailers succeeded in managing peak demand by extending the sales period and
guaranteeing prices. The depreciation of sterling also made the UK an attractive
destination for tourist shoppers, who boosted spending on clothing and luxury in
particular.

Retail sales (values excl. fuel) rose by 7.1% in December, with store sales rising by a
creditable 4.6% while e-commerce climbed by 21.8% beating our pre-Christmas
prediction of 20%. This growth continues to be driven by consumers shopping more
on their mobile devices with sales through smartphones up by an estimated 50%.
Troubled times ahead for retail?

As we look forward to 2017 we note a number of headwinds for the retail sector in
2016. Rising costs pressures signal more challenging times ahead for UK retailers.
We believe that the following will all impact on profitability in 2017;

Increases in business rates

Rising staff costs

Depreciation of sterling

Rising fuel and commodity prices

Increases in pension cost

Retail Trends 2017

So what do we think will be big in 2017?

1. E-commerce the next big thing

2017 could see another tipping point in e-commerce, driven by the ambitious
growth agenda of the leading pure-players. The growth of online isnt over and
is likely to have a greater impact on traditional players as they continue to
scale. Its only just begun.

2. Store 4.0 fulfilment, inspiration & friction free

The retail store is being re-imagined for the digital consumer. A new balance
needs to be struck between transaction and fulfilment. We believe the store
experience will increasingly focus on one of two things: inspiration or
convenience.

3. Conversational commerce
Voice user interfaces (VUI) provide consumers with a more natural and intuitive
way of engaging with digital technology. This combined with the growing
popularity of connected devices in the home and car will have a profound
impact on how we shop.

4. The robots have their AIs on the jobs

Robotic technology has long played a role in retail but in recent years we have
seen the number and scope of user cases (moving from the back to the front
office) increase dramatically fuelled by the incorporation of ever more powerful
AI.

5. Agile at scale- the new normal for retail

How can retailers really accelerate change in their businesses? While some may
have experimented with agile methodologies at the periphery of their
businesses we believe that in 2017, more retailers will implement agile across
 their business as scale as they try and respond to structural change in the
marketplace and improve innovation, responsiveness and the quality of their
delivery.

https://www2.deloitte.com/uk/en/pages/consumer-business/articles/retail-trends-
2017.html

MALAYSIAN ECONOMIC OUTLOOK

Executive Summary

The dawn of a new year has brought a glimmer of hope for better economic
conditions ahead as OPEC together with some other non-OPEC bigger producers
finally agreed on production cut. For the past two years the world economic
community was made to believe that oil glut is the source of economic slowdown.
Production control appeared to be a sound economic advice to many, against a
conventional market economic doctrine of free entry and free exit. In a free market
economy, price movement should lead to an allocative efficiency and eventually
benefit everyone..

OPEC's Algiers and subsequently Vienna Meetings were regarded as a success as

OPEC members, as well as some big non-OPEC producers, finally agreed on
production, arrangement for the first time in 15 years. Markets responded
favourably as prices surged approaching the USD60 per barrel mark. This
development is good for Malaysia on two counts. First, higher oil prices will increase
export as well as government revenues. Second, global trade flows are expected to
improve with better oil prices. Nevertheless, this development is expected to be
unsustainable as the downward pressure on oil prices remains, among others, due
to improved production technology and a decrease in demand as a result of
substitution effect.

Another important development in the world economy that has strong bearing on
global trade is the growing sentiment of protectionism. The protectionism sentiment
in developed economies is gaining momentum following Trump's presidential
victory. Across the Atlantic, the contagious effect of Brexit is growing in the EU. This
is a departure from the established ideology of free trade championed by powerful
nations, transnational corporations and neo-liberal ideologues, which happen to be
the prevailing dominant view in the contemporary international system. On the
other hand, developing economies like Malaysia are intensely trying to liberalize
their markets to maintain their WTO membership. The growing sentiment on
protectionism will not necessarily assassinate free trade but it will add to
uncertainty in the world economy. This is not a welcoming news to trading nations
like Malaysia.

