Less cheer, more pinch
The outgoing year seems to have ended on a rather mixed-note, even as the sales period opens up with a vengeance, suggesting that prices are being slashed all over the place. The suggestion was around, in fact, before the festive season really got going.
The outgoing year seems to have ended on a rather mixed-note, even as the sales period opens up with a vengeance, suggesting that prices are being slashed all over the place. The suggestion was around, in fact, before the festive season really got going. Reports flowing from abroad spoke of a veritable disaster among retailers there, mostly in London, the foreign city which, along with Rome, many Maltese consumers who travel are most familiar with.
The reaction in those cities was for retailers to bring forward their post-festivities stales, to offer many ranges of goods at heavily discounted prices.
The initial response was predictable. Seasoned consumers held back on their purchase plans, arguing that prices were set to fall further. They did and the bargain hunting started in earnest in the last week before Christmas. Following that, retailers cut prices further to induce more buying, or at least so they hoped.
Malta does tend to follow trends abroad, particularly in the two cities referred to above. And so it came to pass this year. Various stores began marking down some of their prices. One says "some" deliberately, since store owners act rationally and have a natural reluctance to lower prices earlier and lower than may be absolutely necessary.
Some clothing ranges, for instance, showed reduced prices early on, but on close examination these tended to be stock carried forward from last or previous years. Other retailers who anticipated unwavering demand for their products remained firm. Electronic supplies including computers and games, for instance, did not follow the trend evident in London.
There prices were slashed, such that like for like items were quite cheaper than in Malta, even before taking into effect the sharp drop of the pound sterling against the euro this year. Local traders still did a roaring trade over the Christmas period, with some doing better than others.
Now, with the New Year dawning, some stores are cutting prices in earnest to try to clear remaining stock to raise liquidity and space for the early 2009 deliveries. Some stores are knocking 50 per cent off regular prices, with others going up to 70 per cent. The signs are that garment stockists are leading the way downwards, which is understandable given the susceptibility of their products in hand to be overtaken by shifts in fashion.
Other traders marking down their goods include booksellers, such as those offering a free book for every two purchased. Electronics are still lagging the trend but one shouldn't be surprised if they, too, begin to shift their ground, depending on the amount and type of stock they are still carrying.
The mixed-note in the opening paragraph of this column owes its nature to the above outline analysis. Stores which pre-empted traditional movements by offering early reduced prices on some ranges of goods indicate that they traded well in terms of numbers of customers, and of units sold. Whether they did as well as they wanted to depends on the impact of reduced prices and of a reasonably high unit turnover on their revenue.
Other retailers make no bones about their dissatisfaction with their sales and revenue-generating performance over the festive seasons. Some speak of doldrums they had not experienced before.
Those who speak of considerable weakness in their turnover include restaurateurs, who claim that in general and allowing for the more popular ones restaurants were not as busy as some operators hoped they would be. Not many of these cared to discuss whether they had pitched prices realistically, given that the prices of some of their inputs should be coming down.
Others claim that not only did they take that into account, but also the fact that competition has grown while demand has weakened, if for no other reason because the tourist inflow and spend appeared to be weak in December, following upon a slim November.
Question now is what will be the position from January to early April, when retailers and restaurateurs hope for a pick-up in sales before the Easter period. Various factors will determine that. The tourist inflow, already falling, seems set to fall further, relative to last year, when it grew strongly in the early months.
This New Year the effect of the depreciation of sterling relative to the euro and the heightened competition in the Mediterranean sector and beyond could have a telling effect on arrivals. While actual lower income and the perception of a more sharply biting recession could reduce the tourist spend.
The recession factor will also exert a strong influence on Maltese consumers, as some become more worried than for several years to date about job security. The utilities tariffs factor will come into play later on. So far people are going by their perception that water and electricity bills are set to jump. Some of the bills issued before the close of the year were still of the estimated type, showing August and September at the then prevailing 95 per cent surcharge, and October calculated on the basis of the new tariffs.
It will only be when bills based on actual water and electricity consumption are issued that households will be able to compare their new and old bills. There could also be fresh distortion through lowered tariffs, as Enemalta begins pricing its fuel on the basis on the reduced cost of new supplies.
