The Future of Retailing – Vincent Farrugia – GRTU Director General

Private public consumption in Malta has still not reached the levels of annual growth that were registered up to the end of 2007. Since the economic recession started in 2008 total private consumption has moved forward only slightly or not at all.

The situation today is still not comfortable as 50% of retailers have not reached previous figures as total private consumption growth is very marginal and the consumption of the public sector is being restrained due to pressure to cut the public sector financial deficit so that the short fall in total private consumption so necessary to sustain retail sales remains unsolved.

The globalised world has made life difficult for the general store. The smaller retail outlet that specialises in the servicing of clearly identified niches in the market, even in a limited market like Malta, has an excellent future. The small general store will, however, have to be intensely competitive in the provision of a speedy and quality customer service if it wants to survive in a highly competitive market.

All attempts for smaller entrepreneurs to team up to be able to pool resources and be able to come up with an innovative marketing plan to move in this direction, at least in Malta, have failed. By nature, the smaller business operator is extremely independent-minded and, for this reason, he is the least likely to make a cooperation exercise work. We as an organisation strive hard at national and EU level to obtain funds to assist new start-ups in the retail and services sector. We also offer assistance programmes through a number of private organisations with whom we coordinate special deals and rates for our members.

The trader is geared for the electronic change that has happened and will continue growing with the introduction of e-commerce up but the people in state authorities are not so geared up. The new Government financed system supported enterprises that choose an e-commerce option but this is not fair for small businesses. It is using Government aid to distort the market against small businesses as it supports larger firms who circumvent the whole system to out-price smaller retailers out of the market. State aid should never be used to disadvantage micro firms. On the contrary, state aid should be used to level out what is competitively unlevelled.

The money that small businesses were promised to help them reinvest and improve their efficiency to cope better in a more competitive market has not materialised and the general level of earnings in the economy has not boosted household's income sufficiently to push demand. Unless action is taken to boost consumer purchasing power the situation will remain worrying for many retailers for at least another six to twelve months.