Retailers last night warned of a tough year ahead after new figures showed overseas spending by locals shot up 14 percent in the final quarter of 2007.

Spending locally increased just three percent in the same time — with the Chamber of Commerce saying factors including inflation negated such a small rise.

Kristi Grayston, chair of the Chamber's retail division, stressed the importance of Bermudians buying locally and urged businesses to step up their game to keep customers happy.

She also called for Government to extend importing duty on goods brought in via IBC, Fedex and the Post Office.

"It's a huge concern," said Ms Grayston.

"You hear people saying all the time: 'I shop overseas because I get more choice.' The problem is that the more shopping they do overseas, the less cash our local retailers will have.

"It's very worrying from a retail point of view. We are a huge local employer. Our workforce is pretty much 100 percent Bermudian. I think that the community has to get that. It's not just about where you get the best bargain."

Ms Grayston said increased buying overseas created a self-fulfilling prophecy in which retailers were forced to put their prices up to make ends meet — thus giving shoppers more reason to go abroad.

"We all shop when we go on vacation. It's a leisure activity. That's OK. It's when you go away to do everything, buy your Christmas presents. The community need to understand the importance of that," she said.

"Retailers themselves have got to look at their product and their stores, their customer service — all of those things.

"We should constantly be examining ourselves, see what can we be doing better.

"It's a good first step for Government to impose the 25 percent across the board duty at the airport. That's helped a lot. A lot of airlines are charging more for excess baggage; not letting you carry in TVs and DVD players. However, everybody can ship it into IBC, Fedex, even the Post Office."

According to the Quarterly Bulletin of Statistics, travelling residents declared $21.6 million on overseas goods during the fourth quarter of 2007, the highest overseas spending level during the fourth quarter since 1986.

Purchases abroad grew $2.6 million, or 14 percent, compared with the same period in 2006, while average spending per trip increased about ten percent to $424. Money spent on clothing and footwear represented almost half of the total purchases.

Asked if she was surprised at the rise in overseas spending, Ms Grayston said: "No. It continues to grow and grow."

She added: "It's going to be a tough year."

Phoenix Stores CEO George Grundmuller said: "As a retailer, you have to be concerned. You just cannot ignore that. Retail is all about volume and sales. When you don't have the sales, it's concerning."

Mr. Grundmuller said it was difficult to compete with the US, because Bermudian companies have to pay much higher salaries and taxes.

"All that has to be factored in, and that reflects itself in higher pricing in the Island," he said. "Unfortunately, it's very expensive in Bermuda to do business."

Asked about the long-term impact on businesses if the trend to spend overseas continues, Mr. Grundmuller replied: "Some businesses may not be viable, I think. It's different from business sector to business sector. Higher priced consumer goods and electronics are more impacted from overseas spending."

He said the way to cope was moving with the times, and his own business has embraced technology through its website.

"You have to change. We are challenged to change and adapt," he said.

But he warned some challenges, such as the might of Walmart, would be extremely difficult to overcome.