Meanwhile the perception of hard times ahead will remain and that will surely impact on consumption levels in all sectors of discretionary spending. If retailers and restaurants did not have much to cheer about in the festive season, they could very well turn more morose as they feel the pinch of the coming months.
The reaction in those cities was for retailers to bring forward their post-festivities stales, to offer many ranges of goods at heavily discounted prices.
The initial response was predictable. Seasoned consumers held back on their purchase plans, arguing that prices were set to fall further. They did and the bargain hunting started in earnest in the last week before Christmas. Following that, retailers cut prices further to induce more buying, or at least so they hoped.
Malta does tend to follow trends abroad, particularly in the two cities referred to above. And so it came to pass this year. Various stores began marking down some of their prices. One says "some" deliberately, since store owners act rationally and have a natural reluctance to lower prices earlier and lower than may be absolutely necessary.
Some clothing ranges, for instance, showed reduced prices early on, but on close examination these tended to be stock carried forward from last or previous years. Other retailers who anticipated unwavering demand for their products remained firm. Electronic supplies including computers and games, for instance, did not follow the trend evident in London.
There prices were slashed, such that like for like items were quite cheaper than in Malta, even before taking into effect the sharp drop of the pound sterling against the euro this year. Local traders still did a roaring trade over the Christmas period, with some doing better than others.
Now, with the New Year dawning, some stores are cutting prices in earnest to try to clear remaining stock to raise liquidity and space for the early 2009 deliveries. Some stores are knocking 50 per cent off regular prices, with others going up to 70 per cent. The signs are that garment stockists are leading the way downwards, which is understandable given the susceptibility of their products in hand to be overtaken by shifts in fashion.
Other traders marking down their goods include booksellers, such as those offering a free book for every two purchased. Electronics are still lagging the trend but one shouldn't be surprised if they, too, begin to shift their ground, depending on the amount and type of stock they are still carrying.
The mixed-note in the opening paragraph of this column owes its nature to the above outline analysis. Stores which pre-empted traditional movements by offering early reduced prices on some ranges of goods indicate that they traded well in terms of numbers of customers, and of units sold. Whether they did as well as they wanted to depends on the impact of reduced prices and of a reasonably high unit turnover on their revenue.
Other retailers make no bones about their dissatisfaction with their sales and revenue-generating performance over the festive seasons. Some speak of doldrums they had not experienced before.
Those who speak of considerable weakness in their turnover include restaurateurs, who claim that in general and allowing for the more popular ones restaurants were not as busy as some operators hoped they would be. Not many of these cared to discuss whether they had pitched prices realistically, given that the prices of some of their inputs should be coming down.
Others claim that not only did they take that into account, but also the fact that competition has grown while demand has weakened, if for no other reason because the tourist inflow and spend appeared to be weak in December, following upon a slim November.
Question now is what will be the position from January to early April, when retailers and restaurateurs hope for a pick-up in sales before the Easter period. Various factors will determine that. The tourist inflow, already falling, seems set to fall further, relative to last year, when it grew strongly in the early months.
This New Year the effect of the depreciation of sterling relative to the euro and the heightened competition in the Mediterranean sector and beyond could have a telling effect on arrivals. While actual lower income and the perception of a more sharply biting recession could reduce the tourist spend.
The recession factor will also exert a strong influence on Maltese consumers, as some become more worried than for several years to date about job security. The utilities tariffs factor will come into play later on. So far people are going by their perception that water and electricity bills are set to jump. Some of the bills issued before the close of the year were still of the estimated type, showing August and September at the then prevailing 95 per cent surcharge, and October calculated on the basis of the new tariffs.
It will only be when bills based on actual water and electricity consumption are issued that households will be able to compare their new and old bills. There could also be fresh distortion through lowered tariffs, as Enemalta begins pricing its fuel on the basis on the reduced cost of new supplies.
Meanwhile the perception of hard times ahead will remain and that will surely impact on consumption levels in all sectors of discretionary spending. If retailers and restaurants did not have much to cheer about in the festive season, they could very well turn more morose as they feel the pinch of the coming months.