This week the GRTU - the association that essentially represents the retailers in this country - released the data of a survey that it conducted with its members regarding the level of economic activity generated by the International Trade Fair that has just ended. The results of the survey were not very encouraging as retailers reported a subdued level of activity, with the main causes for this being the increase in the VAT rate, a lower level of disposable income and a lack of willingness by consumers to spend money on items like household goods that one normally associates with the trade fair.

This is a survey that reflects the opinions of the respondents and the facts as they are known to such respondents, and as such must be accepted for what it is. Respondents in such a survey have no reason not to tell the truth and therefore, from the perspective of the respondents, these are issues that must be addressed.

However, is the retailing sector really in such a gloom? Do the statistics issued by the National Statistics Office reflect this? Is there anecdotal evidence that reflect the contrary or that confirm these perceptions?

One important point of departure is that retailers are essentially entrepreneurs, driven very much by a profit motive. This is to be considered as something positive; but something common to all entrepreneurs is that they always want more. If in one year a positive performance is registered and that performance is repeated the following year, the entrepreneur feels that he has not moved forward.

There is a constant innate urge to do try and do better. This is, after all, what drives the economy and we should be very careful not to dampen this urge or to expect our local entrepreneurs to reduce their expectations.

Another issue that needs to be considered is whether there has been an increase in supply that has been disproportionate to the increase in demand. I am not referring to an increase in the supply of specific goods like white goods but also to an increase in the whole range of products and services on offer that are attracting a person's attention and are all vying for a share of his expenditure.

The level of expenditure on products and services related to information technology and telecommunications has increased dramatically over the last years. So has expenditure on travel.

However, this has in the main replaced other expenditure and, therefore, the obvious question that needs to be answered is whether the subdued demand that an amount of retailers are experiencing is the result of increased competition or the result of a fall in demand or consumer confidence.

Could there have been an investment in the retailing sector that could not be reasonably justified by the level of consumer demand? Could it also be that the availability of cheaper alternatives be directly impinging on the level of activity of a number of retailers?

On the other hand, what do the statistics say? Recorded consumer expenditure (and I insist on the term "recorded" because there is a great amount of consumer expenditure that is not recorded) increased by 33 per cent in real terms between 1995 and 2003, an average yearly increase of about four per cent per annum.

In the last three years, the rate of growth has been slower but we have never had negative growth in consumers' expenditure in spite of the fact that the gross domestic product did decrease in real terms in two of the last three years.

Consumers' expenditure represented 61.1 per cent of gdp in 1995. This went up to 62.2 per cent in 2000 and then to 65.6 per cent in 2003; thereby indicating that consumers' expenditure is taking up a larger share of the economic wealth we are creating. This may be disappointing news to some persons because they feel that too much of our national wealth is going towards consumers' expenditure and not enough is being channelled into investment, but it should definitely not be so for retailers.

Further statistical data by the NSO shows that turnover net of VAT in the wholesale sector increased by over 16 per cent in the first quarter of this year when compared to the same period last year, while turnover in the retailing sector increased by 4.84 per cent. Therefore, even in the short term, there is no doubt that, in aggregate terms, consumers' expenditure has remained fairly buoyant.

The statistical trends send a positive signal, while the perceptions of retailers are negative. There are a number of questions that have been raised in this contribution and others could be raised by persons operating directly in this sector. These are questions that cannot be answered without a thorough assessment of consumer demand, of the way that demand is being met and the response of suppliers to that demand.

The GRTU and the government should seek to address these issues together for the benefit of the retailing sector and consumers in general.