Christmas was positive but inflation is on people’s minds

A first ‘post-COVID’ Christmas free of pandemic restrictions has seen good footfall for retailers since the start of the Black Friday sales in November.

Malta Chamber of SMEs CEO Abigail Mamo said sales had continued to pick up since the discount season despite initial predictions that more people would adhere to online buying. “People are out shopping and making an outing of it. We have noted good footfall so the comeback is there,” Mamo said.

The PG Group’s CEO Charles Borg agrees with Mamo. “We’ve noted an increase in purchases and clothing in particular has picked up more during 2022,” he added.

And from the catering business perspective, ACE president Michelle Muscat noted an increase in bookings of larger groups. “In the past two years we had restrictions on the number of people seated at one table, so without these restrictions we are seeing an increase in large tables. Some people still request outdoor seating weather permitting because they feel safer,” she added.

Malta has finally emerged from a two-year pandemic that had previously seen many Christmas gatherings and celebrations cut short or cancelled as the Omicron variant caused havoc. But there seems to be disparity between the different commercial hubs that have mushroomed over the island. Muscat says ACE members report business in Valletta increasing considerably, however not the same is being reported in the St Julian’s area.

“People are generally keen to celebrate these events but others remain quite cautious,” Muscat said, pointing out that various cohorts preferred to gather in private houses and celebrate by cooking at home or organising small private gatherings. “These types of gatherings increased during COVID times and although establishments have no restrictions this year, these types of celebrations will carry on and increase for various reasons.”

Inflation and Christmas

Both Mamo and Charles Borg attribute inflation to a certain sense of self-restraint on high-end purchases, rather than the post-COVID recovery. “People have become more price-aware as a result of inflation. In the case of food, inflation did not drive consumers to buy less because, let’s face it, you can’t actually take food out of your budget. It did, however, compel them to manage their finances and adhere to budgets,” Borg said.

The PG Group have noticed that more consumers in their supermarkets stuck to off-brands or cheaper options, making them more selective when buying. Borg said that as a long-term investor, PG was ready to take the risk of buying its own products, giving consumers a variety of options on the same product. “This allowed us to lower the pricing of basic items seen in other stores,” Borg said.

In catering, Michelle Muscat says high-income earners still frequent their usual eateries with high-end restaurants still keeping their usual steady flow of customers. But other establishments who cater for average spending customers might have seen a decrease in custom, because people are being very careful of their average spend.

And Mamo adds that a lot of product took longer to reach Malta with stock being late for certain stores even on Black Friday.

Amid the inflation concerns, both Mamo and Muscat feel businesses need to increase prices to counter rising costs. “Prices have increased considerably for everyone, however, the increase in prices affected customers in different manners,” Muscat said.

“There came a point, particularly at the end of last year, when things began to change. Some, certainly, had to raise prices against their will after much consideration and internal debate,” explained Mamo.

An online shift does remain prevalent in consumer habits, with businesses already forced to shift online during the pandemic, helping more local businesses getting the edge on international online stores.

Mamo adds that with skyrocketing rents forcing businesses to scale down and reduce outlets, investment in online platforms became a must. “Take, for example, Brexit. Most customers thought purchasing on British websites was worthwhile, but now they doubt it as it takes longer for that item to arrive and costs more money,” Mamo said.