KUALA LUMPUR, May 19 -- Malaysian retailers are under increasing pressure to move away from the traditional “brick and mortar” models amid the COVID-19 pandemic, according to a recent EY live survey conducted during a webinar for the retail sector.
The majority -- 70 per cent -- of the close to 100 respondents shared that they were prioritising online sales and marketplace listings to improve their topline results in the immediate term.
“The survey respondents recognise that there is a need to reinvent themselves, with digital strategies (55 per cent) and business restructuring (31 per cent) identified as key strategic options in the next 12 months, ahead of alternatives such as divesting non-core assets and mergers and acquisitions (M&As),” the assurance, tax, transaction and advisory services firm said in a statement today.
EY said over the next five years, ASEAN was expected to see a three to fourfold increase in online retail sales, with an estimated market size of US$90 billion to US$120 billion.
"Spending in the consumer health and homecare categories is expected to be positively impacted, driven by shifts in consumer hygiene and cleaning habits as a result of COVID-19," it said.
The survey also revealed new business models were emerging from this crisis -- including dark kitchens, platform-based communities and subscription models -- as social distancing was becoming the new norm.
EY said online retailers and other platform-related businesses were expected to start getting their fair share of the profit pool and ASEAN e-commerce players were likely to become profitable soon
Meanwhile, Ernst & Young PLT partner (transaction advisory services) Preman Menon said the rate of change in consumer behaviour had been rapid and retailers had to anticipate the kinds of consumers that were emerging from the crisis.
"Retailers have to remain agile and build capabilities to remain relevant in the current market. They have to relook their business models, understand the changes happening in their markets and adjust to the new normal," he said.
He cited five key drivers that retailers should consider to accelerate their growth and emerge ahead of the competition: win online (prepare for online accelerated growth with a clear omni-channel strategy), drive supply chain resilience, expand offerings in line with changing consumer needs and behaviours, engage in timely M&As to take advantage of low valuation multiples, and drive agility via fast (local) decision-making.
“Post COVID-19, the winners will be those who are able to quickly adapt. It will be more a case of survival of the quickest, and not so much of the fittest,” he added.
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