Spending trends in dire times

The world is dizzy with recession anxiety, Malta no less. Finance Minister Tonio Fenech has compared the economy of the last six months to a car with two punctured tyres. Kristina Chetcuti caught up with key companies from the various sectors to gauge to what extent the recession has affected spending trends.

Consumers may be exercising caution but the mood does not seem to be totally glum, and the recession can have its advantages.

Sylvana Buttigieg, HR administrator at St Lucia Confectionary, said anxiety over job security had its plus points because people were keener to hold on to their job, in turn performing better to ensure they were kept on.

"Because of the job scare, people stay on and, therefore, the training we provide is not lost. People have a better attitude and approach towards work these days," said Ms Buttigieg.

However, silver linings are few and far between. Outbound travel is one of the sectors that was dealt a blow. Norman Hamilton, of Hamilton Travel, said: "Overall, there has been a 20 per cent drop in travel spending this year."

He believed swine flu fears were behind some cancellations in May and June but after the pandemic hit the island, it was no longer a travel deterrent.

The choice of destination seemed to be determined by the price and, according to Mr Hamilton, weekend breaks increased in popularity compared to same period last year.

"Five-star European and Med-iterranean hotels are giving us very good rates because they themselves have been hit by the recession," he explained.

The least hit is the mid- to high market travel, and cultural and specialised trips.

"People are definitely travelling less this year," said Pio Saliba, Eurotours managing director. "I think the main decline has been in family destinations. Cultural travelling, which attracts people of a certain age and income, hasn't been affected that much," he added.

Stellina Galea, of YTC Travel, which offers tours solely to Tuscany and Livigno, reported that, so far, summer figures had been the same as last year.

"Perhaps we have given out some more incentive, and carried out more advertising but on the whole with a bit more effort there has been no slump. Then again, ours is specialised travelling," she said.

Some businesses are bearing the brunt of the decline in inbound tourism. Due to the dwindling number of tourists, the books sector registered a drop in sales.

"The sales of books are down in general, especially children's books and Malta titles. It's not all due to the local economic downturn but also because fewer tourists are visiting as they too have been bitten by the credit crunch," said Agenda's trade books manager Michael Vella de Fremeaux.

In an effort to make reading more accessible during these difficult times, the price of books had been cut across their stores, he said.

Food is one staple that is harder to budget on and supermarkets do not seem to have been badly affected.

Smart Supermarket financial controller Doris Bonnet said sales were pretty much the same as last year: "It is difficult for us to increase our sales as we have more competition this year but we certainly haven't registered any losses."

The new competitor on the block is Lidl, the supermarket at the cheaper end of the spectrum. There are no figures to compare to last year but, in the UK, Lidl registered a 13 per cent increase over last year.

In Malta, as in the UK, many opt to visit the outlet for certain bargain goods and then do the rest of the monthly shopping at their usual outlet. Judging by the cars parked outside these discount stores, even the more affluent are now price hunting.

As with supermarkets, the recession does not seem to have affected people's love for fast food. McDonald's, for example, has only registered a minimal, almost negligible, drop in sales.

"In fact, January to June sales are almost the same as last year's," Yana Azzopardi, accountant manager at McDonald's Malta, said.

Consumers, however, are more likely to be doing away with the goodies. Sweet and confectionery shops reported a drop in sales over last year, possibly the result of previous binge shopping. St Lucia Confectionary's Ms Buttigieg said that while up to last year a family of four would buy six cream buns, now they were only buying four.

"We are a greedy nation; the last thing we'd let go of is our portion of sweets. Instead, they are buying more carefully."

She added that the recession could help people curb the excess consumption experienced over the past eight years: "Perhaps people are spending in a more balanced manner. And I think as a result only the valid businesses will survive the recession. So maybe it could be a blessing after all."

C. Camilleri & Sons Ltd, known as Camilleri tal-ħelu in Valletta, has also seen sales shrink in their two main products - chocolate and sweets sold in jars - when compared to last year.

This is a trend that does not follow the UK pattern where an eight per cent increase was registered in the consumption of sweets since the economic downturn, which indicates the British have resorted to comfort eating.

"It's a different pattern in Malta. People seem to be hibernating, waiting for the recession to pass. This is a typical Maltese pattern, once a crisis is over then it's business as usual. The Maltese tend to be very cautious," company director Charles Camilleri said.

Not all luxuries have been affected. Entertainment venues seem to be doing fine.

Eden Cinemas' attendances rose by 11 per cent when compared to the first half of last year and director Ian DeCesare said this could not be taken as a trend for the future since these were difficult times.

Bowling was also up on last year, albeit by three per cent. "Considering the economic situation this is very encouraging. Mr DeCesare said: "I would cautiously say that maybe in a recession people are more likely to spend money on light entertainment to take their minds off things."

DVD rentals have gone down and contracted by 10 per cent compared to last year, which is odd.

"I'm pretty sure it's the effect of the recession. In times of crisis people turn to piracy," said Exotique marketing manager Nikolai Borg said.

He did add that the top DVD with customers this year had so far been the feel-good movie, Mamma Mia!

According to Chris Gatt, St James Cavalier Centre for Creativity general manager, cultural activities had also been bitten by the recession since January.

"The 'safer' stuff such as Puerto Flamenco or Joseph Calleja's La Traviata still sold out. But the Maltese audience is quite a conservative one and perhaps experimental stuff is what's bearing the brunt of the recession," he said.

He was not particularly worried about the economy and its impact on culture: "The recession will come and go. But we have to realise that audiences don't build up overnight.

"In Malta, culture is still considered a luxury. We need to have the proper education system and infrastructure to ensure people regularly attend cultural events," he said, insisting Malta was, unfortunately, living up to Oscar Wilde's bon mot: We know the price of everything but the value of nothing.