Consumer spending lags ahead of holiday shoppingWednesday, November 24, 2021
BY ANDREW LAIDLEY
With inflation pushing consumer prices higher and the novel coronavirus pandemic creating uncertainty among shoppers, retail sales ahead of the Yuletide season are lagging, with expectations for a soft Christmas shopping season which normally accounts for roughly a quarter of annual sales for most businesses.
President of the MSME Alliance and member of the Private Sector Organisation of Jamaica (PSOJ) Donovan Wignal confirmed the lag in consumerism in an interview with the Jamaica Observer.
“A lot of people have been hit in their pocket book. The COVID pandemic has really caused a downturn period for people who usually would have disposable cash at this time,” said Wignall.
In the United States, for example, retail sale volumes were up 1.7 per cent in October as consumers started shopping earlier than usual. It's a sign of economic recovery and a return to normal commercialisation. To that end, retail corporations like Walmart, Target and Amazon have reported higher sales and profit for the third quarter ending October 31, 2021. These corporations have also increased their inventory ahead of the Black Friday frenzy this weekend.
Here in Jamaica, businesses are also gearing up for the extra spending which usually comes with the holiday season. But the MSME Alliance president is warning that retail sales might not be as vibrant as in previous years.
“Businesses in general have had their challenges with revenue so I'm not expecting that shopping will be as great as in former years. People are being more frugal now, people are watching that dollar, they are not spending more than they earn. Usually during Christmas people sometimes even borrow to buy the Christmas niceties but if you look around, you're not seeing the amount of Christmas trees or decorations that you'd normally see,” he explained.
This, despite the findings of the latest business and consumer confidence survey which revealed that both consumer and business confidence in the economy improved in the second quarter of 2021.
Meanwhile, past president of the National Consumers League (NCL) Trevor Samuels is urging consumers to get an early start on their Christmas shopping.
“I would tell people to go do their shopping early, look at the fine print in hire purchase contracts because sometimes most of the information is in the fine print and when you run into problems that's when you realise where most of the vital information is contained although it should not be.”
Samuels explained that there shouldn't be any shortage of food since most of Jamaica's imported food items are sourced in the western hemisphere, thereby circumventing the possibility of major logistical hold ups. However, he conceded that consumers are reluctant to spend, especially with rising grocery and gas prices.
Nevertheless, Wignal said he remains optimistic that Christmas bonuses will give consumers the boost they need to go out and start shopping.
“Around mid-December, for those who would probably have gotten bonus during that time, you would probably see a bump in consumer purchasing by then. But everything is phenomenally more expensive now — even going to the restaurants — prices have doubled and tripled.”
In the meantime, he noted that “merchants who normally buy their goods to take advantage of the Christmas sales would have done so long before now. Those cargoes would have either arrived already or are near Jamaica. We have not seen the usual amount of cargo clearance in this time for our business in particular, but what I know is that several of the merchants have pre-ordered because of the challenges with logistics.”