An overall positive year for business; Labour shortage remains an unresolved concern

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GRTU Malta Chamber of SMEs’ end of year Business Performance Survey indicates a positive year in general. Three out of every four respondents did not report a decrease in their turnover. Nontheless, Labour shortage was once again found to be the topmost concern, with the direct result of slowing down business growth, fuelling higher labour costs and leading to high levels of staff turnover.

32% reported higher sales during the end of year peak season while 29% had lower sales when compared to the same period in the previous year.
Black Friday was reported to have had limited positive or negative effect on the festive season as a whole with only 17% reporting increased turnover because of this phenomenon. 20%, on the other hand, felt that because of Black Friday their total sales during the festive season decreased.

The survey was carried out amongst 200 business owners during the first half of January.

• 43.5% say their total sales during 2017 increased over previous year levels – but only 32% had higher profits

The biggest number of respondents said that their turnover increased year on year. Of these, 26% attributed this increase to new products introduced in their activity followed by 20% who felt that consumer spending power was better in 2017. Most of those who reported a decline in their turnover during 2017 felt that this was due to stiff online and local competition, followed by those who pointed towards illicit trade, unfair competition and lack of parking facilities.
Only 18% of respondents sold their products online and of these, the majority said that total online sales accounted to less than 10% of their total sales. For 19% of those who sell online, online sales accounted for more than 50% of their sales. Many of those who did not sell online stated that the reason behind this is that their products could not be sold online or their clients do not shop online.

27% had lower profits compared to the previous year while 32% had higher profits. 26.5% fared worse than they had expected at the start of the year and 19.5% fared better.

• 47% satisfied on the going of sales during the end of year festivities; 29% report lower sales when compared to the same period the year before

47% of those whose turnover is affected by the end of year festivities were satisfied or very satisfied with the 2017 end of year season with 32% reporting higher turnover when compared to the same period a year before. 24% were not satisfied and 25% were neutral.

The week and the weekend leading up to Christmas day seemed to have been, by far, the busiest for businesses, followed by the 8th December long weekend, 13th December and Black Friday. Business owners felt that brand loyalty, the cold weather and consumer spending power were positive factors this season while online competition, traffic and parking facilities and unfair trading contributed negatively to their going of business during the festive season.
Looking back at the whole season, 63% said that Black Friday has not impacted turnover, neither positively or negatively.

Only 28% started offering price reductions before 31st December, with reductions mostly ranging between 20% and 50% of the original price. The client base remained largely Maltese – at 68%; and the average spent by consumers in a given shop was most frequently €20 to €49 followed by the €50 to €99 category.

• 50% hopeful for a better year

Half of the respondents are expecting a better 2018, with 40% expecting this year to be as last year and 10% expecting to fare worse. 36% plan to keep their business in the same size as it currently is while 26% are planning to expand their business in Malta. 4% are looking oversees for their business expansion this year. 11% intend to set up their ecommerce website. 4% are planning to downsize their business, 6% planning to pass over to next generation or third parties and a further 2% are planning to close down. In 83% of the latter cases, the head of organisation has 56 years of age or more.

• Labour shortage and related effects tops businesses’ concerns across the board

Labour shortage remained the topmost unresolved concern among businesses across all sectors. That said, in a number of sectors – such as those with a high degree of driving and the catering industry; this problem seems even more pronounced. 52% of respondents are expecting they will have to recruit new employees during 2018 and in 46% of these cases the main reason is expected staff turnover.

Fierce competition and increasing costs in general followed suit, before traffic and infrastructure -including the lack of parking facilities and road works taking too long to complete (such as in established shopping districts like Paola).