Today I wish to provide you with an overview of the December 2020 Retail Sales Index.
However before I outline the December numbers, I feel it’s important to provide a full overview of some of the modest, yet milestone activities that took place in the retail sales sector last year, particularly since we were faced with such significant challenges due to the Covid-19 pandemic.
Surprisingly in spite of the road blocks that our economy faced, there were several months during 2020 where we saw positive increases in sales.
To provide some context of the role of the Department of Statistics, the public should be aware that the Departmentcollects statistics and produces reports that paint a picture of Bermuda’s economy and society.
In addition to conducting the Bermuda Population and Housing Census, the Department regularly produces publically available reports about Bermuda’s:
➢ Population and demographics
➢ Gross domestic product
➢ Information, communication and technology in business
➢ Consumer Price Index; and the
➢ Retail Sales Index.
Retail Sales Index
The Retail Sales Index (RSI) is produced by the EconomicsDivision of the Department of Statistics and is a key economic indicator used to assess the current performance of local sales activity in the retail sector.
The RSI measures goods sold by retailers based on a sampling of retail stores.
The RSI is considered a self-weighting index, as stores reporting a large value of sales have a greater impact on the movement of the index than stores reporting a low level of sales activity.
The purpose of the Retail Sales Index is to:
➢ measure monthly and annual movements of retail sales
➢ provide an estimated gross turnover of sales in the local retail sector
➢ act as a barometer of change in the level of demand for both the domestic and tourist markets
The Retail Sales Index is structured into seven broad sectors:
➢ Food Stores
➢ Liquor Stores
➢ Motor Vehicle Dealers
➢ Service Stations
➢ Building Materials
➢ Apparel Stores
➢ All Other Store Types
Total retail stores across the seven sectors represent roughly 70% of all retail activity on the Island.
You will note the featured graph which shows the year-over-year percent change in the value of sales for each month in 2020.
As you can see, before the pandemic, our retail sales were slightly down in January at -2.4% in comparison to January 2019.
But there was an uptick in February and March, with 2.2% and 4.3% recorded respectively, again comparative to the previous year.
Predictably in March, when we announced the implementation of the health and safety protocols and the shelter in place guidelines, we saw steep declines in the April and May RSI numbers, with -30.1% and -13.9% respectively.
This was as a result of the closure of our borders; suspension of commercial flights and travel; and the closure of most businesses, hotels, retail stores and restaurants.
In June, although the RSI numbers also saw a decrease with -4.8%, this was not as significant as the previous months.
It wasn’t until July that we began seeing some light at the end of the tunnel, with the RSI creeping up to 1.3%.
By then, through a phased reopening process, we had relaxed some of the COVID-19 regulations, allowed some flights to return to Bermuda, and the resumption of some businessactivity.
And since July 2020, Bermuda has experienced six (6)consecutive months of increased retail sales activity when compared to the previous year. This bodes very well for our economy.
Dollars were being spent right here at home due to the fact that residents were not travelling and they were importing goods in record numbers.
Residents were taking staycations in our hotels and Airbnb’s; they were spending money on building materials to conduct home renovations; and spending their dollars on big ticket items such as new cars, motorbikes and furniture.
Additionally, the streamlined processes implemented by the Government regarding planning applications continued to encourage many building projects to start early, which has helped local businesses and the economy overall.
So with that bit of background, I am pleased to offer a snapshot of the Retail Sales Index report for December 2020.
In December, the overall volume of local retail sales increased by 14.2%. In value terms, retail sales rose 15.3% to an estimated $120.4 million.
This compares to the previous year’s local retail sales which reported a volume decrease of 4.0%.
As I noted, the retail sales growth in December 2020 is the sixth consecutive month of increase as compared to the same month in 2019.
This consistent increase in activity is good news for Bermuda’s economy and many local businesses.
Of the seven (7) retail sales sectors five (5) sectors experienced positive growth in December 2020.
This was led by the Liquor Stores, which experienced the largest sales volume increase of 29.0%.
In December 2019, sales volume for Liquor Stores was down by 6.2%.
Some highlights to note:
➢ Sales for the Building Material Stores sector increased 23.1% in both volume and value terms. The growth in sales was associated with large customer projects.
➢ The All Other Store Types sector comprises a variety of stores selling household items, furniture, appliances, electronics, pharmaceuticals, marine supplies and tourist-related goods. And in December 2020, it showed an 18.5% increase compared to a 2.1% decrease in 2019.
The total selected overseas declarations increased 22.6% in December 2020 compared to December 2019.
The rise in overseas declarations was influenced by more imports of clothing and pharmaceutical products by courier as well as higher imports of clothing, machinery, appliances, electrical equipment and furniture by sea.
The Motor Vehicle Stores sales volume rose by 14.0% when compared to 2019 due to a greater number of cars sold.
We did see some declines however in the December RSI. The Service Stations sector experienced a 4.0% decrease. Restricted business hours due to COVID -19 related curfews and residents working from home also impacted sales negatively.
Apparel Stores volume sales were down 6.3% in December, which reflects the lowest decrease month-to-month in the last 14 months.
In closing, we recognize that the challenges of the pandemic have severely tested us as a country.
But I believe that we have a resilient economy.
We are seeing some encouraging activity with residents supporting our key industries and spending locally.
I would like to encourage everyone to buy as much locally as possible, as it helps to keep our people employed, it helps to create more jobs, and it helps to stimulate the economy.
Thanks to the residents of Bermuda for playing a key role in revitalizing our retail sales.