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Fashion Industry and Fashion eCommerce Trends in Malaysia 2021: Learnings from 2020

Benedict Leong

Muslim lady in a tudung receiving a parcel she received online

The year 2020 has come and gone, and many Malaysians and businesses in Malaysia have learned to adapt to the year’s extraordinary circumstances. From adapting to spending more time at home to experimenting with strategies to make up for a shortage of foot traffic at stores, both Malaysians and businesses in Malaysia have been finding ways to build resilience during these times.

The fashion industry has been particularly impacted by these circumstances, but that doesn’t mean that Malaysians have stopped buying fashion completely. Zalora notes that younger Malaysians are still shopping online for clothes,1 while periods like Ramadan and end of year sales still showed spikes in fashion demand during 2020.2 & 3 & Businesses have been experimenting with ways to reach out to people who are now spending one hour more on the internet during lockdowns and engage with them.

All these were relevant during Malaysia’s 2020 lockdowns, and with Malaysia reentering another round of full lockdowns this January 2021, the learnings from 2020 are likely still highly relevant this year too.

An Overview of Fashion and Retail in Malaysia in 2020

Key statistics on Malaysia's fashion retail and eCommerce industry - Q1 to Q3 industry performance and key insights

2020’s Consumer Shifts: Saving More and Going Digital

In quarter 1 and quarter 2, Malaysia began its lockdown known officially as Movement Control Orders (MCO) in March 2020.4 The MCO was extended three times until 13th May 2020. During this period, non-essential stores which include fashion and apparel stores were closed and Malaysians could not travel farther than 10 km from their homes for purchases.

Below are the retail and fashion growth figures for the first and second quarters in Malaysia in 2020 vs their 2019 counterparts:

Q1 2020 vs Q1 2019:

  • Retail industry: negative 11.4%
  • Fashion and Fashion accessories subcategory: negative 30.5%

Q2 2020 vs Q2 2019:

  • Retail industry: negative 30.9%
  • Fashion and Fashion accessories subcategory: negative 44.2%

Job security concerns and economic uncertainty led to an increased need to cut back on expenses. Malaysian consumers began shifting expenditure more towards online purchases of essential goods like groceries and personal care products like face masks and hand sanitiser.5

In a survey conducted by DIA brands and Rakuten insight in Q2 2020, 75 percent of Malaysian respondents surveyed were concerned about job security and 46 per cent mentioned that they will switch over to cheaper brands.6 A survey conducted by Standard Chartered mentioned that 82 per cent of Malaysians are becoming more careful with their spending habits, with 41 per cent mentioning that they will be spending less on clothes.7

On the other hand, the need for social distancing led to more Malaysians becoming more comfortable with eCommerce. iPrice reported that Malaysians’ average online basket size grew by 24 per cent in the first half of 2020 compared to the same period in 2019.8 In Google and Temasek’s 2020 report, Malaysians indicated they were spending nearly double the amount on online shopping compared to pre-Covid levels.

Google and Temasek’s 2020 report mentioned that 47% on average cited ‘save time and energy’ as the top reason to shop online.9 In a survey sent out by Janio Asia, 65% of those who said they would buy fashion apparel online in 2021 stated convenience and staying safe from the virus to be the primary reason for shopping online.

With older citizens bearing greater risks if they are exposed to COVID-19 and movement restrictions making it harder for people to visit them, more of them are trying eCommerce for the first time. The Edge reported that Lazada Malaysia saw a 120 percent and 220 percent increase in users and buyers on Lazada aged 50 and above respectively.10

This doesn’t spell the end of physical retail for fashion, however, as 86 per cent of those that Janio surveyed who prefer physical retail prefer it when they are able to touch and feel the products and be more certain that they are getting the product they are paying for. This could pave the way for accelerating omnichannel retail’s adoption in the country.

