Adam Cooper Blame it on poor tourism figures, locals shopping abroad, or both, but Bermuda's embattled retail industry could see a major shakeup, according to Chamber of Commerce visitor retail division chairman Ian Smith.

Mr. Smith went as far as to say some of Hamilton's landmark stores may shut their doors for good if conditions do not improve.

After a monthly meeting of the division on Tuesday night, Mr. Smith said that many stores were "operating on borrowed time'', losing money year after year.

And though he declined to provide details, he said there were specific shops -- some among Bermuda's biggest and best known -- that would probably shut down before the end of next year if Government does not intervene. He pointed out one store in Dockyard was already seriously considering the idea of closing down.

"A lot of people are on the verge of going under,'' Mr. Smith declared.

"They're virtually on their last legs and are beginning to wonder `why are we doing this?'.'' He noted that after hotels, the retail sector had been the hardest hit by the slump in air arrivals, while the influx of cruise ship visitors appears to have done little to alleviate the problem.

At the same time, the latest retail sales figures see story below show that overseas spending during May was up 13.6 percent over May of 1999, with locals declaring $3.33 million in goods.

Retailers blame Government for not giving them the duty breaks they need to survive and feel that they carry an unfair share of the tax burden.

`Operating on borrowed time' In order to compete with overseas shops, many retailers have been forced to sell items at same-as-USA or duty-free prices -- while still paying Government duties as high as 22.25 percent.

The results, they say, are substantial cuts into their bottom lines.

Mr. Smith said that even store displays, provided to retailers for free by manufacturers, are dutiable at 22.25 percent -- a disincentive for many retailers to update their stores and move with the times.

He said hotels were not subject to duty on materials they imported to make capital improvements and retailers felt that they should be entitled to similar treatment.

Without healthier sales, shops have found themselves in "a catch-22 situation'', unable to provide the selection that sends Bermudians overseas for their shopping in the first place, he said.

"It will take a whole rash of closures to get the message across that this industry needs help,'' said Mr. Smith.

"Unfortunately, by that time it will be too late.'' Peter Cooper of A.S. Cooper & Sons said the industry needed serious assistance from a Government that had expressed an interest in helping, but did little in the way of action.

"It was part of the PLP's platform two years ago that they would introduce duty-free shopping and it has yet to happen,'' he said.

"We're competing with the whole world -- the Internet and shopping sprees abroad -- yet we have a tax system that is unfair to retailers.

"It's not a level playing field.'' But taxes are not their only problem; in a time of over-employment, the industry has suffered from a perennial staffing problem.

Mr. Smith said that his company, Astwood Dickinson had had problems finding as few as two or three staff.

He said that "poaching'' by the international business sector was every retailer's concern, with shops unable to match the salaries that international companies could pay.

Retail is a closed immigration category and shops cannot bring in sales help from overseas.

But even in the face of possible closures, retailers have been forced to grapple with the implications to their industry if the 60/40 ownership rule is relaxed -- a topic of discussion at Tuesday's meeting.

Abolishing the rule would allow foreign retailers to set up shop independently, without the help or ownership of a Bermudian partner.

Opinions were mixed, but many retailers agreed that if the current situation remained unchanged, overseas companies may not want to operate in Bermuda because of the excessive red tape, razor-thin profit margins and difficulty finding staff.

For others fiercely opposed to the proposition, the arrival of recognised foreign names would sound the death knell for an industry that has long struggled to stay above water.