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Retailer: US dollar payments dry up

* QBC chief says circulation 'nowhere near' past

* Xmas sales off 25-30% as retail faces 'new reality'

* 'Consumer who spent $300 now parting with $175'

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Bahamian retailer yesterday said US dollar notes have "pretty much disappeared" from circulation as he warned that the sector faced "a new reality" until the COVID-19 vaccine takes global effect.

Andrew Wilson, the Quality Business Centre (QBC) and Fashion on Broadway principal, told Tribune Business the amount and frequency of US dollar payments received by his retail brands was "nowhere near what it used to be" in a sign of just how much foreign currency inflows throughout the real economy have dried up due to the pandemic and tourism shutdown.

Revealing that his Christmas sales were between 25-30 percent down on prior COVID-free years, Mr Wilson said consumer spending and average transaction amounts were "substantially down" year-over-year as Bahamians operated under the constraints imposed by mass unemployment and income reductions.

"There was a time when quite a bit of the dollars coming across our cash register were US dollars. That's no longer happening any more," he told this newspaper. "US dollars in circulation are nowhere what they used to be. It's pretty much disappeared.

"We see the occasional $20, the occasional $50, and a couple of $5 bills. For the most part it's Bahamian dollars in circulation." Mr Wilson's disclosures are the first sign of how the 'trickle down' of US dollars into the real economy from visitor spending and gratuities has been largely cut-off by the eight-month tourism industry shutdown.

While the external reserves, boosted by the Government's foreign currency borrowings, stood at $2.341bn at end-October 2010, the flow of US dollars among ordinary consumers and the speed at which they circulate has clearly been disrupted by the economic fall-out from COVID-19.

Meanwhile, Mr Wilson said of Christmas sales: "They were OK, especially in the final days. They were not as in years past, nor were they expected to be, but overall I think the relaxation of the curfew and other restrictions helped.

"All things considered, we were pleased as they were in line with expectations. We expected a 25-30 percent decline overall compared to 2019, and that's pretty much where we ended up. I was grateful."

However, the QBC chief said the change in consumer spending patterns and behaviour was noticeable. "Substantially so," he added. "People were spending but they were not buying as much of the premium items.

"Clearly the consumer was under constraints; financial constraints. They were going for small items - the less expensive cell phones and head phones. The customer that might have spent $300 on an item last year might have taken a $175 item this time.

"Until those people get back to work in the hotels and private sector, we are in for a new reality," Mr Wilson told Tribune Business. "By and large, one of the yardsticks we use is the number of people on the streets. The traffic on the street is reduced, and people are getting home earlier.

"Whereas previously after-work hours were among our busiest hours, and we still get some traffic, it's nowhere near what it used to be." He added that the private sector, and wider Bahamian economy, would only return to something resembling stability with the roll-out of a vaccine both here and in the country's major source markets

"There's nothing we can do about it," Mr Wilson said. "I'm just trying to spend my pennies as frugally as I can and take advantage of whatever new opportunities present themselves in this environment to strengthen my foundation for the future.

"It's going to be a few months until the Americans get vaccinated and the vaccination process gets underway here. We're going to have to adapt and we will. We don't have a choice."

Comments

thps 3 years, 4 months ago

Mr Wilson's disclosures are the first sign of how the 'trickle down' of US dollars into the real economy from visitor spending and gratuities has been largely cut-off by the eight-month tourism industry shutdown.

So the QBC owner and the Tribune have discovered the first sign?

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TalRussell 3 years, 4 months ago

Can't say I blame retailer Comrade Andre the former member of the Royal Constabulary, and once an aspiring actor's frets socking away their two daughters and son's inheritances contributions USD Gold Accounts. - Shakehead a quick once for upyeahvote, Twice for not?

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Bonefishpete 3 years, 4 months ago

Shouldn't a Sovereign Country use it's own currency?

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FrustratedBusinessman 3 years, 4 months ago

You have to use USD to pay for anything ordered from the US (which is practically everything).

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BahamaRed 3 years, 4 months ago

He's correct, there is hardly any US currency in circulation. So that should indicate how important those tourism dollars are to the economy. We are just circulating the same funds, nothing new is coming in.

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TalRussell 3 years, 4 months ago

My Comrade BahamaRed, that's a practable way to put it. So true, we're just recirculating the same currency, nothing new is coming into cash registers drawers.

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John 3 years, 4 months ago

US currency disappeared since the middle of last year, much to the benefit of local banks. Persons who now travel must either use credit or debit cards (banks treat debit cards in The Bahamas same as credit cards so stores and businesses must dish out up to 6% to banks whenever these cards are used in a transaction) or purchase cash at an exchange rate of 95 US for 100 Bahamian dollars. And, even when a person uses their credit card abroad or even on line, exchange rates apply, in addition to bank fees. Of course, the best buy now is transactions that involve Canadian dollars, for which the Bahamian dollar is worth $1.20. And yes, some businesses are not even seeing single US dollars. And there is one business that makes all its customers pay US dollars with their credit card. So the customer has to pay more and the business has US funds on their account to pay their foreign bills. When you try to query it, they tell you their credit card is not working properly and will only accept US $ transactions.

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John 3 years, 4 months ago

ANd Mr Wilson is right about the Christmas holiday sales. They are off, ways off last year's numbers, and many businesses who have been locked down for months on end, earlier in the year or had their business operation hours reduced due to Corona are holding on to their business by a sandfly's eyebrow. And January will be another trecherous battle for them to fight. Some will not make it, especially if there are additional curfews or lockdowns.

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