Retail sector languishing in the doldrums
Growth in Bermuda’s retail economy continues to prove elusive with new figures showing very little improvement year-on-year once inflation has been taken into consideration.
And the Island needs a larger population if it is to return its retail sector to where it once was, according to the Chamber of Commerce’s Paula Clarke.
In January, total retail sales in terms of value increased 2.6 per cent, year-on-year to $77.2 million.
However, adjusting for the retail sales rate of inflation, which in January was 0.6 per cent, the rise in the value of sales was 1.9 per cent.
Looking at the figures, and those of the past year, Ms Clarke, the Chamber of Commerce’s retail division chief, said: “If you take inflation into consideration the growth is zero, or hardly any.”
She added: “Everyone is looking for growth this year, but there is no indication that there is any yet.”
The January figures were released by the Department of Statistics.
The building material stores sector recorded the biggest increase, rising 10.5 per cent compared to its January 2014 figure.
Ms Clarke attributed a portion of that increase to the “overhang from last year’s two hurricanes” as people continue to carry out repairs.
Charles Dunstan, president of the Construction Association of Bermuda, agreed that the uptick for the sector probably reflected the lag-time between hurricane insurance claims being settled and permanent repairs being undertaken.
However, he added that some building material stores were reporting an increase in general sales not attributable to the hurricanes or the America’s Cup preparations.
“I believe the number of building permits are up, and the construction companies I have spoken to seem to be busier.”
Gladwin Anderson, shop manager at SAL Trading’s Ace hardware store in Devonshire, said: “Business is coming back. Things are looking up and there are a few bits of building work going on.”
While building material stores recorded an impressive year-on-year increase for the month, the value of those sales was only 44.2 per cent of the 2006 benchmark used by the Department of Statistics.
How far the value of sales have diminished since the years immediately before the economic downturn, which started around 2008, is also evident in the motor vehicle and apparel stores sectors.
Motor vehicle sales receipts for last year ended at 54.9 per cent of the 2006 figure, and apparel stores ended the year with sales values at 84 per cent of the 2006 benchmark.
“We are catering for a smaller population. One of the big factors is the shrinking population,” said Ms Clarke.
“In order to revive the economy we need more people in Bermuda and that would mean people on work permits or job creators.”
During January, motor vehicle stores fell by 5.3 per cent year-on-year. More cars and motorcycles were sold than during the same period a year ago, however less trucks were bought, which dragged down the sector.
Apparel stores saw revenue edge up 1.7 per cent, which was partly attributed to promotional advertising that boosted sales volume by 4.5 per cent.
Retailers of service stations registered the largest fall, a decrease of 12.5 per cent. This was the third consecutive month that service station retailers have seen receipts drop and it is attributable to the fall in the price in fuel, which offset a 2.7 per cent increase in sales volume.
Declared overseas spending was $4.4 million, up from $4.2 million in January 2014.
Looking at the year ahead, Ms Clarke said: “Retailers tend to be optimistic, but they are also realists. They continue to bring great value to Bermuda and, if we want the economy to grow, people have to continue to shop here on the Island.
For the construction sector, Mr Dunstan said it was too early to say if things are turning around.
“There is a lot of construction related work being done,” he said.
“The America’s Cup is creating confidence, but it’s early days and we have to better understand what the magnitude of the event is going to be and whether it is enough of a catalyst to get the hotel projects going.”