Malaysia Q2 retail sales growth lower than expected as consumers tighten spending

KUALA LUMPUR, Malaysia - The country's retail industry experienced weaker-than-anticipated sales growth of 2.5% in the second quarter (Q2) of 2026, according to the latest Malaysia Retail Industry report. This growth was lower than the 4.8% projected by industry associations. Despite government measures aimed at boosting household spending, such as cash transfers and fuel subsidies, consumers displayed cautious spending habits.

They made fewer shopping trips, compared prices more often, and showed preference for discounted items, generic brands, and online shopping for lower-priced products. In addition, consumers reduced spending on discretionary services like haircuts, nail spas, beauty treatments, car care, cinema and theatre visits, and opted for domestic travel over international trips.

The report noted that the retail sector had contracted by 3.0% in Q2 2025, partly due to Hari Raya Aidilfitri falling on March 31 that year, with pre-festive sales captured in the first quarter. For the first half of 2026, the retail industry grew 3.1% from the same period in 2025. Industry associations anticipate retail sales to improve in the upcoming quarter, projecting an average growth of 4.7% in Q3.

Fashion retailers are the most optimistic, expecting sales growth of 17%, while pharmacy operators foresee a 4.1% increase, personal care retailers anticipate a 3.8% growth, department store operators expect a 3.8% growth, and department store-cum-supermarket operators foresee marginal growth of 0.5%. In contrast, supermarket and hypermarket operators project a negative growth of -11.1% in Q3, the least optimistic among retail sub-sectors.

Furniture and furnishing, home improvement, electrical and electronics retailers expect a moderate growth of 1.8%, while other specialty stores anticipate sales remaining flat with a 0.4% growth in Q3.