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PETALING JAYA: MR DIY Group (M) Bhd
expects a change in buying patterns among customers as they adjust to the combination of rising inflation, burgeoning costs and increasing interest rates.
Chief executive officer Adrian Ong said value and white-label brands will become a significant part of household spending, creating an opportunity for the company to cement its relationship with consumers.
“We will be focusing on year-round bargain-driven promotions, festive promotions around major festivals like Chinese New Year, Hari Raya, Deepavali and Christmas, as well as volume purchasing and repeat-buying incentives to keep customers coming back for more,” he said in the group’s recently released annual report.
“Moving forward, as gross profit margins have recovered, we will also have the flexibility to drive more out of cyclical promotional campaigns,” Ong added.
He pointed out that changes in generational demographics are also coming into play.
“We have to rethink our approach to recruiting and engaging millennials and Gen-Zs, who are forming a significant part of the workforce.
“Our human resource, marketing and sales teams are focused on ensuring we understand this change in behaviour and adapt accordingly so that we stay relevant to this important base.”
Ong said the combination of local and global challenges will keep the company on its toes.
“But I am confident we have the brand stature, financial stability, operational know-how and management expertise to achieve sustainable growth, in turn continuing our strong track record for generating and distributing value to our stakeholders,” he said.
Ong said indicators from major central banks at the end of 2022 signalled a continued willingness to raise interest rates to bring down inflation.
“This will have a direct impact on every man’s wallet and overall spending power. The Russia-Ukraine conflict and US-China tensions over Taiwan both have an impact on commodity and food prices globally.
“What we know for sure is that governments and policymakers around the world are keeping a close eye on emerging events and will react. We in turn will have to be responsive, agile and flexible.”
Despite this, Ong said the group remains optimistic about growth prospects in 2023, given the well-diversified nature of the Malaysian economy and its proven track record of withstanding shocks.
“The country’s well-developed infrastructure, competitive manufacturing and services sectors, substantial natural resources and young population are expected to support growth and keep the economy resilient.
“The expectation is that broad retail sales and specifically the home improvement sector in Malaysia are expected to recover post-Covid.”
Ong noted that Frost & Sullivan remains bullish on the sector and anticipates that it will grow at 8.6% per annum over the next five years, almost back to pre-pandemic levels of 12.7% per annum.
“Our market share in the sector has grown considerably over the years and in 2022, it has further improved from 38.5% in 2021 to 41.8%.”
Globally, Ong said there were positive indicators.
“The tight global container shipping market, which severely impacted freight costs, resulted in inventory delays and put pressure on overall input costs, has eased.
“This will eventually bring costs down and we expect to see the full benefit of this in 2023.”
Ong also said the ringgit is slowly but surely strengthening against the benchmark dollar and yuan, which will help the company manage input costs.
For its financial year ended Dec 31, 2022, MR DIY’s net profit rose to RM472.95mil from RM431.83mil in the previous corresponding period, while revenue improved to RM3.99bil from RM3.37bil a year earlier.
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