Two-fifths of retailers that took part in a business survey reported a drop in sales last year, citing more local competition and online shopping as the main causes.

“The survey was generally positive. There were more businesses that reported an increase in sales than those reporting a decrease last year. However, figures change when taking into consideration the retail sector on its own because there were more who reported a drop than an increase,” the vice-president of the Chamber for Small and Medium Enterprises – GRTU, Marcel Mizzi said.

Overall, 36 per cent of all respondents – including the retail, arts, accommodation and entertainment sectors – said they experienced an increase in sales over 2013 whereas 33 per cent reported a decrease. The rest said business was unchanged.

When taking into account just retail, while 25 per cent saw higher sales, 40 per cent reported a drop of up to 30 per cent.

According to the replies, the main reasons for such a decrease were local competition, trading from Sicily, online shopping and lack of parking facilities.

“Local retailers cannot ignore the online market anymore. They need to realise that while people in Italy and France are buying products online from Italian and French outlets, the Maltese are buying from foreign outlets,” Mr Mizzi said, adding that retailers might need to be supported financially to improve their online presence.

Mr Mizzi was speaking about data that was collected in January from 200 respondents.

GRTU president Paul Abela said the government’s promise to impose more controls over products imported from Sicily, which usually avoided tax and VAT, and the overhaul in the warden system should help improve the situation.

Traffic fines discouraged many from buying from particular places that lacked parking facilities, he said.

Another matter that needed to be better regulated was permits issued to hawkers, such as those selling Valentine’s Day flowers, which were meant to be temporary and tied to a particular place. CEO Abigail Psaila Mamo said loopholes allowed some to extend such permits, while others were simply setting up shop at the Sliema Front, for example.

Referring to expectations for 2015, as in previous years, the outlook was positive.

While nearly half said this year would be the same as 2014, another 36 per cent expected the coming months to be better. A third of respondents said they planned on expanding their business and only five per cent will be downsizing. Businesses were also asked how they were affected by this year’s Budget.

While the reduction in electricity rates and tackling unfair competition were expected to have a positive impact, respondents said they believed the small COLA increase (58c a week) and Excise duty on ammunition, wine and tyres would impact them negatively.