Retailers fear they may have to suffer through a hard year — unless there is a change in policy, or a change in mindset.

Bermuda retailers saw their sales this March drop $1.3 million compared to sales of March 2007.

Apparel stores suffered a notable drop in revenue of 4.6 percent compared to last year, the first such drop since July 2006. March is typically a period when sales begin to rise with the onset of summer.

A portion of the drop is attributed to Good Friday falling in March this year, so reducing the number of shopping days, but some in retail believe the problem goes deeper.

"I don't think it was a one-time dip," said Chamber of Commerce retail chair and owner of both Pulp and Circumstance stores, Kristi Grayston. "I think that what we're seeing is a trend. It's a colossal problem."

The problem, she said, was demonstrated by the increase in overseas spending by 54.5 percent year on year. And that figure only counts items declared by returning vacationers, not items mailed or brought into the Island under the duty-free limit.

Bermudians turn to overseas retailers for lower prices. Bermudian retailers have a difficult time competing due to the high cost of running a business on the Island.

"The cost of doing business in Bermuda is exorbitant when you look at the cost of duty and customs. If you get damaged goods, you can't just call up the distributor and get credit the way that you could in the US," said Mrs. Grayston. "When you import, you get the same discount that the retailers get, except on technology."

Until this loophole is closed, Mrs. Grayston hopes that Bermudians will consider the effects of purchasing products abroad before making an order.

"If you earn money in one community, and you spend money in another community, what happens to your community?" she said.

Another concern in the retail section is the state of tourism, with fewer cruise ships visiting Hamilton this year. "Bigger ships do not directly translate to bigger dollars," Mrs. Grayston said.

While Mrs. Grayston hopes the sales figures will pick up as the summer season continues, she is worried the downward trend will continue.

"People are being cautious about what they spend," Mrs. Grayston said. "Retailers across the board are concerned."