Malaysia retail sentiment mixed as fading Raya and Middle East impact weigh

Past subsidy rationalisations temporarily slowed spending.

Malaysia’s retail sector is facing mixed sentiment as consumer confidence remains strong from late 2025 into early 2026, but uncertainty has risen due to fading post-Raya demand and geopolitical tensions in the Middle East, according to UOB.

The report said that past subsidy rationalisations temporarily slowed spending, even when real household impact was minimal.

The ongoing Middle East conflict has so far caused more noise than operational damage for key retail players.

AEON faces risks from sentiment-driven demand and potential increases in logistics costs over time.

DXN remains largely insulated operationally, with foreign exchange volatility as the primary concern due to its exposure to the Middle East market.

Meanwhile, Eco-Shop has experienced minimal disruption, with only slight margin effects at the SKU level. Spritzer is the most exposed, facing resin price volatility that could drive cost pressures or necessitate a review of pricing decisions.

The RM100 targeted MySara cash aid, disbursed from 9 February 2026 (totaling RM2.2 billion), has had a broader yet more moderate effect across retailers.

UOB also noted that expanded product eligibility and a wider outlet network have diluted spending concentration in supermarkets and grocery stores, reducing shopping urgency.