Malaysia began adjusting movement restriction rules in phases, with more businesses and industries allowed to start operating in the fifth phase, also known as the Conditional Movement Control Order (CMCO) from 4th May 202011 until early June 2020.12 This was just in time for Ramadan celebrations, the Muslim holy month that ends with Hari Raya Aidilfitri celebrations on 24th May 2020. During this period, deep discounts and a focus on collection size-led pricing strategies helped to recover some fashion demand.13

Malaysia then entered the next phase of the MCO known as the Recovery Movement Control Order (RMCO) which began on 10th June 2020.14 This ruling allowed interstate travel to resume. It was originally planned to end on 31st August 2020. With malls and stores able to open back up, albeit adhering to social distancing measures, in quarter 3, fashion retail was not performing as poorly as the previous two quarters, which lends credence to the theory that many Malaysians still have a preference for brick and mortar fashion shopping:

Q3 2020 vs Q3 2019:

  • Retail industry: negative 9.6%
  • Fashion and fashion accessories subcategory: negative 12.5%

However, in late September 2020, COVID cases began resurfacing in Malaysia including in major shopping malls.15 This led to the RMCO being extended to 31st December 2020.16

In addition to that, around a third of the Malaysian population needed to be placed back under CMCO restrictions to curb this new wave of infections starting from 14th October 2020 17 and originally scheduled to end on 27th October 2020.

This needed to be extended to December 6th 2020 18 across multiple states, with some states only having CMCO restrictions lifted on 20th December 2020.19 Fortunately, stores were still allowed to operate during this period, albeit not at full capacity as they needed to abide by safe distancing measures.20

COVID infection cases were still rising in January 2021, which led to a new set of movement restrictions in Malaysia being announced for 13th January 2021 21 in some states before being extended almost every state in the country starting from 22nd January 2021.22

Notable Trends in Malaysia’s Fashion Industry and Fashion eCommerce Market

Malaysian fashion and retail insights 2020 and 2021 - Young malaysians still shopping for fashion online, Ramadan still saw fashion demand spikes, and what initiative businesses are taking to adapt

While fashion retail was recognised as one of the hardest hit industries due to the pandemic, both consumers and businesses have been taking major steps to adapt to the situation. Most of these changes were brought about by the need to stay safe during lockdowns as well as the economic uncertainty of 2020, and these are likely to still continue into 2021 with the Malaysian government’s recent MCO announcement in January 2021. 23

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Higher Interest in Luxury and Sportswear, Younger Malaysians Still Interested in buying Fashion Online

Luxury brands saw an increase in search traffic in Southeast Asia after the COVID-19 breakout compared to before. iPrice compared the search volume for these and found increased interest in brands like Chanel (274%), Saint Laurent (306%), Rolex (161%), and Louis Vuitton (555%).24

Notably, iPrice found that luxury watch brands like Rolex and Tudor (51%) saw increases in search interest despite putting their product new on hold due to pandemic related disruptions. While not confirmed, one possible angle for this is using luxury watches as investment items.

iPrice also included sportswear giants like Nike (605% increase) and Adidas (577%) in their luxury brand interest research and found incredible jumps in search interest in Southeast Asia. Zalora backs this up by showing increased google searches in Malaysia for yoga mats (164% increase), dumbbells (52%) and resistance bands (135%) indicating that Malaysians are interested in turning their homes into hubs for all their lifestyle needs, including fitness.25 A search on Google Trends26 further supports this finding:

Younger Malaysians were still shopping for fashion even during the early parts of Q2 when the lockdown was in full force. Based on data from consumer research firm vase.ai27 on 21st April 2020, 61 percent of the millennials aged 24 – 34 were still spending on clothes.

Based on Zalora’s data, “individuals with the highest disposable income who spend most of their time shopping online fall into the age group of 26 to 30 years old, amounting to 24 per cent of the total ZALORA market share” in Southeast Asia including Malaysia. In particular, Zalora points out that younger female shoppers in the millennials and Gen Z segments are primary consumer segments that fashion brands can target.28 We’ll be covering this segment in more detail in a follow-up article.

Special Occasions like Ramadan Still Saw High Fashion Demand, Year End Shopping Festivals Beat Records

 

Malaysia is a multiracial country with each group having their own unique cultural holidays during the year. Malays, who’s primary religion is Islam, make up the majority of the population, followed by the Chinese, Indians and other races.

Occassions like Lunar New Year, Deepavali and Hari Raya Aidilfitri – which ends off the Muslim holy month of Ramadan – are when many Malaysians take the time to visit friends and relatives.

