Chamber of Commerce CEO Marthese Portelli (pictured) has suggested that Malta has enough supermarkets and shopping malls and that the Planning Authority should stop issuing permits for new developments.
The Chamber of Commerce has urged the government to move away from a “growth at all costs” economic model and has released a plethora of policy proposals for the next budget. Yet the novelty of new shopping complexes, which differs from the supermarket, is quintessentially popular. For a start, it brings together additional shops which do not necessarily form part of the supermarket. In the case of Pavi, for example, one finds a bank, a Go Mobile outlet, a flower and indoor plants shop, a laundry, a perfumery, a shoe shop, a book shop and soon a McDonald’s restaurant in addition to an existing trattoria and a car wash.
Psychologically this makes shoppers accept that a shopping complex helps one save money and relieves the weariness and drudgery of shopping. There are no doubt shopping complexes, particularly those of a high calibre, which will succeed to attract repeat consumers. But what then could possibly come round to challenge the shopping complex? People are spending much less. They appear to be purchasing mainly essentials rather than high-end goods.
Ask the traditional corner shop and it reports fewer shoppers through its doors. In unison, they blame the popularity of malls, which offer better parking facilities and protection from the windy weather and summer sun. Typically, we notice the popularity of Lidl. This was founded in Germany as a food distribution company and is a supermarket franchise seen almost all over the world.
Since its first mall opened in 2008, it now boasts an impressive 10 stores with thousands of trained employees; it is here for the long run. The announcement of another mall comes after the Planning Authority approved the construction of a mega store on the site of the former General Softs Drinks factory in Qormi. The development is a joint venture between the German supermarket chain and Mizzi Organisation, following initial plans by subsidiary company, Mizzi Estates, to transform the site into an apartment complex. A competition is hotting up with the opening of an Italian supermarket giant, Eurospin.
This low-cost retailer opened its first store in Mosta, right next door to its competitor, Lidl. Risparmio Casa, another Italian discount store, also opened a store in the same locality. One cannot omit to mention the impressive addition of the biggest shopping mall in Smart City by Shoreline. With a €200m investment, the mall encompasses over 25,000 sq.m. across two levels, offering a wide array of shops and brands.
It offers two main floors bathed in natural light streaming through the massive, glass skylight. The outdoor and indoor free parking makes any visit stress-free, sporting a vast 44 outlets to keep consumers busy and entertained. There is a variety of surrounding restaurants just a stone’s throw away. Given the numerous high-end shopping malls catering to a small population of 560,000, it is anticipated that any property consultancy would caution us about the potential downside of an oversupply of malls.
One questions – is there a dilution of product mix and duplication of brands? Too many, too similar and a lot of the malls target the same consumers. Tourists with a low-spending budget do not visit them. Any slowdown in retail sales, competition from online retail and over-supply of malls in some areas are all negative near-term factors for malls in these locations. All this combined with a searing inflation factor – one which exceeds that imported from Europe.
One stops and asks, have we learned our lesson from the spectacular demise of the largest mall, Price Club, 25 years ago. MaltaToday broke the news of a scathing audit report conducted by PricewaterhouseCoopers (PwC) regarding the Price Club bankruptcy, which revealed that up to 200 suppliers and other creditors lost between Lm8 to Lm12 million (approximately €30m) when the Price Club collapsed. Following a number of appeals, the courts have confirmed that three directors face claims said to exceed €20m, after being found guilty of wrongful trading when they kept doing business despite knowing that the company was going under.
According to PWC, Price Club directors enabled the company to generate more available cash by paying their suppliers at a slower pace. However, the affidavit noted how the first months of operation were punctured by a loan of €1m to a company owned by directors. According to PWC, in a period where Price Club incurred losses in excess of €10m, the directors had diverted over €2m of cash into their personal businesses and incurred costs of over €1.2m on the Birkirkara Day-to-Day supermarket and €600,000 on the Happy Saver supermarket “without in any way seeking to strengthen the equity base” of the company.
Perhaps most seriously, the directors diverted “further cash of €2.2m to meet capital and interest repayments on this and other borrowings taken out by other companies within the Price Club Group”. One hopes that I am wrong with my comparison of the economic tempo that reigns now. Critics tell me there is no comparison of Price Club with today’s mega retail investments.
Another positive factor is the significant growth in population and the more than doubling of our GDP since 2008, fostering hope that consumers will continue to appreciate the excellent variety available in retail.