While Christmas may have originally been intended as that special time of the year when families get together and share, retailers certainly experience a different kind of reality throughout the festive season.
Between September and Christmas, a typical retailer’s life is burdened by incredible stress and anxiety. As summer ends, shop owners embark on a spending spree to ensure that their outlets are well stocked for Christmas. By November, smaller shops will generally be flat broke and larger ones tend to spend time worrying about losses they may be incurring due to oversights in stock purchasing.
Come December, shop owners are to ensure that their ware is presented attractively enough for it to sell at the right prices, while of course having to work unbelievably long hours to keep up with inflow of Christmas shoppers and make up for burnt-out staff. Families are often unhappy with the invisibility of shop owners at their homes during festivities.
While everyone else is having fun consuming, someone will have to sweat away preparing to provide the product to meet an increased level of demand. Retailing is not to be made out to look like a vocation, but rather like compulsive gambling. This occupation may certainly reap interesting enough profits to celebrate Christmas everyday for the next two months or so before Valentine’s Day. But not too fast. Adapting to a growing scale of demand requires skills that are not easy to acquire, and if you’ve had it during Christmas, you’ve pretty much had it all year round. Bad service and wrong stock purchasing in December will most often result in extra expenditure and effort to re-establish a reputation until the next Christmas comes.
While business owners were more than justified in pointing out the way government failed to keep consumer confidence at a high before the shopping season kicked off last week, some other shop owners have shown remarkable courage in working on their competitiveness to keep up with sales.
A good portion of entrepreneurs have realised when to stop knocking Austin Gatt and Tonio Fenech and when to start rolling their sleeves to come up with the solutions themselves.
We should not be scandalised at Christmas sales because these are not new to Malta. Firstly, budget customers have always existed and will exist forever. Targeting this market segment will many times add value to an outlet and more often than not, it will generate new sources of income from a new customer base. Secondly, it helps shop owners clear their stores from the 2008 stock to pave the way for more fashionable items to be sold in the year to come. The advertising of sales on 2009 stock on the other hand is scary. It represents dire straits, desperation to sell and certainly falls short of augmenting consumer confidence. Shop owners are hardly to blame for this. Such acts are a direct response to the panic caused by a dwindling market demand.
However, worthy of note is the way some outlets decreased their prices to fall within the reach of consumers whose budgets weakened, without admitting to the bleak economic situation so evidently.
Some butchers have reduced their beef prices by as much as 25 per cent, and when asked why, they all mention cheaper supplier prices due to the falling price of oil. It is hard to believe that transport alone could even constitute as much as 25 per cent of the wholesale cost of the product – but even if so, transport would have had to come for free to justify the discount. Certainly, a good chunk of the 25 per cent discount was eaten away from the butcher’s profit margin. That profit margin was perhaps sustainable when the economy was good enough to demand beef at a higher sale price. But the bottom line is that every family would like to enjoy a decent Christmas, and because those butchers are now in wild competition with their counterparts, their volume increases as they become cost leaders.
Surprisingly, the business owners adopting this strategy who spoke to Business Today said they are faring better than last Christmas.
The morale of the story is that there is no way government will manage to instil consumer confidence in the days to come. The damage is done. If retailers are to have an acceptable result this Christmas, it will have to be a matter of gambling on intelligent strategies to increase competitiveness. If done successfully, consumers will reap as much benefit as the suppliers, while Maltese shop owners will once again prove to be resourceful enough to make up for government blunders.
There is of course a downside. Those outlets losing the cutthroat competition game will be hit twice as hard.
In any case, merry Christmas and good luck.
