It is the peak of the shopping season when retailers hope to keep hearing their cash registers buzzing while issuing sales receipts. There was a time not so long ago when newspapers and TV stations regularly featured long queues of people braving the early morning winter weather to take advantage of Black Friday offers or New Year sales that opened and closed the Christmas retail reason.
Today it is more likely that people spend even more hours on their computers to buy goods from Amazon or eBay while sipping a glass of wine.
There are, of course, two very different faces of the retail industry. While the traditional physical retailers are pushing the panic button as they struggle with expensive high street rents for their shops and falling sales, the online retailers see their sales skyrocket as they compete to cut prices to gain market share.
Stacey Widlitz, founder of SW Retail Advisors, says that product offerings are a “sea of sameness” that has left department stores with only price as a distinguishing feature. They are “hitting the promotional panic button” to encourage footfall and ultimately eating into profit margins. Investors in shares of retailers that rely mainly on physical outlets for their turnover experience the sinking feeling when they see the retailers’ share prices of plummet.
The local retail industry is not immune to this evolving trend. Online sales keep increasing as now many more people are not just buying books online, but also furniture, household appliances and even cars. Were it not for the fact that we are an island with all the consequences of complex transport logistics that this implies, online retail shopping would be even more popular.
A visit to your local ironmonger, tool shop, household goods store or a clothing outlet often involves a couple of hours of travelling by car and searching desperately for a parking space in our shopping meccas of Valletta, Sliema, Ħamrun and Mosta. Some retailers have not given up and have relocated to shopping centres that offer adequate parking for their clients.
The internet has blown a hole in the physical retail industry
Unfortunately, supermarkets selling mainly food items are becoming greedy by giving up some of their parking facilities to rent the space to kiosks selling hotdogs, crepes or seasonal specialities. A Christmas market in the middle of the parking place of a supermarket is a sure way to deter clients from getting anywhere near to do their Christmas shopping.
Even more worrying is the fact that local retailers have done little to make their online sales enticing for today’s consumers that have such a wide choice when buying the goods they need. Some stores offer a minimal selection of products because they rely on the stock they hold in their warehouses. Others give insufficient details about price and delivery costs.
These retailers need to study the business model of Amazon to understand how a teenager living in Mellieħa can order the latest model of an iPhone and have it delivered to him from Singapore in a couple of weeks.
There was a time when renting a shop in Valletta would cost you a fortune that one hoped to recover from booming sales all the year round. Those days are gone. Retailers cannot survive just on Christmas season sales when many still follow the ritual of going to well-lit and attractively decorated shopping malls in our city centres. The retail businesses that rely on physical outlets need to reinvent themselves. The internet has blown a hole in the physical retail industry. Yet the craze for building even more showrooms seems to remain strong in our congested island. There will always be some who find that retail therapy is the best way to deal with stress, but this therapy is increasingly being provided with less hassle by retailers that rely on a bricks-and-clicks strategy to serve their clients and boost their profits.
The retail banking industry is also feeling the need to change the way it delivers its services to customers. We may be a decade behind the current retail banking strategy of many banks in continental Europe. When the present phase of justified concern about the importance of know-your-customer procedures calms down, it should become easier to open a bank account without visiting a physical branch in a city centre.
Hopefully, we do go to the extreme that some European banks are going to by removing ATMs from places where their use does not justify the cost of servicing them.