Meanwhile, economic growth of China and Japan, two of major Malaysia's trading
partners are moderating. The American economy is expected to continue growing
healthily but uncertainty about Trump's economic policy has an impact on Malaysian
trade scenario. China, Japan and USA, these three countries represent one third of
total Malaysia trade value. Thus it can be seen that current global economic
conditions point to a prolonged weak external demand. Taking this into
consideration, we have downgraded our forecast on exports for this year from 3.0%
(December 6, 2016 publication) to 1.3%. Therefore, more weight is expected from
domestic demand to drive economic growth for this year.

About 92% of real GDP for 2015 was attributed to domestic demand and the trend
continued last year and it is expected to continue for the next two years. Therefore,
the growth in domestic demand is the main source of GDP growth. For 2015, 4.7
percentage points of the 5.0% GDP growth, or about 94%, was contributed by
domestic demand. A similar trend is expected for 2016 but the growth in domestic
demand is slower at 4.6%, the lowest since 2008/2009 world financial crisis. The
growth in domestic demand is expected to be flat at 4.6% for this year (downgraded
from our earlier forecast of 5.0%) and rebounded slightly to 4.7% in 2018.

Slower growth in domestic demand is attributable to the slowdown in private

expenditures, both for investment and consumption. The slowdown in private
investment is more prominent mostly due to weakened investment flows globally. It
is expected to grow at 5.5% in 2016 against an average growth of 13.3% a year for
the past six years. Private investment is expected to improve to 6.0% this year
(revised from our earlier forecast of 6.6%).
Private consumption is expected to grow at 5.4% in 2016, below an average growth
of 7.1% a year for the past six years. It is not just slowing down, the contribution of
private consumption towards GDP growth is getting more important to pick up the
slack of private investment as can be seen by comparing the average growth for
both for the past six years. High dependency on private consumption to boost
domestic demand comes with a price. First, private debt level accumulated to
almost 90% of GDP as a result of an easy consumption credit. This will increase debt
servicing burden to households and this in turn will limit future spending prospects.
Second, the current policy to boost consumer spending via transfer payments is
good for improving current spending but it impedes future growth prospects. Direct
income transfer crowds out competing public investment allocation particularly for
productivity enhancement.

Consumer price inflation stays subdued despite an expansionary spending policy

atmosphere. The average monthly CPI inflation rate for the first eleven months of
2016 is 2.1%. Nevertheless, food inflation remains higher than the overall inflation
causing public anxiety particularly among low-to-middle income households. The
fear of ringgit devaluation from imported inflation seems mitigated, as its direct
impact is small in the context of CPI measurement. While, its indirect effect through
input prices into domestic production is spread-out over time.

Consumer confidence level remains low as MIER fourth quarter's Consumer

Sentiments Index (CSI) continues to be below the demarcation level of 100 points.
The fourth quarter 2016 CSI slipped further continuing its downward trend. It shows
that in general consumers are still pessimistic about the economy. The survey
results revealed that the situation of consumers' current incomes in the fourth
quarter 2016 deteriorated a bit from the previous quarter. Likewise, the survey
indicated that consumers are feeling pessimistic about their future incomes as
compared to the third quarter 2016. Consumers are also still pessimistic about the
employment outlook. As their confidence level is still lacking, consumers indicated
cautious and selective spending plans.

In line with CSI, MIER's Business Conditions Index (BCI) also dropped further in the
fourth quarter 2016 by 2.7% as compared to the previous quarter after took a
double-digit quarter-to-quarter dive of 22.5% in the third quarter. It remained below
the 100-point threshold of optimism, which was briefly achieved in the second
quarter 2016. Expected index in the fourth quarter 2016 plunged by 12.4% as
compared to the previous quarter. Both sub-indices on expected production and
expected export sales declined from the previous quarter by 4.8% and 7.6%,
respectively. New export orders also dropped significantly by 6.6% from the third
quarter 2016. All in all, BCI sub-indices revealed that external demand is still weak.
Nevertheless, domestic demand remains robust to compensate the sluggish
external sector. The sub-index for new domestic orders in the fourth quarter 2016
rebounded by 8.2% as compared to the previous quarter. Overall sales and
production improved due to strong domestic demand, but likely to drop later as
capital investment sub-index dropped by 10.7% and capacity utilization rate
declined from 79.3% in 3Q2016 to 76.5% in 4Q2016, responding to weakened
export demand.

