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The economy in 2021: Online overseas purchases soar to record levels

Growing trend: Online shopping continued to rise in 2021

The pandemic-induced lockdowns of 2020 led to a surge in online overseas purchases by local residents. But any hopes of local retailers that shoppers would return to their old habits in 2021 were dashed - overseas purchases kept rising to new records.

Selected overseas declarations of Bermudian imports rose by $53.3 million in the first seven months of the year, compared to declarations from the same period in 2020, government statistics show.

The figures in the Retail Sales Index report for August, the last figures released, show what may be a record value of $161.4 million in “selected overseas declarations” – at least the highest in six years.

During August 2021 alone, overseas declarations increased by more than eight million dollars – a whopping 41.1 per cent higher than August 2020.

The government said the rise in overseas declarations was accounted for by higher imports of clothing, furnishings and electrical machinery and equipment.

And while some numbers may be pandemic-effected, the 2021 figures show a substantially higher flow of Customs-observed, non-commercial imports for those months since 2016.

The Department of Statistics stated: “Overseas declarations reflect the value of goods declared, whether for personal or business use, by returning residents via the airport, imports via couriers, imports via post office and the value of non-commercial imports by households via sea.”

The figures also highlight why the Government this year struck a controversial deal with a US firm to create an international online shopping service.

During the same seven months (the only retail sales figures available from government to date) a mere $3.1 million worth of goods were imported via the Bermuda Post Office.

By comparison, couriers in the same time frame brought in $107.3 million.

It is not surprising the government sought to cash in on the trend by having the Post Office derive revenue from a residential penchant for online shopping. The revenue from foreign currency purchase tax and customs duties are just not enough.

Bermuda imports almost everything – whether by retailers or by individuals.

The resale of items to consumers by merchants is the basis for the retail industry. Any indication that Bermudians are bringing in more of these items themselves becomes worrying to shopkeepers, and may decrease their ability to employ people to move the goods.

The state of retail in Bermuda has been of concern since before landmark department store Trimingham’s closed down in 2005. More evidence of the downturn has been seen, year after year.

The overriding issue is if the highly-pressured retail industry can survive the world of online shopping.

The government said that while August’s retail sales volume saw a slight decline of 2.9 per cent compared to last year, in value terms, retail sales remained unchanged at an estimated $99.6 million compared to August 2020.

Online purchasing in general had grown to $4 trillion globally in 2020, including a staggering 300 million people in the united States alone, expected to buy online next year – 9 out of 10 Americans.

Clothes may be the biggest item, but there are also electronics, jewellery, watches, flowers, furniture and much more.

American trends often become Bermuda trends.

Entrepreneur reports that by 2018, some 51 per cent of Americans preferred to shop online – buying online 19 times a year!

That was pre-pandemic.

In Bermuda, store-to-door delivery service is about to expand from just food, with delivery of dry goods and a variety of other items by a Sargasso Sea sister company, Pronto.

The more products local retailers can catalogue their wares online and provide efficient local delivery, the more e-commerce may keep the wolf from their door.

Long before the pandemic, retail stores were being closed by the thousands – 7,000 US stores in 2017.

In Bermuda, there is a revolving door of openings and closings.

The latest retail sales figures were released under an optimistic headline: “Slight decline in retail sales volume compared to 2020, value of purchases remains steady”.

Meanwhile, in October investment analysts warned that Bermuda’s inflation rate may be four times higher than the Government’s official Consumer Price Index.

They seriously questioned the accuracy of reported CPI figures, and issued a stark warning that future calculations would show a substantial spike in the Consumer Price Index.

The inflation numbers have been rising, although many Bermudians say they bear no relation to cost of living, which has been rising for some time.

Meanwhile, while the economy has been heavily impacted by the pandemic, there were problems long before.

In November, The Royal Gazette reported that Bermuda’s economy suffered the deepest contraction in living memory last year.

The 2020 report on Bermuda’s Gross Domestic Product said the economy contracted by 6.9 per cent in real terms as the Covid-19 pandemic and lockdown caused declines in 13 of the 19 business sectors analysed.

Bermuda had only seen annual economic growth of more than one per cent in one year since 2007. That was the year of America’s Cup in 2017.

Government figures in September showed the economy had substantially contracted again for the first quarter of the year – the fifth quarterly reduction in a row.

GDP was shown to have fallen by 4.3 per cent. The second quarter showed growth of 13.6 per cent year over year, still more than six per cent below pre-pandemic levels.

Bermuda’s unemployment rate doubled between 2019 and 2021, the labour minister estimated this summer.

Like many government statistics, they are released in such arrears, it is difficult to see how policy is tailored to address an imbalance.

He did report that the Department of Workforce Development continued to provide training opportunities for unemployed Bermudians through a phased approach.

And while the government touted job creation, Cabinet Minister Wayne Furbert had no answers when pressed about the fact that many jobs created by government were temporary, lasting mere weeks to complete required projects.

Unemployment remained a problem in 2021. Some have been out of work so long, they are no longer counted among the unemployed.

There is hope that 2022 will bring change and a better system for measuring the unemployed, that brings more timely and accurate statistics, and the policies needed to address the problems.

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Published December 31, 2021 at 7:46 am (Updated December 31, 2021 at 2:19 pm)

The economy in 2021: Online overseas purchases soar to record levels

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