With many consumers turning to online retail giants like Amazon for many of their retail purchases, a Bahamian retailer and Chamber of Commerce executive has called for the development of policies to adapt to the modern retail era and stimulate the local retail segment.
Tara Morley Nolan, a Bahamas Chamber of Commerce and Employers Confederation (BCCEC) executive and general merchandising manager for clothing retailer Cole’s of Nassau, the ladies clothing boutique, argued that the problems facing the global retail sector are only exacerbated in The Bahamas where the high cost of doing business and high import duties further disadvantage local retailers.
“High customs duties are extremely prohibitive to the retail sector’s ability to bring in sufficient assortments without taking huge inventory risks. Additionally, it puts undue pressure on the pricing structure which burdens consumers with unnecessarily high prices. This creates huge issues for local retail as both locals and tourists opt to shop abroad rather than spend money in The Bahamas.”
According to Nolan, the digital revolution has changed the way shoppers consume and they have access to price comparisons in the palm of their hands with the single click of a button on their phones. Generally, prices are higher in the Bahamas on goods on which a significant rate of duty are applied. Bahamians and expat residents living in the Bahamas travel to Florida frequently to purchase goods that they deem to be more expensive locally. Upon returning, many Bahamians and expat residents often do not declare these purchases, especially if the items are easily concealable in a suitcase or easily passed off as used, such as clothing, footwear, accessories, personal items and small electronics.”
“The list of such items is long and inexhaustible and the government has priced the country beyond the competitive range in many of these categories. These undeclared purchases made in Florida represent a huge portion of our economy and represent both a loss in sales to local businesses and a loss in tax revenue to the Bahamian government, as neither duty nor VAT is collected on those purchases.” Nolan noted that high import duties have also led to a growth in the informal retail sector and illegal trade activities.
“Too often as we travel we see persons with several bags of what ends up being commercial goods that are not declared as such. Businesses also operate illegally by means of either falsified invoices in order to cheat Customs, or delinquent payments on NIB or Business License and the list goes on. The air courrier industry is also a vehicle for fraud. While a number of courrier operate legitimate business others rely on a business model that requires some form of illegal or illicit activity to make it work. Bahamas Customs is very familiar with the courrier challenge and has been working hard to combat the illegal activities of various operators.”
“The more effective Customs is in its interdiction effort the better for the Bahamas Retail Industry. A transparent and level playing field makes for a healthier more efficient business which can compete.” Mrs Nolan said that The Bahamas needs to adapt to changing market conditions and focus on ways of stimulating growth in our economy.
“Travel retail is expected to grow by +8% per year between 2017 – 2021, yet we as a country have not done anything to support this sector. Downtown continues to be a mess and duties need to be eliminated or reduced to a nominal amount on soft goods such as clothing and apparel and gift items. As tourism is the anchor of our economy, it would seem Travel Retail would be an easy sector to target for growth with immediate impact. There is so much focus on concessions for foreign-owned hotels to stimulate jobs growth, yet the Wholesale and Retail sector employs the largest percentage of Bahamians in the private sector. Growth in local retail would immediately stimulate the employment rate in the country in a sector of the economy which is Bahamian-owned.”
“There needs to be more focus on how to support and grow our local retail industry rather than continuing to send Bahamian consumers abroad.” “In short, the government needs to work on strengthening customs controls, eliminating illegal roadside businesses, lowering duties and reducing the cost of doing business in the Bahamas. Each of these actions will lead to lower prices and reduced spending overseas. Retail will become another asset of the tourism product offering. The more money spent in the Bahamas on retail goods, the more money to go around in our economy, the more jobs created, more taxes generated, less government spending on social services, and the greater our GDP growth.”