The fourth quarter 2016 Vistage-MIER CEO Confidence Index also remains below the
100-point threshold of optimism for 12 consecutive quarters since 3Q2013. Vistage-
MIER CEO Confidence Index is based on quarterly surveys on CEOs of small and
mid-sized businesses in Malaysia. The 4Q2016 index fell by 6.8% from the previous
quarter, the second consecutive fall. This suggests that lack of confidence among
businesses with overhanging negative sentiments in the Malaysian economy
continues.

Index for all six components recorded a decline as compared to the previous
quarter, except the expected change in employment index remains the same. The
other five components are currents economic conditions, expected economic
conditions, planned fixed investment, expected revenue growth and expected profit
growth. Generally, CEOs continued to be negative about the current as well as the
expected economic conditions, as both indices remained below 100-point threshold
of optimism. Almost 70% of the CEOs surveyed were in the opinion that the overall
domestic economic conditions have worsened in the 4Q2016, compared to 57.0%
for the previous quarter. Indices for another four components, namely expected
change in employment, planned fixed investment, expected revenue growth and
expected profit growth, however, recorded above 100-point threshold of optimism,
although not improving.
Bank Negara Malaysia (BNM) is expected to continue pursuing an accommodative
monetary policy favouring businesses as household debts are creeping up. The
expansionary monetary policy is expected to continue this year since the price level
is kept under control to complement the expansionary fiscal policy. The government
continues to pursue an expansionary fiscal measures to boost private consumption,
mostly through transfer payments.

Last year witnessed a moderated net exports as external demand remained

sluggish. On a y-o-y basis, net exports for 2016 are expected to contract by 0.5% on
account of a slower growth of exports with the rate of 0.3% (downgraded from our
earlier forecast of 2.5%). However, imports are also expected to slow down as
ringgit continues to be weakened. We have revised downward import growth for
2016 to 0.4% from the earlier projection of 2.9%. As such, the growth of net exports
of goods and services for 2016 is maintained at -0.5% despite a slowdown in
exports.
MIER maintains Malaysia's real GDP growth projection for 2016 at 4.2%. As the
external sector remains sluggish, more weight is given to the domestic demand to
steer growth. Growth will be driven largely by private sector expenditures, both on
consumption and investment. The 2016 domestic demand growth, which have been
revised upward by 0.1 percentage point in July from our April 2016 projection, is
maintained at 4.6%, as a result of an improvement in private consumption.
Meanwhile, the revised private investment growth is also maintained at 5.5%. Public
investment is expected to pick up the shortcoming by growing at 1.4%, a
turnaround from a negative growth of 1.0% last year. Public infrastructure
development for last year continued as planned.
We have downgraded real GDP growth for 2017 to 4.5%, the lower bound of the
range of our earlier forecast of 4.5 - 5.5% as some downside risks are beginning to
emerge. External demand is not as strong as expected although commodity prices
are showing sign of recovery. The slowdown in global trade and investment flows is
expected to prolong. Oil prices are expected to be sticky upward as production
agreement is believed to be fragile and fail to bring down the supply glut. Moreover,
global oil demand is not expected to improve strongly either. Growth in major
economies are slower than expected, particularly for China and Japan. The
protectionism sentiment in developed economies is gaining momentum, thanks to
recent political development across the word.
Domestic demand continues to be the engine of growth for this year but growing at
a slower rate of 4.6% (initial forecast: 5.0%) as both private consumption and
investment are expected to grow moderately by 5.5% and 6.0%, respectively (initial
forecasts: 5.6% and 6.6%, respectively). Likewise, public consumption and
investment are also expected to grow slowly. Export demand is also downgraded to
1.3% from initial forecast of 3.0% a year. Current account balances for this year as
well as for 2018 are expected to improve, owing to a better commodity prices,
estimated to be 2.0% and 2.4% of GNI respectively. The CPI inflation rate for 2017 is
expected to average higher at 2.5%. The CPI inflation for 2018 is anticipated to be
higher at 2.7%. Real GDP growth for 2018 is forecasted to be stronger at a range of
4.7 - 5.3%, as domestic demand as well as export demand are expected to improve
further.

