The Malta Independent 25 April 2019, Thursday

TMBW Editorial: Uncovering retail issues

The Malta Business Weekly Thursday, 7 February 2019, 15:07 Last update: about 4 months ago

According to a release by Eurostat last week, Malta's retail sector suffered the second largest decrease in retail sales in the EU.

Malta's retail trade from December 2017 to December 2018 decreased by 1.9% volume-wise, surpassed only by a 2.2% decrease in Germany. Sweden came third with a 1.6% decrease.

On the other hand, retail trade increased in Slovenia, Ireland and Poland,  with increases of 11.2%, 7.5% and 4.9% respectively.

Malta, and the other two states, bucked the trend. In the euro area in December 2018, compared with December 2017, the volume of retail trade increased by 2.5% for automotive fuels, by 0.7% for food, drinks and tobacco and by 0.5% for non-food products.

In the EU28, the retail trade volume increased by 3.3% for automotive fuel, by 1.2% for non-food products, and by 0.6% for food, drinks and tobacco.

It was only in the last month of 2018 that decreases were registered.

In the euro area in December 2018, compared with November 2018, the volume of retail trade fell by 2.7% for non-food products and by 0.3% for food, drinks and tobacco, while it increased by 0.5% for automotive fuel.

In the EU28, the retail trade volume fell by 2.6% non-food products and by 0.4% for foods, drinks and tobacco, while it increased by 0.7% for automotive fuel.

This comparison shows that the retail sector generally across the EU reflects the general trend of the economy which is slowing down and heading in some countries like Italy and even Germany into a recession. Malta is no longer an island, cut off from the trends abroad.

In Malta's case, the negative trend as regards retail is exacerbated by online purchases as well as by people going and getting stuff for themselves by means of the catamaran from Sicily.

So far, we have rather skimpy information. The GRTU, which usually issues a press release just after Christmas to speak about the trends over Christmas, has not done so, even though a full month has elapsed after the Christmas shopping days.

To be fair, GRTU, which was itself heavily involved, had issued a press release after Black Monday and is about to speak about the trend of retailing over a whole year.

One must also remember that the retail sector is a very important sector in the economy, perhaps even more than in other countries. We have shops opening in all towns and villages and quite heavy sums are spent to attract visitors and shoppers. Many retail outlets involve many more people around the venture, not just the employees. And when sales start going bad, the reverberations are felt not just by those directly involved but also by their families.

In a way, we have here what we can equally say about the whole construction industry - that density of offer does not always translate into more sales. On the contrary, maybe all these shops get into each other's way.

One must also consider that the sector lacks depth - few are those outlets who have back office capacities: most rely on imports.

At the same time, we can also see that the retail sector in other countries, such as for instance the UK, are consolidating, shedding jobs, closing outlets and coming together. We do not see much of this in Malta. On the contrary, as stated, we see more and more outlets coming on stream.

The retail sector is totally private enterprise and the government wisely steers clear of it. When it tried to so something, in the bad old 1980s, it failed miserably.

So it is the sector itself which has to find out the way ahead. Certainly the beggar thy neighbor tactic is counter-productive. Coming together, facing reality and avoiding measures that render things worse, for starters.

 


  • don't miss