The retail industry in Malta has traditionally been one of the more important economic sectors, even if in the last years it may have declined in importance as technology has revolutionised the way people shop. Today there are more than 18,000 people employed in the retail sector with the average wage being just over €13,000.
The challenges facing the retail industry here are not very different from what retailers are facing in other countries. It is therefore interesting to understand the vision and the objectives of political parties on how they would support retailers when in power. The Nationalist Party has articulated its ideas and plans for the retail sector in a document entitled ‘A policy for retailers. – 51 proposals for retailers’.
The policy document is well researched and written in a style that makes easy reading for most stakeholders in this industry. Not surprisingly, the headline comments in the document emphasise the fiscal incentives a future PN government would take to instil new life in the retail sector.
The 51 proposals make good script, based on what a political administration can do to enable retailers to invest more in their businesses, promote better profitability and generate new and better paid jobs. As one would expect, fiscal incentives are the backbone of these proposals.
The promise to small retailers to reduce their income tax rate to 10 per cent on their first €50,000 of operating profit is a positive move that would help SMEs in the retail sector in a tangible way. It would also help to increase long-term tax revenues.
The document does not shy away from identifying the “many and multifarious” challenges for the retail sector. These are presented to the readers in a comprehensive graphical style. Some challenges are relatively easy to resolve. Others are more difficult as they call for substantial investment as well as a change in the mindset of the various stakeholders in the retail industry.
The more serious challenges are clearly identified: lack of e-commerce competition preparedness, local cut-throat competition that indicates a degree of overcapacity, rental cost of retail space in high footfall areas, which make operating costs prohibitively high, and the market dominance of large operators.
The fiscal incentives to promote innovation, the educational enhancements for employees in the industry as well as the snipping of government-induced red tape can all be achieved in a relatively short period of time once there is the political will to support the retail industry.
This enabling policy document could be enriched if it were to spell out more clearly the need for this industry to restructure as a result of the changes in technology that are revolutionising the way people shop. Admittedly, this is a political document and not a consultants’ report on how to harness new trends in the retail industry.
The PN has invited interested parties to comment and make recommend-ations on how this policy document canbe improved.
Shopping in physical stores is still the most prevalent way of procuring the goods consumers need, even if newer retail channels are evolving. As a Harvard Business Review article states: “In the future of retail, we’re never not shopping.”
It is essential that all stakeholders, including future political administrations, understand what consumers want. The PN’s final version of the document will undoubtedly be enriched by the feedback of consumers who are by no means a homogenous group and will demand an integrated omnichannel system of shopping.