Retailers struggling to survive amid slow sales in post-COVID limbo

Numerous retailers have been forced to lay off employees and – in some cases – close down the business, as measures imposed during the COVID-19 pandemic made it impossible for them to meet financial obligations, especially high rent, BusinessToday has learned.

“Those worst are affected are businesses that entered into rent agreements in recent years, when the rents have sky-rocketed as many landlords have tried to make a quick buck off the foreigners wishing to open a business in Malta,” an industry insider said.

Of the handful of shopping destinations available, Sliema is considered to have fared best in the run-up to Father’s Day two Sundays ago, albeit only averaging around 40% of sales that businesses are accustomed to around this time of year.

Valletta is the locality where retailers appear to be the worst hit, with coffee shops in the capital city believed to have averaged as low as 15% of their normal turnover on the same Sunday.

One exception stands out, the sources said. Retail outlets at PAMA Shopping Village in Mosta seemed to be enjoying brisk business, boosted by the immediate access to the supermarket and ample parking space, a huge attraction to shoppers.

The sources said that the businesses closing down were mainly in the catering industry.

An importer and distributor of coffee-making equipment and supplies reported many clients forfeiting payments during the lockdown, as well as a number of clients even returning the equipment itself as they were forced to close their doors, no longer able to sustain the heavy losses they incurred in the past few months.

One industry insider said that rents – more than anything else – seemed to have played a pivotal role in whether a business survived the lockdown or not.

“Intelligent landlords immediately realised that they needed to work with their tenants in the interest of both parties,” they said. “Others insisted that their tenants continue to pay the full rent even during the lockdown and that drove many businesses into the ground, and leaving the landlords with no income too.”

The number of actual staff layoffs seems to have been mitigated by the aid offered by the government in its economic measures aimed at assisting businesses during the coronavirus pandemic.

The sources agree that the outlook for Valletta does not look too bright at the moment.

Tourism minister Julia Farrugia Portelli announced on Tuesday that 700,000 tourists were expected to visit Malta this year, as Malta re-opened its doors to tourism yesterday – down from 2.7 million last year.

Valletta will once again be the worst-hit locality with the reduced number of tourists.

One industry insider said that he calculated that some 70% to 80% of Valletta’s business depended on tourists, including cruise line passengers visiting on day trips to the historic capital.

“I would say that Sliema, another shopping mecca, only depends on tourism for around 50% of its business,” they said. “This means Sliema will fare much better than Valletta as we come to grips with welcoming only around 26% the volume of tourists that visited Malta last year.”