Online retailers are slashing prices, yet new survey shows Malaysians too scared to spend

People shop for essential goods at the Chow Kit market during the movement control order in Kuala Lumpur April 5, 2020. — Picture by Firdaus Latif
People shop for essential goods at the Chow Kit market during the movement control order in Kuala Lumpur April 5, 2020. — Picture by Firdaus Latif

KUALA LUMPUR, April 7 — Businesses’ desperate attempts at keeping sales up by lowering prices has had little impact as most Malaysians appear too afraid to spend, a new survey on online consumer behaviour found.

The survey by consultancy tracked buying attitudes during the movement control order (MCO) now in its third week, and 66 per cent of respondents said they only spent on essential items despite the discounts offered by nearly all online businesses.

Even among those who spent on non-essential items, cleaning products topped the list, at 39 per cent of respondents. Clothing came in second at 35 per cent followed by skincare at 32 per cent.

Only a fourth had spent on non-essential goods while 7 per cent said they were unaware of any sales. The market research polled 1,085 people.

For essential goods, 97 per cent said they buy their groceries online, likely reflecting the fear felt towards Covid-19. In Malaysia, the novel coronavirus has claimed over 60 lives and infected more than 3,000 people up until yesterday.

Personal hygiene products and household items followed after, at 91 and 88 per cent respectively. Epidemiologists said washing hands with soap or sanitiser is one of the best ways to stave off the Covid-19 virus, that is transmitted through droplets, which could explain the surge in demand for hygiene goods.

Supermarkets like Tesco and 99 Speedmart appear to be the biggest winners from the grocery shopping rush. The three top sources that consumers rely on for groceries are their local stores or supermarket at 40 per cent, 99 Speedmart at 39 per cent and Tesco at 21 per cent.

Under the MCO, mom-and-pop shops have scrambled to provide a home delivery service, pitting them against financially bigger competitors in a desperate bid to stay afloat.

Shopee, the popular online retail market platform, noted that more Malaysians are now shopping online for their daily necessities such as milk powder, Milo, diapers, toilet paper, cereal, pasta and rice.

“Since the start of the MCO, we have also seen robust online shopping activities throughout the country, and even in Sabah and Sarawak as well as rural Malaysia,” said Ian Ho, regional managing director of Shopee.

The platform itself, valued at over US$10 billion (RM43 billion) curated a special “Shop Safely From Home” campaign that ran from March 27 to April 4.

Deals started from as low as RM0.44 with discounts of up to 80 per cent, a campaign Ho said helped users purchase necessities from one place “without breaking the bank.”

But despite the leeway for essential businesses like wet markets, supermarts and eateries to remain open, the economic fallout from the restrictions have not eluded retailers.

Those reliant on walk-in customers are the most badly hit, with many reporting a significant drop in customers turned away by either fear or put off by the long queues caused by a self-enforced social distancing measure — a majority of stores have been forced to limit the number of people allowed to shop at a single time.

The survey’s findings dovetailed with official data indicating considerable spending cutbacks since the MCO was enforced.

Average household spending has dropped by over half to just RM2,813 from RM6,317 prior to the restriction, while consumer spending plunged 48 per cent or the equivalent of RM1,923 from RM2,110.

Bar food and non-alcoholic beverages rose by a fourth, while spending on nearly all consumer goods plunged.

Clothing and shoe purchases dropped 95 per cent, followed by transportation 89 per cent, furniture and household items 72 per cent, fuel and utilities 58 per cent, and recreational and cultural pursuits at 71 per cent.

Spending on two items — education and communication — remained at pre-MCO levels.

“The average consumer spending was estimated to have reduced by RM1,923 or 48 per cent while household spending recorded a drop of RM3,504 or 55 per cent from prior to the MCO,” the Department of Statistics Malaysia (DOSM) said in a report released last Tuesday.

The top 20 quintile income earners, likely the largest spender of consumer goods, led the ranks in spending cuts, at 59 per cent.

Spending among the middle and bottom 40 income quintiles dropped 48 and 41 per cent respectively, the DOSM report showed.

Economists have warned that it may take more than a year to recover from the Covid-19 fallout, and that governments around the world must be prepared to spend exponentially if they are to revive the economy.

Yesterday, Prime Minister Tan Sri Muhyiddin Yassin unveiled an additional stimulus of RM10 billion on top of the RM250 billion announced last week to help small and medium enterprises stave off bankruptcy and keep jobs.