Economic nationalism is not a new phenomenon. In challenging economic times, political leaders often appeal to their people’s patriotic sentiments by encouraging them to buy local rather than foreign products and services.
In his article in The Sunday Times of Malta, Prime Minister Abela said: “We need to continue to buy local and support our businesses.”
There is no doubt that some sectors of the business community have had to endure immense hardships due to the drastic changes in consumer behaviour brought about by the pandemic. But it would be short-sighted to underestimate the rising importance of e-commerce.
The question that many would ask is: what line is to be drawn on the concept of buying local? On the one hand, globalisation has had many advantages for consumers. It has also meant, however, that many workers have lost their jobs as businesses preferred to move their production to low-cost countries.
Similarly, the expansion of e-commerce has meant that consumers can now procure the products they need from the comfort of their own homes with a guarantee of competitive prices and a high quality of service. COVID has shown how the phenomenon of online commerce is now irreversible as more consumers embrace this safe, convenient and time-saving way of procuring the goods they need.
On the other side of the coin, consumers, no doubt, appreciate that the local retail business community has had, at best, mixed fortunes in the last year, partly owing to circumstances beyond its control. But those sellers who were creative and prepared to invest in satisfying their customers’ buying preferences were able to react swiftly and offer online sale of goods and services at prices consumers were ready to pay.
Others suffered the consequences of not being ready to compete on digital platforms because, perhaps, of a defective pricing strategy, or inefficient delivery, or poor service quality.
Appealing to consumers to be patriotic and buying local will only succeed if their experience meets their legitimate expectations.
The concept of free trade is also a fundamental principle of the EU. The free movement of goods within the Union has benefitted consumers enormously.
Malta has the disadvantages that stem from being a small island where practically all consumer goods are imported. These logistical challenges become all the more complicated because local businesses tend not to have the selling clout that comes with economies of scale. Online retail giants like Amazon and eBay offer consumers the competitive advantages of a virtual and extensive online market.
The line on a buy-local strategy can never be drawn through restrictions that would hurt the consumers’ interests and this is not what the prime minister was suggesting. The government must ensure that all those who sell to local consumers fall under the same rules.
What the government could do is help micro-businesses, especially those in the agricultural sector, to organise themselves better by pooling their resources and investing in modern marketing methods to convince consumers, say, of the advantages of fresh produce. Fresh produce can command a better price if the quality is comparable, if not better, than imported products.
Other retail businesses need to invest more in their online platforms to ensure that their pricing and services are still competitive compared to those of foreign suppliers.
The retail goods and services industry is unlikely to return to what it was even a decade ago. Consumers have more choice. This is a positive thing.
It is up to local businesses to reinvent themselves, with fiscal support from the government, to cater to ever-changing consumer behaviour.