Particularly during the Ramadan period, Malay families enjoy buying matching clothes for the whole family in addition to homewear items to prepare their homes for guests. In Islam, modesty is a virtue which is expressed by not wearing clothes that do not reveal much of one’s skin or figure which makes Malaysia a primary market for modest fashion.

While home visits were hampered by social distancing measures in 2020, occasions like Ramadan still saw demand for fashion spiking during 2020. The Google Trends report29 also showed terms like ‘baju raya 2020’ (Raya Clothes 2020) and ‘Zalora raya 2020’ still had search volume in 2020.

In a report by Omnilytics,30 demand for fashion was initially weak in the early days of Ramadan and only began improving nearer the end of Ramadan. This was driven by deepening discounts throughout Ramadan to boost sales. Modest fashion brands’ pricing strategies were adapted by opting for a collection size-led strategy by reducing prices for larger intakes, which matches the habit of buying matching clothing for the whole family. Omnilytics also reported that Zalora’s Raya collection “recorded over 20% uplift in sales in both Malaysia and Indonesia.”

Malaysia is also no stranger to Q4 shopping season favourites like Singles Day and 12.12, which still managed to garner good sales volume in 2020. 12.12 sales on both Lazada31 and Shopee30 both broke records according to Lazada Malaysia and Shopee Malaysia. Top selling categories were primarily suited to activities at home such as furnishings and home improvement, toys and games as well mobiles and tablets.

While fashion and clothing were not the main items being purchased, sports and outdoors33 products sold well on Lazada Malaysia indicating that athleisure and sportswear could likely continue to see demand in 2021.

Brands can take note that in addition to luxury and sportswear, other categories like modest fashion still have buyers in Malaysia as long as discounts and promos are adapted to suit the right occasions and consumer profiles.

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Digital Initiatives and Other Measures Businesses Have Been Adopting in 2020

Content is King, and Live Streaming is Picking Up Steam

With Malaysians needing to stay home more, many wound up spending more time online. Google and Temasek’s 2020 e-conomy report highlighted that across all Southeast Asian markets covered, including Malaysia, digital engagement increased by an additional hour of personal use per day during lockdown. They also mentioned that 8 out of 10 users in the study felt that technology was helpful in dealing with the pandemic.34

Retailers that were forced to move online have also been seeing some success. The Straits Times interviewed Poya Boutique owner Adilah Khairudin who needed to scramble to create an online presence for her store when the lockdowns were imposed.35 She curates content such as photo collections and short videos on platforms like Instagram and IGTV which has helped her win customers in states beyond the Klang Valley, where most of her customers were mostly based prior to the lockdowns.

Another trend that took off was live-streaming. Zalora36 points to the rise of live sessions with influencers and also ‘shoppertainment.’ For an example of live sessions, Zalora collaborated with “influencers, gym partners, and brands to encourage more reach and customer engagement for each session” by running 30 minue workout sessions via live Instagram as part of their #SaturdaySweat campaign. This resulted in a net merchandise value increase of 55.5 percent for May 2020.

Zalora defined shoppertainment in their report as “a bridge between brick-and-mortar and online channels by offering the consumer (a) myriad of engaging content through a digital shopping platform.” Zalora points to examples by Lazada such as their “See Now, Buy Now” model as well as games. Lazada also live streamed its birthday concert exclusively on its app featuring Dua Lipa. The Lazada platform attracted around 318 million visits during the celebration and gained 15 times the daily average sales during the period.37

With Malaysians likely to continue staying at home with the latest MCO extensions scheduled this year, continuing to engage them online via these channels could be a safe investment for brands.

Omnichannel Retail and the Shift to eCommerce

The pandemic situation doesn’t necessarily sound the death knell for physical retail, as many Malaysians still have a preference for shopping for clothes at physical stores, as they are able to touch and feel the item before committing to a purchase.

In Janio’s survey for Malaysian fashion and apparel shopping behaviour during COVID-19, nearly half of shoppers surveyed mentioned they prefer shopping at brick and mortar stores for that reason, and some were still skeptical about ensuring that they would be receiving the right item if they shopped online.

On the other hand, many are also warming up to eCommerce in order to stay safe, as well as for the cost-savings and convenience – as the record-breaking successes of the year end sales in 2020 have shown.

