Local retail sales to suffer further decline, says expert

The prediction comes from Cordell Riley, an analyst with Profiles of Bermuda, a human resource assessment and consulting firm.

He arrived at the figure by looking at the underlying trend for 2010.

Mr. Riley estimates that total retail spending for 2010 will be about $1,036.2 million, a decrease of 5.5 per cent from the $1,096.0 million recorded in 2009.

He added: “Food sales didn’t fall last year but when we look at the landscape, that’s quite possible for 2011.

“There were job losses at CD&P [on Monday] and there have been pockets of job losses throughout the year that will realistically have an impact on food sales.

“Liquor sales are predicted to go up and that is not a good sign.”

A big contributor to the sales decline of 2010 is the building materials sector, which plummeted by an estimated 23.6 per cent. This is largely due to the stalled construction industry.

The vehicles sector also fell by 14.2 per cent.

Mr. Riley said that besides job losses and residents not purchasing big-ticket items such as cars, the third reason for a predicted decline in 2011 is that lower-income foreign workers are sending money to their home countries.

He added: “You go the restaurants, construction sites, bakeries and you have a lot of non-Bermudians.

“All of those individuals at the lower end of the pay scale and after they have accommodated all their expenses on-island, the bulk of their money is going overseas.

“That is going to manifest itself in lower retail sales, not only for 2011, but also for 2012.” Overseas spending by residents returning from abroad in 2010 is expected to fall a marginal 1.5 per cent to $72.1 million from the $73.2 million recorded in 2009.

But spending by residents overseas this year is expected to rise by 7.6 per cent to $77.6 million.

Mr. Riley said that with airfares as low as $300 for a round-trip to New York, many residents go off the island to shop.

He added: “People will take money to buy that ticket because the airfare is so cheap to where they believe, and they do get, more for their money.

“If they give up something, they will give up something else before trips.

“As long as they can get a ticket on JetBlue for less than $300, people will travel and that is why overseas spending may increase.

“I’m sure the retail sector will disagree but an increase of $5 million in overseas spending is relatively a moderate increase.”