With 30% drop in CNY sales, traders brace for ‘grim’ festive year ahead

The retail sector struggled this Chinese New Year with many traders reporting slow sales despite malls making an effort to entice shoppers. – The Malaysian Insider pic by Afif Abd Halim, February 13, 2016.Merchants selling Chinese New Year-related products complain they experienced an average 20% to 30% drop in sales this year compared with 2015, says a trade group.

The drop in sales during 2016’s first major festival season could also repeat itself during Hari Raya Aidilfitri, Deepavali and Christmas later in the year, as prices go up and consumers cut back on spending.

Malaysian Small and Medium Industries president Michael Kang said nationwide, the retail sector saw an average 20% to 30% drop in sales during Chinese New Year.

This trend was felt across a range of merchants selling Chinese New Year-related wares, such as fruits, clothing and prayer items. The trend started last year where merchants that sold festive-specific wares were also hit sales-wise.

The Malaysian Employers Federation (MEF) said in 2015, traders who invested in stalls for festivals, struggled to recoup their costs.

This was the trend for merchants in all major festivals in 2015 from Chinese New Year to Hari Raya Aidilfitri to Deepavali to Christmas, said MEF executive director Datuk Shamsuddin Bardan.

Merchants in Klang, a town with a large and diverse Chinese community, told The Malaysian Insider that they saw between a 40% to 50% drop in sales this year.

A fruit seller, who only wanted to be identified as Ang, said he could only take two days off to celebrate Chinese New Year, after which he had to come back and man his stall in Taman Eng Ann, Klang.

A short stroll away, Desmond Chia also cut short his holiday to finish selling off his stock of barbequed pork and tinned biscuits.

The problems both men face over their unsold stock illustrated how bad sales were during this year’s Chinese New Year.

Anticipating weak sales, Chia and Ang invested in less stock and bought less expensive items compared with previous years.

But even then, they still struggled to finish what little stock they had.

“A few years ago, it would only take three to four days before the eve of Chinese New Year to finish selling your stock.

“But now, I’m still here on the fourth day and I still have stock,” said Chia, 35, who has been selling biscuits and snacks for the past 10 years in Taman Eng Ann, an almost 100% Chinese neighbourhood.

Ang is even more worried as the boxes of apples, oranges and pineapples he is struggling to sell have an even shorter shelf life than Chia’s biscuits.

“I can refrigerate some of these fruits in my house. But we are prepared to lose some money because of spoilage. I know I won’t be able to sell all of them,” said a despondent Ang.

Ang blames the bad sales on the rise in the price of fruits, such as mandarin oranges. A box of ordinary grade mandarins sold for RM8 to RM9 last year.

But because of the fall in the ringgit’s value relative to the US dollar, a box now costs RM12 to RM12.50. So people bought less, said Ang, who has been selling fruits with his mother since he was six years old.

The goods and services tax (GST) was another problem, said Ang, who claimed that importers were charging the tax even though on paper, fresh fruits were exempted.

According to a list of sundry goods published by the Customs Department in January last year, oranges, apples and pineapples are zero-rated.

“My supplier charges me GST but I can’t charge the customer. So I have to factor in the extra cost and put it into the final price.”

However bad it is this year, both Ang and Chia are thankful that they will at least be able to break even.

Elsewhere in downtown Klang, merchants selling prayer idols and incense sticks also reported declining sales, though business was not as glum as those selling food and fruit.

Lim Boon Hong, 52, said sales were 20% down but he would still make some profit from the idols or Jin Yin Zui that his father’s shop has been selling for the past 50 years.

“The thing with idols and incense sticks is that everybody who prays during the lunar new year festival will have to buy them. It’s just a matter of buying more or less,” said Lim, at his store on Jalan Nenas in the heart of town.

Across the road from Lim’s store, Calvin Khoo, who also sells Jin Yin Zui, however, was more pessimistic, claiming that sales were down by 40% this year.

Khoo said the price of idols has gone up because of the GST as the coloured paper used to craft them was imported.

Incense sticks are also imported, so the ringgit’s low value has also driven up prices up this year by about 20%.

“It’s very bad this year, and I blame it all on the GST,” said Khoo. – February 13, 2016.Shops selling religious paraphernalia also reported slow sales in the Chinese New Year period, blaming the plunging ringgit and GST. – The Malaysian Insider pic by Seth Akmal, February 13, 2016.