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Stabroek News

Jamaican stores banking on late shopping rush
published: Wednesday | December 20, 2006

Camilo Thame, Business Reporter


( L - R ) Gassan Azan, owner of Mega-Mart and Bashco stores.   - Richard Luck of Courts Jamaica Limited.   - Wayne Chen, chief executive officer of Super Plus.   - GraceKennedy's Don Wehby.

The Christmas buying frenzy may be kicking later than some had hoped, but Jamaican retailers still expect that a late rush of purchases by consumers will push this year's holiday spending beyond last year's level.

In fact, in what is clearly a mixed environment for businesses, some retailers have already seen strong activity in their stores and cash registers, providing, in some cases, a cushion against the lean times of the recent past.

The GraceKennedy subsidiary, Rapid True Value, is among them.

"Sales are up by over 15 per cent during the month of December when compared to last year," Don Wehby, the CEO of GK Investments, the Grace-Kennedy arm that controls the hardware retailer, said Monday.

"Growth is being driven by the larger stores, located in Ocho Rios and Montego Bay," Wehby said. "The tourism development in those areas has resulted in higher disposable income and more spending this year."

For other retailers, the performance is far more measured, as has been the case at Ammar's, the clothing store with shops uptown and downtown Kingston.

Reasonable Christmas

"I predict it will be a reasonable Christmas, but it will be the last eight days that really matter," Michael Ammar Jr, a director, said earlier this week.

"December started off slow, but it is picking up in the uptown stores, especially on the weekend," added Ammar, echoing the sentiment of several other retailers. "Downtown, the spending is more steady but it is stronger during the week."

No one has tested the reason for the initial consumer reticence, when Jamaicans should have more money in their pockets than this time last year.

For instance, after a two-year pay freeze, public sector employees received a real increase in pay at mid year. At the same time inflation has moderated, helped by the moderate adjustment of the Jamaican dollar against its U.S. counterpart.

With inflation expected to end this year at six per cent, the central bank projects that demand for cash will peak this month at about J$42 billion, or 18.4 per cent higher than last year's Christmas peak.

In other words, consumers, in real terms, should be able to buy 12 per cent more than last year with their available cash.

The trend is clear. Up to Monday, the stock of currency in issue, according to the Bank of Jamaica, at $36.9 billion, was already 16.9 per cent higher than at the matching period last December, when money in circulation was a mere 4.1 per cent higher than at the corresponding date in December 2004.

Not unexpectedly, retailers say that business last Christmas was flat.

Conventional wisdom suggests a Portia factor in the slowness of Jamaicans to open their pocket books on consumer items this Christmas.

Consumer confidence soared after the populist Simpson Miller took office in March on the back of high expectations which, some say, have not been fulfilled. Analysts also suggest that a suspicion that she might have called general election towards year end might have caused businesses and consumers to hold back, in line with Jamaica's political/economic traditions.

Profitability

But whatever the cause, retailers are hoping that in the remaining time until Christmas, shoppers will flock to their stores, driving sales and, hopefully, profitability.

For some, what happens at Christmas is critical to their overall bottom line, and Wehby for one would wish that December sales for Rapid True Value, with its 19 stores, will grow considerably.

Last December, its sales of $1.33 billion was 16 per cent lower than the turnover in December 2004.

While Wehby is upbeat about Rapid True Value's Christmas performance, one of his major competitors, Mainland Inter-national, claims that its sales, so far, have been flat.

Mainland has its flagship store in Spanish Town, with branches in St. Andrew, Mandeville and Montego Bay.

According to the company's vice-president for marketing, Garth Walker, things may pick up.

"Since last Wednesday we are seeing the shoppers coming out, but so far, spending has been less than last year," Walker said. "Hopefully, it will pick up this week."

Better performance

Walker, who said Mainland's performance last Christmas was better than 2004, attributed the current softness to the fact that many people are still recovering from the "cement crisis earlier this year".

This was a reference to the recall of tens of thousands of tonnes of the faulty product that caused a shortage of cement, shut down several projects and left thousands of people without jobs.

Like Walker, Gassan Azan, the principal of the chain Bashco budget stores, as well as the MegaMart stores in Portmore and upper St Andrew, is not overly optimistic about sales this Christmas. Neither at the two MegaMart locations nor the 15 Bashco stores does he expect to beat inflation.

"We are really seeing sporadic sales," Azan said. "We get the weekend spending, but during the week sales go down.

"This year should be slightly better than last year but we probably won't beat inflation," Azan told Wednesday Business.

And any growth in sales at his stores, Azan claimed, would be, in part, attributable to Bascho and MegaMart's participation in the Easy Own consumer credit scheme run by a Dehring Bunting and Golding subsidiary. "Customers are using Easy Own," he said.

Wayne Chen, who runs Super Plus, whose 30 stores makes it Jamaica's largest supermarket chain, was apparently in a better mood than Azan.

His stores, according to Chen, will "close the season 10 to 12 per cent above last year".

The furniture and appliance retailer Courts, which has just been taken over by a Costa Rican-based family, may be facing stiffer competition in the market this year, but says it has enjoyed a steady, if small, increase in both its cash and credit sales.

"We took a position earlier this year that this Christmas was going to be a hard one because of greater competition," said Richard Luck. "The steps we took have been well received by the public and the increase is in keeping with the last quarter.

Turnover at $1.44 billion for the three months to October 1 was 4.3 per cent higher than the comparative period last year. For the December quarter in 2005, $2.29 billion in sales, which was one per cent lower than the previous year's December quarter.

Bruce Loshusan, who runs the Loshusan Barbican supermarket, a member of the 23-store Progressive Grocers consortium, says consumers tend to focus on the purchase of non-food items, apparently waiting until the last week before the holidays to stock up on food.

Sales at the Barbican store, according to Loshusan, are already up by about 15 per cent over last year.

But with the store only two years old, it is only now establishing its customer base so turnover would be coming from a lower benchmark.

camilo.thame@gleanerjm.com

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