In the newest C360 blog, respected regional economist Marla Dukharan, financier and CEO of Bitt Inc. Rawdon Adams, and regional marketer and Chair of GHA Inc. Greg Hoyos share their points of view on various issues. They begin this week with the question: Is Regional Retail Dead?
Greg’s P.O.V.: Yes, its day is over. Retail in the Caribbean will continue to wither and die in the face of Amazon. Local retailers are hobbled by a shortage of capital, which leads to poor selection, little variety of stock, freight costs and customs duties. These elements do not appeal to consumers who increasingly want more options and lower prices.
It’s a vicious cycle, since the resulting low retail margins mean that staff are badly paid and take out their frustration on customers. Complaints about terrible in-store service are legion among consumers.
And the trends are clear – and inevitable. Look at what’s happening to Sears, Macy’s, Walmart and thousands of other stores and chains around the world.
I don’t see that malls as we know them have any future either. They may evolve into something else, but I expect most will go the way of malls in large countries.
Now everyone in every village has a credit card, an Amazon account and a US mailbox, and regional retail can’t compete with all this plus 24/7/365 store hours.
Marla’s P.O.V.: Not in Trinidad!! Try getting a parking spot in Trincity Mall (reputedly the largest shopping mall in the English-speaking Caribbean) on a Saturday afternoon. Either people are flocking there to shop (and with the most overvalued currency in the Caribbean, Trinis are therefore incentivized by the authorities to buy imported goods), or to take in the air-conditioning, or just to idly walk around and around as though on pilgrimage to Mecca. Most likely a combination of these.
But not me. I hate shopping. I do it because I have to. The whole concept of ‘retail therapy’ is entirely foreign to me, and perverse even. When I do go shopping, I approach it like one would typically approach an unpleasant but necessary exercise – like going to the dentist or gynaecologist. I attack the stores with precision and efficiency.
So I admit that online shopping is a welcomed blessing. And should the trend we have seen affecting the large ‘department’ stores continue and their demise accelerate, you won’t hear me complaining.
Rawdon’s P.O.V.: This is one of those questions where eyeballs are deceiving. Amazon grabs much attention and most people think retail is already majority digital. But that is not true! By far, most retail sales take place in brick-and-mortar shops – in the US, it is something like 90%!
Regionally I’d guess it’s even higher because e-commerce is so weak. Much of that is down to fragmented markets with different trading rules and currencies. These are obstacles to digital expansion.
But that same state of affairs tells me retailers are potentially very vulnerable to change should the landscape change. Until then, the existing regional playbook for retail expansion is a very thin volume – the Caribbean’s retailers have not had to compete against the moving target Amazon has made industry internationally.
So dead? No. More like robust, but an industry ripe for technological innovation – especially in payments technology. I agree with Marla on the convenience an Amazon approach could bring the Caribbean.
* Marla Dukharan is a regional economist.
* Rawdon Adams is a financier and CEO of Bitt Inc.
* Greg Hoyos is a regional marketer and Chair of GHA Inc.