Abigail Agius Mamo, the outgoing CEO of the Malta Chamber of Small and Medium-Sized Enterprises (SMEs), mentioned that Maltese small businesses have been voicing their concerns to the local lobby group since the opening of the first major discount store in the country.
As Malta’s economy evolves and the rise of sprawling supermarkets, multinational chains and glitzy malls continues, Maltese small and medium-sized businesses have found themselves fighting for survival.
Each new mega-store that opens, the attention seems to tilt further away from the local grocer, the corner bakery and the small retailer. Large malls like Mercury in St Julian’s and Shoreline in Kalkara, were opened within a year of each other (2023 and 2024 respectively).
Before that, mega supermarkets opened in various parts of the island, gobbling up business as they made shopping easier, offering customers varied products that went beyond the usual food, drink and home products. Some of the bigger shopping complexes have themselves found it difficult to keep the pace. Just three years ago, Supermarkets Tower, Park Towers, Valyou and Trolees amalgamated their brand names to form Welbee’s, aiming to strengthen their position in the competitive supermarket industry.
The Malta Independent on Sunday spoke to Agius Mamo, who confirmed this growing phenomenon, which has been happening “over a good number of years” and which has seen it expanding further, making life harder for the small, grocery shops which can in no way offer the same kind of business when compared with the giants in the same industry.
Agius Mamo said the new system of shopping centres and large chain supermarkets has grown significantly, whereby those small businesses who find themselves in a corner of a locality, away from such centres, have been struggling.
She said that this is all related to consumer interest or preference, where the consumer is moving more towards shopping which includes a variety of different choices.
Agius Mamo also said that the family experience is also something sought out for, where the shopping experience has veered into a family-friendly activity.
“Malls provide entertainment, food courts, activities, and more, which attract people,” Agius Mamo said.
She spoke about the economics of the phenomenon, where she said that “the bigger they are, the more they benefit from economies of scale, having much more financial strength to do certain things.
“Our surveys, which are conducted on a regular basis, show that competition as one of the things highlighted as a negative impact for SMEs. They feel it for sure,” Agius Mamo said.
Agius Mamo continued that the population has increased, and the country’s market, although quite limited, has increased over the years.
And at a much faster pace, shopping centres and complexes have also increased.
She said that small groceries in some localities cannot compete by offering the same benefits as their larger competitors, bringing up parking limitation as an example.
“There is a lot going against businesses in the Mosta square, for example, as, especially with the roadworks, there is very limited parking,” Agius Mamo said, while large shopping centres usually have parking lots for their customers.
Agius Mamo was asked about the government’s Stabbilta scheme, which was introduced by the government in response to inflated prices of food items.
Since its inception, almost all large supermarket chains, as well as smaller grocery stores, have put up the initiative’s mark, showing that they sell the essential products reduced in price.
Agius Mamo said that due to economies of scale, the larger complexes can compete much better, even among the large players themselves.
“There is ample competition, there are also mergers of these big companies, for them to compete more efficiently by pooling resources,” she said.
In Malta, there is no phenomenon of “one sole player compared to more small players”, as there are quite a few larger corporations, Agius Mamo said.
Asked if small businesses have felt the effects of this, to the extent that some had to shut down, Agius Mamo said that unfortunately, many have already.
She said that complaints with regards to larger competitors began when the first Lidl complex opened on the island, which was in 2008, the Santa Venera complex. That same year, three more were inaugurated.
“More locations of these chain supermarkets are being added, and they have favourable tax advantages too,” Agius Mamo said.
Agius Mamo said that small businesses definitely feel the impact of more large stores popping up.
“Fortunately, you still find the small businesses, albeit you will no longer find the number there once was,” Agius Mamo said.
She said that local people still go to their local grocery store or bakery for their daily needs, then opting for larger chains for their larger shopping.
Agius Mamo also spoke about the concept of franchising, which has also infiltrated in SMEs.
She said that the question for them is, “how to exist?” Agius Mamo said that a number of smaller businesses have started franchising, meaning opening up more locations on the island.
“It is not just about the branding, but it is also about strengthening their numbers, so that they benefit from economies of scale,” Agius Mamo said.
She said that ultimately, the market has certainly been “revamped” in this sector, and is not the same market the country had before.
However, Agius Mamo said that this is a natural economic progress driven by consumer demand and expectations, and seemingly, almost everyone has found their place in the new market.
“There are a variety of players, those who were small may have remained small, but there are those who fell under the franchising umbrella, and the larger complexes,” Agius Mamo said.
The landscape has “definitely changed”, where there is now ample choice, she said.