Retailers hopeful for holiday shopping surge
Jamaican retailers heading into the year’s busiest shopping period are cautiously optimistic that sales will improve over the holiday season despite rising cost of living pressures and other challenges affecting the industry.
Retailers who spoke with Observer Online painted a daunting picture of the sector at the moment, with inflation, crime, competition from overseas online shopping providers, and bad weather cited among a confluence of factors stifling business.
Gassan Azan, who operates two major retail chains, MegaMart supermarket and Bashco dry goods store, says sales have been flat since the back-to-school shopping period late summer.
“We have seen completely flat dollar sales,” Azan said. “We have much more transactions but the same dollar sales, which tells you that you’re not losing customers but the customers are buying less every time.”
Anthony Pearson, managing director of Lloyd’s Department Store in Montego Bay, likened the current market to having “hit a brick wall”.
Both Pearson and Azan pointed to rising cost of living as a major factor impacting sales, noting that it has eroded consumer purchasing power.
“Cost of living and utilities, when that eats out salaries, it is a problem. For the man in the street on a fixed salary, it is really challenging,” Pearson said.
Azan noted that the impact is particularly noticeable at MegaMart, where he said the average basket content has changed because of rising prices.
“You have the situation where ground provisions have gone out of whack, price-wise, because of exports. People are not planting anymore, so the exporters are grabbing it up and there is very little on the local market,” Azan reasoned, adding “couple that with the drought of the summer, and then the floods that we are now getting, it is a disaster for the food basket of Jamaica.”
Sonia Trehan, general manager of clothing chain Lee’s Fifth Avenue, cited the proliferation of overseas online shopping service providers – shipping companies facilitating purchases online directly from the US and other foreign markets— as a major issue affecting local retailers.
“Going by what we normally do, we are seeing a little decline, I am not sure if it’s because of the mushrooming of the online business,” Trehan said. “We have always voiced that online shipping is growing uncontrollably … the cost is that the local retail industry has been suffering.”
Pearson expressed similar sentiments to Trehan and cited what he indicated was an uneven playing field in taxes paid at the point of entry. Duty concessions are given to individuals when they shop online and import items up to a value of US$50. Commercial importers, however, reportedly pay full customs duty and other charges along with GCT to land the same items for retail.
“Once it is under US$50, there is no duty, which is so wrong because we have to pay serious duties on everything that we import,” Pearson said.
Pearson said high crime was also having a negative effect on retail activity, especially in St James where a flare-up in violence recently led to the government imposing a state of emergency in the parish.
“The crime situation affects everything – all the parties and functions,” he said. “Persons are (hesitant) about going out and if you don’t go to a function you don’t need a new shirt.”
Exacerbating the difficult market conditions has been the persistent rainfall since October – traditionally the wettest month – which the retailers believe has kept customers away from the shopping plazas and malls.
“It has been extremely slow, probably mostly attributable to the terrible weather we have had,” Michael Ammar Jr, owner of the Ammar’s chain of fashion stores, said.
Still, Ammar Jr and the other retailers expressed cautious optimism that consumers will embrace holiday spending, with the Ammar’s boss citing pent-up demand, lower prices and new merchandise as factors that could drive sales over the next few weeks.
Ammar Jr said his store will be rolling out new merchandise beginning Black Friday, the shopping extravaganza that originated in the US and has spread across the world including Jamaica.
“Of course the season starts Black Friday weekend. This is the time of the year that our entire stock is new,” Ammar Jr said. “So, we are hoping for a good Black Friday weekend and hopefully that will go into Christmas.”
He said consumers will be met with favourable prices due to a decrease in freight rates from source markets such as China and the US.
“In our business, I am seeing very few price increases and more price reductions. We had seen some really big increases due to that freight problem with China and the whole hangover from COVID – I think that’s mostly out of the system now,” Ammar Jr said.
Pearson said Lloyd’s has gone “overboard” in its preparation for the season, stressing that “if you don’t have the goods, you don’t have a chance.”
He added, “We will be well stocked and, as usual, Lloyd’s will have all the right stuff at the best prices and the brands that people want… we are hoping that that, along with the atmosphere that we create, will encourage people.”
Trehan meanwhile noted that the bumper holiday shopping season “is starting later and later” each year and, against that background, expressed cautious optimism that retail activity will pick up significantly as it gets deeper into the holiday period.
“People used to start shopping from October and now people are starting in November. They are postponing buying decisions as much as possible. That’s mainly because of the general economy,” Trehan said.
This article was originally published in the Jamaica Observer’s 2023 Holiday Shopping preview.