By NEIL HARTNELL
Tribune Business Editor
The “make or break” Christmas shopping season will this year be vital for Bahamian merchants to “build a financial cushion” against forecast economic headwinds in 2023, a well-known retailer warned yesterday.
Tara Morley, the Bahamas Federation of Retailers’ co-chair, told Tribune Business it was critical that the industry enjoy a sufficiently buoyant festive period that rebuilds the financial reserves lost to COVID-19 ahead of further pressures anticipated in the New Year.
Besides grim predictions of a recession in the US and other major markets, she explained that retailers - as well as the wider Bahamian economy - will have to grapple with a variety of local cost pressures that include up to 163 percent increases in Bahamas Power & Light’s (BPL) fuel charge; increased costs associated with clearing goods through Customs; and the “ripple effect” of the minimum wage increase on other salary earners.
Pointing out that these cost increases will impact simultaneously, and simply add to global supply chain and inflationary pressures, Ms Morley told this newspaper it was the aggregate impact - rather than any one factor - that was causing the industry concern and likely to result in merchants raising their prices to consumers to compensate.
“People are expecting a pretty solid holiday season. There’s just a better overall outlook in terms of we seem to be over the COVID hump,” she said. “In terms of anything recessionary, it’s looking like that may not hit us until next year but that remains to be seen. Hopefully that will not hit us at all.”
With travel demand remaining strong, and the all-important tourism industry that drives Bahamian consumption and spending maintaining its recovery momentum, Ms Morley voiced optimism that Christmas 2022 will provide the local retail industry with sufficient financial breathing room to help merchants withstand any future shocks in 2023.
“I feel like for those of us who made it through COVID, there’s certainly no cushion any more for anyone, so in terms of building back up that financial cushion to withstand other hurdles that are ahead it’s going to be a busy season to be watching,” she told Tribune Business. “I think for a lot of people it will be just what helps build up any cushion for what lies ahead. Nobody has a crystal ball, but it’s definitely better to be prepared.
“Everybody is hoping it’s going to be a good Christmas. Events are back in a real way, so there’s things to shop for again, a reason to shop. Consumer demand has definitely picked up, with everyone excited to feel some level of normalcy again. I think people are excited for a normal Christmas. I think everyone is just ready to feel festive again. Everybody keeps predicting a recession, but it doesn’t seem like consumer demand has slowed. We’ll see how it all shakes out.”
This will be the first Christmas for three years that is free of COVID restrictions. The festive season is vital to the financial health and well-being of retailers, accounting for up to 40-50 percent of annual sales for some, thereby making it “a make or break” period for such operators.
“When we were in the grip of COVID, consumers shopping locally really made all the difference in the world for retailers who were able to survive in that period,” Ms Morley said, calling for a repeat this Christmas. “We hope local consumers recognise their importance and value, and hopefully they will discover the value of shopping at home and maybe continue to think about shopping local before logging on to the Amazons of this world.
“For this Christmas, the biggest thing is going to be while we have little bumps and surprises down the road ahead of us, that we build that financial cushion just in case and build that financial cushion for BPL price increases. We have quite a few cost and price increases being thrust into the mix. There’s also something that Customs has planned for the clearing of goods which could lead to more expense.
“BPL is going up, the cost of clearing goods is going up, the minimum wage is going up, which has a ripple effect for other employees as well because no one wants to be earning the same as someone on a lower rung than they are. It just seems like there has been a lot of cost increases at the same time, and they are coming when we already have global inflation to worry about,” Ms Morley said.
“It’s like there’s the global inflation level, which we’re price takers on and don’t have any control over, and there’s other things where we have a bit more flexibility to stagger the timing rather than have them all in one year. That’s why I’m nervous there’s this additional layer of inflation. It’s not just one thing. The aggregate becomes a bigger deal.
“I haven’t heard of any tax breaks being put out there for business. I’m struggling to understand how all these additional costs are going to be absorbed. There’s nothing to offset them other than raising prices on top of whatever cost increases have been received from our vendors. That is a little bit worrisome, hence the need for Christmas.”