Watch: Business performance survey shows trading in the doldrums

A cautious sense of optimism tempered by a harsh reality of increasing costs was evident in the results of a Business Performance Survey carried out by the Malta Chamber of SMEs. In a nutshell, the main results are that:

  • 61% of respondents were not optimistic about sales during the Christmas period, the vast majority being operators in Valletta
  • 44% reported a decrease in sales ranging between 10-30%
  • 10% fewer traders reported a sales increase in 2019
  • 17% more traders reported a sales decrease in 2019
  • 38% of respondents reported worse profitability, 16% more than the previous year
  • 35% cite higher costs of staff and operation for the erosion of profitability
  • 21% cite political instability as a cause for a decrease in sales
  • 43% of those reporting increase in sales say this was due to new products and an increase in population

Turning hunches into numbers

In this number-crunching exercise, hunches and feelings get translated into tangible terms even if, as the methodology of the survey itself cautions, the margin of error is 6%. Be that as it may, 38% reported a decrease in profits mainly due to higher operational costs, higher staff costs, lower turnover and increased competition. These were also the main factors named by those operators who said that their profits remained largely the same. For those who saw an increase in profits, higher consumer interest was mainly the mover since 34% of those who saw increased profitability pegged it to a higher turnover. A canny 28%, probably those destined to be survivors, said that they increased their profits because they improved their business strategies and increased efficiency.

Christmas downer

The Christmas period was not a highlight for almost two out of every three businesses. 61% of respondents were not optimistic about sales during the Christmas period, the vast majority being operators in Valletta. This dissatisfaction reached about 11% more operators than it did in 2018. 44% reported a decrease in sales ranging between 10-30%. Probing for reasons, the survey turned up two main culprits: Political instability and power cuts. Even Black Friday was a dark time with 53% of operators saying that the business was below expectations in 2019 – again the political situation being cited as the main cause.

Worst hit: Valletta. The survey disaggregated the sales turnover respondents on the Christmas period between ‘All Malta’ and ‘Valletta’. The Valletta respondents top the list on the dissatisfied, very dissatisfied and Neutral gauges.

Hope never dies

However, not all is bleak. 76% of respondents believe that 2020 will be a better year or at least, the same. 40% plan to expand their business in Malta and train their staff, 4% plan to sell up while 1% plan to change their line of business. Major challenges are not few. Increasing costs, labour shortage, economic and political instability, traffic and lack of infrastructure, difficult access to finance and bureaucracy all play a part in the scenario that traders will face in 2020.