Retailers continued to be hit hard as sales dropped for the 16th consecutive month, according to the latest figures released by Government.

The Department of Statistics' Retail Sales Index report reveals that consumers bought and estimated $98 million in goods during July, 2009 or $7 million (nine percent) less than was spent for the same period last year.

The steady fall in sales, which year-on-year declined by its biggest amount in terms of volume for the past five months, was driven by lower takings in apparel and fuel, while fewer viisitor arrivals and cut-backs in consumer spending were also a factor.

But Finance Minister Paula Cox is hopeful that US economic stimulus packages and help from Government in the form of customs duty relief for retail shops and more recently customs duty deferment of goods for retail sale, introduced in the last Budget, will assist Bermuda's struggling retailers.

Ms Cox said retail businesses were important to the overall strength of the Island's economy and it was crucial for those companies to succeed and contribute through the multiplier effect such as their employees spending money in the local economy and increase Government's revenue through payroll tax and customs duties.

However, she was quick to point out that Bermuda was not immune from the economic downturn and as a direct result consumers were being more cautious with their money, including American visitors, who make up 70 percent of the Island's tourists, many of whom were looking for less expensive holidays at home or spending less money at overseas destinations.

Ms Cox acknowledged that apparel stores, which rely heavily on tourism, and motor vehicle stores, much of whose sales depend on consumer confidence in purchasing its products, had been impacted by the fall in sales, which had a knock-on effect on the country's income statement, so it was essential for reverse that trend through increasing arrival numbers and getting consumers spending again.

"Tourism is one of this economy's main pillars and consumer spending is one of the main driving forces in any economy, therefore these two components are extremely important not only for reversing the trend of falling apparel store and motor vehicle store sales but for helping the entire economy to grow and prosper," she said.

"Money from the tourism industry eventually flows throughout the entire and consumers spend money on all aspects of the economy and therefore play a very important role in not just the recovery of retail stores but that of the entire country."

Local apparel trading continued to fall as shopkeepers suffered an 18-percent plunge in sales, with July marking the 13th consecutive month of flagging figures. Traders pointed to a decrease in the number of tourists visiting the Island as one of the reason behind the declining sales.

Overseas apparel purchases also dropped by less than one per cent. Overall, overseas spending by residents dropped by 2.5 percent year over year to $5 million, the eighth time in the last 12 months that it has fallen.

Fuel pump sales also plummeted 17 percent in July 2009, compared to a 15 percent increase for the same period in 2008, as the lower revenue reflected the 19 percent decrease in the price of fuel over that time.

Similarly, the motor vehicle trade experienced its third straight month of declining sales, with auto dealers reporting a six percent lower revenue in July versus a two percent fall last year. Lower revenue was attributed to weak consumer demand for vehicle models currently in stock.

But building materials stores registered their second monthly sales gain for the year, as gross sales edged up two percent compared to a 14 percent drop in July 2008, the marginal rebound mainly as a result building installation and completion work rather than new construction projects.

Ms Cox hoped construction levels would increase on a consistent basis, but added that despite Government projects being budgeted for, it was hard for the Ministry of Finance to predict how the private sector would fare and the sustainability of building material store sales.

Elsewhere, growth in food sales rose accompanied by a five percent hike in prices. However, despite grocers reporting a one percent increase in food store sales, this growth was weaker than the 14 percent rise in July 2008.

Ms Cox said that Bermuda imported inflation as it had little control over the prices set by food stores, with costs subject to shipping prices, while the duties on many products zero or very low rates, limiting Government's ability to lower the prices.

She added that despite the economic downturn, Government would continue to encourage entrepreneurs and small start-ups to set up in business through the Bermuda Small Business Development Corporation as well as supporting existing enterprises, as both were key parts of Bermuda's economy.

"Entrepreneurs know how to seize the moment and there has been no diminution in the level of enquiries," she said. "Many seize the moment.

"Also you have had a few recently publicised new businesses that have seen an economic opportunity – not just a challenge in the economic landscape. The better view may be to take steps now to position oneself as a business entity for the likely upswing in the economic climate that is anticipated over the next year."

Other sectors suffered the same fate as their apparel and motor vehicle counterparts, with furniture, pharmaceutical, electronics and tourist item retailers seeing a 14 percent decline in sales. Tourist-related stores and retailers of household goods posted a 43 percent and 25 percent fall in receipts respectively. In contrast, sales of pharmaceuticals grew by four percent compared to a year earlier.