Ong Chin Seong, the chairman of the National Tech Association of Malaysia (Pikom), has revealed to FMT that reduced consumer spending and overall economic uncertainties have led to a slump in the retail tech sector this year. Consumers have been cautious and focused on saving, leading them to spend only on necessary items.
Ong said the prevailing worries among consumers are influenced by global events such as bank collapses and the Russia-Ukraine war, which have affected Malaysia. The increase in interest rates by banks has directly impacted loan repayments, decreasing the spending power of consumers.
Although there was a temporary increase in sales during the Chinese New Year and Hari Raya festive seasons in Q1 2023, Ong noted that customer spending habits have changed. Many now prioritise buying essentials and are less inclined to splurge in extras like smartphones and computers unless they truly need replacements.
An emerging trend is the rise of retail stores offering refurbished computers and second-hand electronic items, which has gained popularity among mid and lower-income groups.
Phone retailer Scott Lim at Digital Mall in Petaling Jaya reported a 40% drop in sales compared to the previous year, attributing it to low currency exchange rates and stagnant salaries. He stated that consumers are opting for budget phones over flagship models to minimise expenses.
Sanjivii Thevan, an Oppo phone retailer, also experienced a significant decrease in sales. He said monthly sales have struggled to reach the desired target for a couple of months now. Other retailers, such as Reven Raj at PC Image, a computer store, estimated a sharp decline in sales of around 75-80% since April.
