For small businesses in Malaysia, consumer trends are one of the most overlook data mainly due to lack of resources or these data are available at high prices—which could be afforded only by large firms and corporations.
Certain product trends or fads are easy to identify through market observation and word of mouth. However, trends in consumer behaviours are what we are going to share with readers in this article. These trends are some highlights based on Euromonitor International reports and we picked some of the consumer behaviour trends in Malaysia that might be useful for your business or if you are going to start one.
1. Consumers Increasingly Going Online to Shop
In 2013, online sales in Malaysia reached more than RM1.2 billion and Google 2014 survey reported that “two of five Malaysians (43%) who have never purchased online before will start in the next 12 months”.
Although some consumers are wary about providing financial details, most of them are attracted to buy online due to transparency in deciding prices, values and availability of products. The new wave of online consumers that we will see soon on the rise is consumers who shop for services online.
How this could be important for your business:
We have posted before that close to 70% of SME companies in Malaysia have yet to have their business websites or strengthening their online positions. If you are on of these 70%, better make a move now.
2. Consumers In Travel Industries Are Willing To Spend More, But…
More Malaysians have chosen to travel during their holidays—both domestically and internationally—and this growing trend is not expected to change significantly, at least in the short term. Consumers are expected to raise their spending levels by 17%. Out of potential travellers in this country among the consumers, 91% are planning to travel more domestically.
On the other hand, most consumers are still intent on finding a bargain. According to a survey, 75% of Malaysian travellers said their choice of holiday was often determined by them being able to secure a good price or a special offer. Most of consumers in Malaysia booked their last minute hotels/packages online and a small (yet growing) numbers are constantly going online to search for better offers (refer to our first point above).
How this could be important for your business:
If you are a tour related services operator, you can plan for the best deals to make your businesses stand out from your competitors. Deals that are value for money are more attractive to consumers especially with our current fluctuation of Ringgit. Also, consider to boost your business presence online through websites and social media.
3. Household Debts Are Rising Among Consumers
Households in Malaysia have been on a borrowing spree in recent years and debt levels have increased considerably, threatening to disturb consumer-spending in uncertain economic times. In 2013, the outstanding balance of mortgages/housing borrowing reached RM47,353 per household, an increase of 38% from 2008.
Most of the debts occurred due to Malaysians treating the property market as new deposit boxes. Another large factor that contributes to the number of increasing household is automobiles. Most consumers borrowed money from banks to purchase new cars and other types of automobiles.
How this could be important for your business:
If our country inflation rates rise higher, brick and mortar businesses selling products have to expect a drop in spending from consumers. Thus, prepare a plan for bad days. For any aspiring startup entrepreneurs, this also could be a good indicator to start business that could help with savings and getting discounts in products for consumers.
4. Busy Consumers Cook Less At Home
Faced with long commutes, ever-busier lifestyles and the need for convenience, it is not surprising that modern Malaysian consumers are choosing to dine out more often, particularly consumers in living in fast-paced urban areas. However, this factor added with ever growing traffic jam and parking scarcity contribute to the rise in drive through or home delivery.
Another concern from consumers are the relatively low options in getting comfort foods as most of the available home delivery or drive through services are associated to fast foods and big names brands.
How this could be important for your business:
This is one of the reasons services like Foodpanda, Be Malas and MakanSharing prosper. In fact, KFC also just jumped into the wagon! If you operate food and beverages business, don’t forget to include a delivery option (or sign up with delivery partners).
5. Middle Class Consumers Spend The Most, But Are Starting To Control
In past years, consumer expenditure in Malaysia has increased steadily in line with the country’s economic growth as well as most middle-class households’ comfort with subsidised food, fuel and energy prices. In 2013, consumer expenditure reached RM530.6 billion, up from RM408 billion in 2008, reflecting growth (in real terms) of nearly 30%.
But recently, government decisions to relax subsidies, coupled with the worrisome growth in the inflation rate, high property prices, slow wage growth and possible interest rate rises, have convinced many consumers to watch their spending more closely and, in some cases, curb it altogether.
How this could be important for your business:
Basically, this point is almost similar to point number three above. For new entrepreneurs, consider something else than brick and mortar (presumably online businesses); while existing businesses could focus more on being value for money in terms of promotions. Or you can start a startup that can overcome this problem effectively.
This article was adapted and edited from an article on Bantu.my, a Malaysian business, tech & creative services market platform. The original post is titled ‘5 Consumer Behaviour Trends In Malaysia That You Need To Know’ and can be read here.