https://www.mier.org.my/outlook/

Flourishing Tourism Sector Driving Retail Industry in Malaysia: Ken

Research

Malaysia is the third wealthiest in Southeast Asia by GDP per capita values.

Incorporation of GST from April 2015, has impacted the purchasing capacity

of consumers in a big way.

Online retail market also growing in a traditional retail sector.

Voyagers from China dont have to apply for Malaysian Visa from 1 March

2016. This ought to draw in 8 million Chinese sightseers to visit Malaysia for
holiday and shopping.

Ken Research declared its most recent production on, Retailing in Malaysia-
Market Summary and Forecasts; Comprehensive overview of the market,
consumer, and competitive context, with retail sales value and forecasts
to 2020 , offer bits of knowledge on the changing trends and key issues inside the
Malaysia Retail market. The production incorporates a shrewd investigation of the
most recent trends in retail consumer shopping, covering the components driving
retail shopping, customer insights, market trends and surveys of the most recent
best practice in retail site design. It likewise provides information to forecast and
historic retail sales, furthermore incorporates data on the business environment and
country risk related to Malaysias polish retail environment. In addition, it has
comprehensive knowledge on fastest growing product categories and also on the
key international and domestic players operating in the Polish retail market-
including store counts and revenue.
International trade plays an exceptionally noteworthy role in Malaysias economy. At
one time, it was the biggest maker of tin, elastic and palm oil on the planet. The
economy of Malaysia is the fourth biggest in Southeast Asia, and 35th largest on the
planet. Malaysia is additionally the third wealthiest in Southeast Asia by GDP per
capita values, after the city-districts of Singapore and Brunei. Malaysias economy is
one of the most competitive in the world, positioning fourteenth in the Ease of
Doing Business Index for 2015. Malaysian economy is profoundly vigorous and
broadened with fare estimation of cutting edge items in 2014 remained at 63.3
billion USD, the second most elevated after Singapore in ASEAN. Malaysia exports
the second biggest volume and estimation of palm oil items internationally.
Malaysias top individual and corporate income assess rates are 25 percent; the
corporate rate is set to decrease in 2016. Different duties incorporate a capital
increases assess. The general taxation rate meets 15.8 percent of aggregate
residential pay. Government spending adds up to 29.3 percent of GDP. Expansive
government spending ventures have added to a spending deficiency above 3
percent of GDP, and open obligation levels with 57 percent of aggregate local yield.
Malaysias normal tariff rate is 4.3 percent. Imported vehicles are liable to high
taxes. State-claimed undertakings assume a huge part in the economy. The
monetary area stays stable.

In initial quarter of 2015, Malaysian retail industry recorded a growth rate of 4.6% in
retail sales and the industry witnessed the poor growth rate of 11.9% in the second
quarter of the same year. The incorporation of GST affected all retail sub-sectors,
retailers from grocery, fashion and accessories, electronics, foods and beverages
and tourism, since 1 April 2015.The fundamental difficulties for Malaysian shopping
malls in 2015 had been lessened consumer spending and rising operation costs.
Because of the incorporation of Goods and Services Tax (GST) in April 2015,
Malaysian buyers kept down their spending notwithstanding sustainable disposable
earnings. Shopping movement of shopping malls dropped altogether amid the initial
2 months since the introduction of GST.

