Shopkeepers have had to make financial and operational changes to keep their businesses viable and staff employed in the face of a $40 million drop in the Island's 2009 retail sales.

Retailers in nearly every facet of the industry grocery and liquor stores being the exception have reported a consistent decline in sales every month last year bar January. The Royal Gazette spoke to a cross section of shop managers and sales persons to get their point of view on the economic situation. We asked what, if any, changes they have made to help their businesses stay above water. Yesterday's Retail Sales Index released by the Department of Statistics showed a 21 percent decline in motor vehicle sales in December 2009 compared to the same period in 2008. The manager of one Hamilton shop told The Royal Gazette that while they have not had to get rid of any staff, overtime has been drastically limited to maintain their bottom line.

"Recession hysteria" was behind the decline in sales, said the man, who asked that we not use his name. He added that the media has a large influence on the way people spend.

"While our numbers appear to be down so far this year, the worst month in the company's history was February 2009 right after the recession was announced in Bermuda," he said. "Interestingly in March and April, when people realised that the recession wasn't going to affect them right away, our sales increased marking two of the best months we have ever had."

He added: "But people are definitely spending more cautiously and our higher-end models are not selling as well as some of our less expensive bikes. It seems like people are spending for necessity rather than luxury."

Apparel stores saw a one percent decline in sales for December 2009. Staff who spoke to The Royal Gazette said employees were the hardest hit by declining sales. "We have been reducing our hours for the past two years," said a salesperson in a popular store. "Most of us have also had to take pay cuts even the managers and administrators have had their pay reduced. Instead of yearly pay increases, our pay increases have stayed the same, or decreased, over the past two years."

A Front Street apparel shop said it was forced to make half of its ten employees redundant, reduce working hours and initiate pay cuts in order to survive.

Electronics sales were down four percent for December 2009 according to the Retail Sales Index. The manager of a major electronics and computer store said sales there have declined by 30 percent since Christmas 2008. She said: "In this economic climate people are saying 'I can make this computer last one more year' or, 'I don't need the newest iPod. The one I have now works fine'. This is different than two years ago when people didn't seem to care about price they just wanted the newest, trendiest gadgets. These days we sell a lot more items made by generic companies than the big brand names."

While it is unclear how long Bermuda's retail sales will continue to decline, there is optimism that next week's unveiling of the Budget will provide some relief, with Finance Minister Paula Cox saying that it will bring "likely policy changes".