This means that in Malaysia, there is more room for omnichannel retail to play a role in “bridging the gap between physical and digital shopping experiences.” Zalora mentions FashionValet’s example where shoppers can search for an item’s availability or size online before heading to a physical outlet.38 There is also room to explore other technology like using virtual try-ons where users can ‘try-on’ the item digitally before committing to a purchase, with the aim of reducing returns due to wrong sizes.39

With the lockdowns and the virus lowering footfall for most brick and mortar stores, it’s fortunate that logistics, courier, and international shipping services are earmarked as essential services to help keep the eCommerce logistics engine for fashion businesses running. Partnering with a logistics provider with the right coverage in Malaysia along with quick and reliable customs clearance is paramount to giving your fashion customers a smooth eCommerce experience.

With Janio’s experience in regional Southeast Asian customs and a wide array of reliable logistics partners in Malaysia and the region, our modular logistics solutions have you and your business’s unique shipment needs covered. To find out more about our services, click on the banner below:

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Reference list

  1. Zalora Southeast Asia Trender Report 2020 
  2. Omnilytics – Muslimah Fashion’s Top Brands in H1 2020 (Index) 
  3. Malay Mail – Lazada Malaysia in record-breaking performance during 12.12 Grand Sale 
  4. New Straits Times – 14 Day Movement Control Order Begins Nationwide Wednesday 
  5. Vase.ai – Consumer Purchase Behaviour Changes Amidst COVID-19 – Part 2 [Data] 
  6. Rakuten Insight and Dia Brands – The Next Normal – Covid-19 Consumer Survey 2020 SG & MY 
  7. The Edge Markets – Over two-thirds of Malaysians now more comfortable shopping online after Covid-19 — StanChart 
  8. iPrice – Southeast Asian E-commerce, 1H / 2020: Analyzing Impacts Of COVID-19 on Online Shopping 
  9. e-Conomy SEA 2020 report – Google
  10. The Edge Markets – Seniors becoming digitally savvy during pandemic 
  11. Malay Mail – Minister: Malaysia now in Phase Five, Putrajaya’s new rules for CMCO applies nationwide | Malaysia 
  12. The Star – PM: CMCO extended till June 9 
  13. Omnilytics – Muslimah Fashion’s Top Brands in H1 2020 (Index) 
  14. Muhyiddin: CMCO to be replaced with recovery movement control order with further relaxations beginning June 10
  15. Malay Mail – List of notable malls in Klang Valley with reported Covid-19 cases in third wave
  16.  New Straits Times – RMCO extended until Dec 31, says PM Muhyiddin
  17.  Straits Times – Kuala Lumpur, Putrajaya, Selangor and Sabah placed under Covid-19 movement curbs again 
  18. Prestige Online – CMCO in Malaysia extended to Dec 6 with exception for Perlis, Pahang, Kelantan and Sarawak 
  19. The Edge Markets – Government to end CMCO in several states 
  20. The Edge Markets – Still no light at the end of the retail tunnel 
  21. Straits Times – Malaysia to impose MCO for 2 weeks from Jan 13 in several states to curb Covid-19 cases: Muhyiddin 
  22. The Edge Markets – Entire nation to come under MCO except Sarawak — Ismail Sabri 
  23. Ibid
  24. iPrice – Why the Fashion Industry in Southeast Asia Will Survive COVID-19’s Aftermath 
  25. Zalora Southeast Asia Trender Report 2020
  26. Google Trends – Fashion, Nike, Adidas- accessed at 23rd January 2021
  27. Vase.ai – Consumer Purchase Behaviour Changes Amidst COVID-19 – Part 2 [Data] 
  28. Zalora Southeast Asia Trender Report 2020
  29. Google Trends – Fashion Zalora FashionValet – accessed at 23rd January 2021
  30. Omnilytics – Muslimah Fashion’s Top Brands in H1 2020 (Index)  
  31. Malay Mail – Lazada Malaysia in record-breaking performance during 12.12 Grand Sale 
  32. the Malaysian Reserve – Shopee breaks record with 12.12 sale despite challenges 
  33. Malay Mail – Lazada Malaysia in record-breaking performance during 12.12 Grand Sale 
  34. e-Conomy SEA 2020 report – Google
  35. Straits Times – Coronavirus: Malaysian retailers move online to stay afloat 
  36. Zalora Southeast Asia Trender Report 2020
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