I went to IKEA last saturday (5 sept). I wanted to buy a baby chair, a new pot and a few LED bulbs. The car park was very full and after many turns, I had to park at a spot which is regarded as illegal. The showroom floor was full of people. Perhaps these people are here just for ideas, right? I found my items and proceeded to the payment counter. As soon as I saw the queue, I gave up. The lines were so long and everyone had so many items that I felt it’s better to have lunch instead. No point in waiting for half an hour or more just to pay for that few items. This brings me to one very important observation. IKEA is a furniture store. In other words, this is not a necessity. It is mainly for homes! Does this mean the property market is still booming?
For booming, answer is no. Based on the past few quarters and even up till Q1 2015, total property transactions continue to be lower compared to the quarter before. The boom times of 2009 to 2012 is not about to suddenly return. However, the transactions remain huge enough to continue to support IKEA. Well, IKEA being so full of people definitely tells us that certain businesses would continue to do well because the economy is still moving; albeit slower. It also meant despite the MAS now becoming MAB and the loss of thousands of jobs, RHB having initiated a potential separation scheme with up to 2,700 staffs and CIMB’s earlier VSS exercise, the unemployment rate remains low and people are still spending, at least where IKEA is concerned. Perhaps these are the better off middle class? I think this is the reason why in terms of numbers, retail is still growing too even if in a much tougher environment.
Is IKEA representing the retail market then? Well, truth is out of the many malls I have gone to for the past few weeks, I could see that the number of empty retail shops are plenty. It’s also much easier to find car parks too. The only shops still patronised by people would be the food and beverage ones. This is especially those which are cheaper and more affordable. I was eating at Teh Tarik Place and the place was still full. Well, maybe because one meal of Mee Goreng and Teh Tarik is still around RM10, a palatable number for those who are still thronging malls. It’s important to note that retail is still growing as at Q2 2015 but on an overall 2015 basis, growth may be at best marginal. If you are in business, it is now time to be even more competitive and offer more for less. Now’s the time to kill your weakened competition. Happy shopping or window shopping.
written on 7 Sept 2015
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One possible reason is that people are cutting back on purchasing new houses during tough times, instead they just touch up current home and replace some old furniture. Then again, IKEA being in Mutiara Damansara where the population is above average income household does not really paint the true picture of consumption power of all Malaysians
Quite agree k Lee. Damansara mutiara part