By Aileen Anthony, Executive Editor, MALAYSIA SME
The scale of commerce flowing through Malaysia is equally significant. Wholesale and retail trade recorded RM163.7 billion in sales in December 2025 alone, an increase of 7.6 per cent year-on-year, while retail trade grew 6.9 per cent. For the full year, the volume index for wholesale and retail trade expanded 4.8 per cent. Yet behind the numbers, the economics of running a retail business are becoming considerably more complex.
Consumers can compare products across multiple platforms without entering a store. Online marketplaces have widened choice and intensified price competition. Retailers are simultaneously dealing with higher rentals, manpower costs, utilities and other operating expenses, while technology and artificial intelligence (AI) are changing how products are discovered, marketed and purchased.
CHAT MALAYSIA SME spoke with Dato’ Liew Bin, President of the Malaysia Retail Chain Association (MRCA), about the changing economics of retail, why physical stores continue to matter, the role of AI and data, the advantage smaller retailers may now possess, and why Malaysia’s culture could ultimately become one of the industry’s strongest competitive assets.
The Changed Consumer
Dato’ Liew traces much of retail’s transformation back to the internet and, subsequently, the smartphone. What started as another channel has progressively altered consumer behaviour. Today, the customer standing in a store is no longer comparing that retailer only with the shop next door. The comparison can involve multiple platforms, sellers and countries.
“Spending did not change. People still buy what they need to buy,” he said. What has changed is how consumers decide where to spend. Previously, online shopping was often used to find something unavailable locally. Today, particularly among younger consumers, comparing online has become an ordinary part of purchasing.
“Anything I buy, I compare all platforms,” Dato’ Liew said. Consumers can compare prices “anytime, any minute” before deciding where to buy. The result is greater transparency for consumers but considerably more competition for retailers. That pressure is also contributing to retailers’ dependence on promotions, vouchers and discounts. But price cannot be the only answer. The physical store still has a role.
Dato’ Liew shared that the advantage of the physical store is something digital commerce struggles to replicate. “First, you’ve got a human touch. Second, you can touch and feel the product.” But the role of physical retail he said is becoming broader than the transaction itself. Malaysia’s malls remain social destinations where people meet, shop and spend time together. In Dato’ Liew’s view, this shift in consumer behaviour will need retailers to increasingly compete on experience, interaction and relevance, rather than simply availability.
More Outlets Do Not Necessarily Mean Growth
The changing environment also challenges one of retail’s oldest growth equations. “Traditionally, when you talk about growth, you open more chain stores,” said Dato’ Liew. But as shopping centres multiplied, retailers expanded alongside them and several outlets within the same catchment can end up serving essentially the same population.
Dato’ Liew shared, “Growth may not necessarily follow by opening more outlets,” he said, adding that even when revenue increases, net income and profitability may not follow. Retailers therefore need the discipline not only to decide where to open, but when an existing outlet no longer makes economic sense. “You must decide whether you want to close or not. That’s a very important decision for the retailers.”
Technology could help retailers make those decisions better. For Dato’ Liew, one of AI’s most practical applications is understanding the data businesses already possess. Retailers can use technology to analyse stock, sales and customer demand, giving management greater visibility over what is selling, what is not and who their customers are. The advantage comes from translating information into better decisions on inventory, customers, marketing and operations. Dato’ Liew’s message is succinct: “If you don’t adapt to it, you lose out.”
Small Can Be Beautiful
Interestingly, Dato’ Liew opined that the changing landscape may create opportunities for smaller retailers. “The bigger the chain store you are, you could be facing bigger challenges,” he said. Smaller businesses can possess a different advantage: agility. “When you are small, you’ve got a lot of personal touch.”
Owners can stay closer to customers, respond faster and make decisions without multiple management layers. This can be particularly powerful in F&B and specialist retail, where customers may return because of a product, personality, recipe, craft or experience associated with one particular business.
Dato’ Liew shared that being small should not automatically be interpreted as being less successful. A highly profitable single outlet can be a stronger business than a larger network burdened by escalating costs.
A Home for Retailers
“A Home for Retailers” is a philosophy that shapes Dato’ Liew’s direction for MRCA. When he assumed the presidency, he wanted the association to become what he calls a “home” for retailers, not only established chains, but smaller and emerging businesses. “The big brands may not need us as much as the smaller brands,” he said. At the same time, he emphasised, established brands provide experience and mentors who can help younger retailers. “Big and small, we need to move together, grow together.”
Looking towards 2030, Dato’ Liew believes one of Malaysia’s strongest retail advantages may be something competitors cannot easily reproduce: culture. He opined that Malaysia’s multicultural population, languages, food and hospitality create an experience he believes can become a commercial asset.
“This is something that nobody can take from us,” he said. And that advantage does not have to remain within Malaysia. “As retailers, we can export our culture.” For Malaysian F&B and retail brands, international expansion can be more than exporting products. It can be about taking a recognisably Malaysian experience into other markets.
Keep Your Legend
Dato’ Liew’s closing message, however, returns to the independent retailer. Across Malaysia are businesses handed from grandparents to parents and then to the next generation. Some are now struggling with rising costs and changing consumer behaviour. He believes they must change with what he calls the “disruptive economy”. Working hard is no longer enough; retailers also have to work smart. But adaptation does not mean discarding what made the business special.
“Focus on that one tradition that makes your business special.” And for the retailer operating only one outlet, his message is particularly poignant. “Do not feel discouraged. Sometimes small is beautiful.”
Because ultimately, success in the next chapter of Malaysian retail may not be determined simply by how many outlets a business can open. It may depend on understanding what customers cannot easily find anywhere else and having the discipline to preserve it. As Dato’ Liew put it: “You are not keeping a shop. You are keeping a legend.”
Sources for Opening Statistics
Department of Statistics Malaysia (DOSM), Gross Domestic Product 2025; and Performance of Wholesale & Retail Trade, December 2025.
