January 30, 2013 at 5:54 p.m.
Tough times: Retail woes
Retailers beg for duty and fee relief to survive recession
They hope banks and Government will offer them a life raft.
Retail sales were down for the 31st straight month in November, with shoppers spending $2.4 million less than the previous year.
The Department of Statistics’ Retail Sales Index shows consumers spent $83.6 million —2.8 per cent less than November 2009.
But after adjusting for inflation, the fall is actually 5.4 per cent.
Overseas spending was up by 2.6 per cent to $7.9 million.
Kristi Grayston, chairwoman of the Bermuda Chamber of Commerce retail division, commended Government for its payroll tax concession for retailers in the first quarter. But she said the relief — announced in last year’s Budget — did not go far enough.
She added: “We’d have preferred it in the last quarter or summer, when we employ more people. The relief is coming at the least effective time as January to March are quiet, so people’s hours are cut anyway. This is the lowest quarter for payroll tax. We would also like Government to reassess the duty rates retailers pay.”
Mrs. Grayston said the duty of 22.25 per cent on most items and 33.5 per cent for electronics hits retailers hard.
She added: “Some people are in favour of going to a sales tax rather than import duty.”
Mrs. Grayston also wants to see a reduction in transaction fees.
When a consumer pays by debit or credit card, the retailer must pay the bank or credit card firm an interchange or ‘swipe’ fee.
In the U.S. the average debit card processing fee is 1.3 per cent per transaction, which can add up to hundreds of dollars a month for a small business. Credit card transaction fees here are between two and three per cent.
The Justice Department estimates swipe fees cost U.S. retailers up to $35 billion a year.
But late last year, the Federal Reserve proposed a cap on debit card fees of 12 cents per trans-action. This is set to reduce retailers’ commission costs by up to 70 per cent.
Mrs. Grayston said: “If [a cap] happens in the U.S. but not here, retailers in Bermuda will become even less competitive.” HSBC Bermuda said: “Interchange rates are set by the card associations — MasterCard etc. — and vary according to the type of transaction. Rates are governed by legal contract and as such the specifics are confidential.”
Mrs. Grayston said it is important for retailers to push for solutions, like the U.S.’s 3/50 Project.
She said: “The idea is to think about the independent retailers you would miss if they went out of business and then commit to spending $50 a month with them.
“It has a huge following in the U.S., so if it caught on here it would really help Bermuda.”
Special report: Tough times
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