There are many trading companies in Malaysia, but the numbers have diminished due to the popularity of e-commerce. Nevertheless, the retail industry is still a mainstay of the Malaysian economy. The volume index for Wholesale & Retail Trade posted a growth of 5.9 per cent in June 2019 as compared to the same month of the previous year. The types of retailing that play a large role in Malaysia are supermarkets; shopping centres that accommodate specialty stores; department stores such as Isetan, Parkson and Aeon; and miscellaneous retail stores.
Freight Forwarders, Transport Companies, Logistics, Air-cargo, Shipping, etc.
Distribution encompasses the activity of transferring goods from the manufacturer to the final customer. For imported goods, distributors need to import these goods, pack or repack the goods, and use logistics to deliver these goods to retail stores. The players in this industry are freight forwarders, logistic companies, cargo airlines, and shipping companies. Logistics services for distribution include transportation, inventory warehousing, material handling, security and cold chain facilities.
With the advent of the e-commerce boom, the distribution industry is poised to gain the most and reap the benefits from the shifting consumer behavior where online shopping takes a larger precedent in the daily lives of today’s consumers than the traditional retailing concepts. The increased demands for distribution and delivery of items, bypassing the show-and-sell retailing concept, have spurred many new competitors in this space eg freight forwarders (parallel import & export, direct import to household), End to End 3PL / 4PL logistics providers and Retail deliveries (Grab Delivery, Uber Eats, Foodpanda)
Supermarkets, Shopping Centres, Retail Shops, etc.
In the recent years, retail has been greatly affected by e-commerce, and as a result, most shopping centres are trying to find a new niche in the retail sector. Therefore, instead of just selling goods, they are moving to include lifestyle services such as Food and Beverage (F&B) and entertainment in their retail outlets.
Image source: globalcoldchainnews: montracon chills for Tesco in Malaysia
Instead of pure e-commerce, some traditional bricks-and-mortar retail players in Malaysia have succeeded in using e-commerce to redefine their businesses. Their strategies will include using the omnichannel or online-to-offline (O2O) approach to provide customers with an integrated shopping experience. For example, Tesco delivers groceries directly to customers who buy their goods through e-commerce. Another example is Kumoten, Malaysia’s largest drop-shipping platform that lets merchants sell on multiple online marketplaces without the hassle of buying and keeping stock.
Image source: globalcoldchainnews: montracon chills for Tesco in Malaysia
Instead of pure e-commerce, some traditional bricks-and-mortar retail players in Malaysia have succeeded in using e-commerce to redefine their businesses. Their strategies will include using the omnichannel or online-to-offline (O2O) approach to provide customers with an integrated shopping experience. For example, Tesco delivers groceries directly to customers who buy their goods through e-commerce. Another example is Kumoten, Malaysia’s largest drop-shipping platform that lets merchants sell on multiple online marketplaces without the hassle of buying and keeping stock.
The retail sector involves significant logistics and maintenance of inventories to satisfy customers’ requirements. It also requires smart branding and sales promotions. Inventories need to be managed carefully due to somewhat long lead times if the goods are imported from overseas whilst customers’ demand may change over a short period of time due to the state of the Malaysian economy and customers’ preferences. Importation of goods usually faces many importation obstacles such as customs procedures and indirect taxes.
The accounting for inventories will be a challenge due to valuation and impairment issues. In addition, trade receivables will need to be stated fairly, all of which, require special expertise in view of MFRS 9 for financial instruments which require an estimation of an Expected Credit Loss for receivables.
Taxation of companies in the retail sector usually encounter challenges in the area of claiming for bad debts written off, claiming write-downs of inventories, deduction of expenses for sales promotion and claiming of capital allowances for renovations.
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