Malaysians are dynamic in online based shopping. Be that as it may, the exchange
sum is still low when compared with the whole retail industry. Online retail sales
represents under 2.0% of aggregate retail sales in Malaysia. More brick-and-mortar
retailers in Malaysia now offer online based shopping. This pattern covers all retail
divisions worldwide luxurious brands, fashion garments, fashion embellishments,
gifts, toys, books, furniture, equipment, electrical and gadgets, grocery and food.
Along with this the more online retailers in Malaysia are setting up physical stores.
Zalora.com.my has a perpetual commence at Mitsui Outlet Park. The notable Christy
Ng Shoes has set up her showroom in Damansara Utama. Well known Facebook
Fatbaby frozen yogurt has set up a dessert parlor in Subang Jaya. online shopping in
Malaysia will not replace physical retail outlets any time in the coming future.

Malaysian government is focusing on 30.5 million visitor entries with expected

tourism receipts of RM 103 billion in 2016. Voyagers from China dont have to apply
for Malaysian Visa from 1 March 2016. This ought to draw in 8 million Chinese
sightseers to visit Malaysia. The weak Ringgit will likewise empower not just more
territorial voyagers (counting Singapore, Indonesia, Thailand and Brunei),
additionally worldwide voyagers to go to Malaysia for holiday and shopping
,According to Ken Research

https://www.kenresearch.com/blog/2016/11/global-retail-industry-research-ken-
research/

New Reference Rate Framework

Ref No : 03/14/05 19 Mar 2014Embargo : Not for publication or broadcast before

1800 hours on Wednesday 19 March 2014
Bank Negara Malaysia announces today that effective 2 Jan 2015, the Base Rate will
replace the Base Lending Rate (BLR) as the main reference rate for new retail
floating rate loans.

Since the introduction of the BLR framework in 1983, the BLR has served as the
main reference rate on retail floating rate loans in Malaysia. Since then, the
determination and implementation of the BLR has evolved with the development of
the financial sector. In the recent period, however, the BLR has become less
relevant as a reference rate for loan pricing, as lending rates on new retail loans are
being offered at substantial discounts to the BLR. The BLR also lacks transparency,
which makes it difficult for consumers to make an informed decision.

The new Reference Rate Framework aims to provide a more transparent reference
rate to enable better decision by consumers in making choices among the many
loan products offered by financial institutions. The new reference rate will also
better reflect changes in cost arising from monetary policy and market funding
conditions, while encouraging greater discipline and efficiency among financial
institutions in the pricing of retail financing products.

The Base Rate will be determined by the financial institutions benchmark cost of
funds and the Statutory Reserve Requirement (SRR). Other components of loan
pricing such as borrower credit risk, liquidity risk premium, operating costs and
profit margin will be reflected in a spread above the Base Rate. This increases the
visibility of the factors underlying changes to the Base Rate. The greater
transparency in turn will enable more informed decision making by consumers.
Under this cost-plus structure, spreads will always be positive as it would not be
possible for financial institutions to offer lending rates below the reference rate.
Financial institutions will be given the flexibility to determine their respective
benchmark rates. The expected strong link between the Base Rate, market interest
rates and the Overnight Policy Rate (OPR) will facilitate more complete adjustments
to retail loan repayments when market interest rates adjust to an increase or
decrease in the OPR.
The Base Rate will be used for new retail floating rate loans and the refinancing of
existing loans extended from 2 January 2015 onwards. After the effective date, BLR-
based loans prior to 2015 will continue to be referenced against the BLR. However,
when a financial institution makes any adjustments to the Base Rate, a
corresponding adjustment to the BLR will also be made. As such, financial
institutions would be required to display both their Base Rate and BLR at all
branches and websites.

The shift to the new Reference Rate Framework should have no impact on the
effective lending rates charged to retail borrowers which are determined by various
factors, including a financial institutions assessment of a borrowers credit
standing, market funding rates and competitive considerations. It is also important
to note that the changes do not represent a change in the Banks monetary policy
stance.

http://www.bnm.gov.my/index.php?ch=en_press&pg=en_press&ac=555