Political and economic instability rated as main reason for drop in sales
The Business Performance Survey 2019, conducted by the Malta Chamber of SMEs, has revealed that most businesses believe that the reason behind reduction in sales last year was due to political and economic instability.
The Malta Chamber of SMEs concluded that 2019 was slower than 2018, but possibly even slower than expected. It found that the political crisis at the end of 2019 effected not only the festive season but the overall business performance.
Consequentially, 2020 has started below expectations so far, yet, with the changing political scenario, businesses are optimistic.
The study took the shape of an online survey with unique tokens, a system where participants had a unique number to make sure that they cannot reply more than once. The survey was held earlier this month, from 9 until 24 January, using a pool of participants which consisted of 300 businesses that operate in Malta. This is the highest number of participants that has ever participated in the survey.
The survey showed that most businesses felt that they experienced an increase in sales when compared to 2018 with 41% experiencing an increase. However, this is 10% less than the satisfactory rate of last year's survey.
Notably, while in last year's survey only 17% reported a decrease in sales, this year's survey showed that this number has increased to 33%. The reason behind this is greatly attributed to the political and economic instability that Malta experienced in the last months of 2019.
Profitability also suffered in 2019, as 38% expressed that they made smaller profits, which is a huge leap from the 22% reported in the 2018 survey. Once again, the majority of participants blamed political turmoil for this decrease.
When zooming onto the amount of sales during the festive season, there was a 10% decrease in satisfaction from last year's survey, and a 15% increase in dissatisfaction.
Political turmoil, followed by the numerous power cuts that Malta faced at the time, was again identified as the culprit. In fact, the report shows that, when compared to the rest of Malta, businesses in Valletta felt the most dissatisfied with sales.
The report also showed that there was a 20% increase in businesses that participated in Black Friday this year. However, 53% of participants felt that sales did not meet their expectations.
There was also an overall dissatisfaction with January sales this year, with 38% saying that the figures did not meet their expectations.
Despite all of this, businesses seem to have faith for the coming year as only 24% believe that it will be worse, while 37% feel that 2020 will benefit them. The Malta Chamber of SMEs stated that this is a common pattern it encounters wherein a non-profitable year brings with it higher hopes for the coming year.
Participants believe that the main challenge for 2020 will be to increase costs in general. Other challenges included labour and employee shortages, increasing labour costs and political instability.
The CEO of the Malta Chamber of SMEs, Abigail Mamo, said that "the timing of this survey is important. The political scenario is very sensitive and a lot of changes were happening when respondents were replying. This had an effect on the way they are looking towards the coming year.”