Issue link: https://maltatoday.uberflip.com/i/712521
maltatoday, SUNDAY, 7 AUGUST 2016 10 TIM DIACONO IT'S been eight years since the first LIDLs opened their doors in Malta, wooing customers with cheap food items and special of- fers. The German discount super- market chain has proven a roar- ing success, with seven branches now operating across the coun- try. However, small-time retail- ers who operate in the shadow of the supermarket giants have told me of a different reality – one of declining business and of being forced to compete on a non-level playing field. All but one of the six retailers I spoke to, randomly selected from within the close radii of the San Gwann and Santa Venera LIDL stores, adamantly insisted on maintaining anonymity. The sole exception identified himself as Johnny Cajal, and busi- ness did not appear to be boom- ing for him as I approached his Sta Venera corner shop. Indeed, he was whiling the time away in a deckchair outside his shop, build- ing model plastic dolls. "Sales have declined for me since LIDL opened nearby," he admits, right off the bat. "How can I compete with them? They can sell their food for cheap prices because they purchase it in bulk directly from producers, whereas I have to buy from an agent or a wholesaler." Our conversation is punctuated here and there by clients popping into his shop, yet the aging ven- dor's outlook remains pessimistic. "I have a few clients who have stuck with my shop, but LIDL's constant adverts, special offers and promotions will ultimately have an effect on people. Even though sometimes the food is on- ly a few cents cheaper than mine and its quality poorer, people still fall for it and consequently miss out on the taste of fresh Maltese produce." Indeed, a common feature among local vendors was an obvi- ous disdain towards LIDL's fruit and vegetables, with some decry- ing it as "tasteless" and "garbage". "Our produce is like a brand – more expensive than LIDL's but much better quality. We only sell first and second tier fruit and vegetables, such as strawberries directly from Mgarr, whereas LIDL sells third tier food which of course is cheaper," a woman who runs a grocery and convenience store in San Gwann says exasper- atedly. "People don't always realize this and buy cabbage from LIDL to save 50c, but then bite into it and find it as hard as rock. Some peo- ple simply don't care that they're eating garbage though, just so long as they're saving money." Moreover, contrary to common perception, vendors point out that LIDL food is not even always cheaper than the local stuff. "People have got this idea stuck up here that they're saving money when buying from LIDL," a fruit van owner tells me, tapping his cranium. "Sometimes they might save a few cents, but then again sometimes a kilo of tomatoes costs €1 from me and €1.99 from LIDL." Yet this particular vendor has developed a parasitic-like strategy to attract customers to his van – by planting his van outside LIDL on a biweekly basis. "People buy all their shopping from LIDL, but then come out and buy their fruit and vegetables from me, so in a sense LIDL has actually helped my business," he says with a chuckle. 'Strong with the weak and weak with the strong' LIDL was awarded a €13 million loan from the European Invest- ment Bank to commence its op- erations in Malta back in 2005, a deal which still leaves a sour taste to small shop operators. "That was the first blow to us since Malta joined the EU," a vet- eran San Gwann salesman says from the entrance of his empty shop in a nostalgic but resigned tone. "20 years ago, we small re- tailers were at the top of the pyra- mid in Malta but we are now at the very bottom. The authorities had known… they had known that LIDL would destroy us." Worse is the notion among shop-owners that LIDL can effec- tively get away with murder while they get called out for the most minor of health issues. "I had to create a separate com- partment for my detergents be- cause the authorities ruled that they were too close to the food items," Johnny Cajal says. "How- ever, LIDL are somehow able to place their detergents right next to the food, the plates and every- thing else. I have nothing against LIDL but it's only fair that we get to play on a level playing-field." Similarly, the owner of a small Hamrun store shows me around his shop at all the minor issues the Environmental Health De- partment have nitpicked on. "LIDL has two skips right out- side its store, and you can smell the stench from all the way near the Hamrun parish church. Peo- ple have filed so many police re- ports about it that they have all but given up now," he says. "Yet the authorities come to people like me first, warning me because the fly repellant and geyser were switched off or the wastepaper basket didn't have a lid. They should use the big shops as an ex- ample, so that the little guys visit them and wow at how well they're maintaining things. Instead they pick on us..." tdiacono@mediatoday.com.mt News Not such a LIDL effect on small-time retailers TIM DIACONO went looking for small business owners who feel the brunt of larger chains on their day-to-day business 2013 2014 2013 2013 2015 2014 Year end 28/02/13 30/04/14 30/04/13 30/04/13 31/12/15 31/12/14 Revenue from main operations €89,229,604 €29,706,051 €32,434,531 €32,434,531 €12,687,857 €12,013,137 Cost of sales €71,210,768 €23,142,785 €29,612,978 €29,612,978 €10,364,525 €9,109,980 Gross profit €18,018,836 €6,563,266 €2,821,553 €2,821,553 €2,323,332 €2,903,157 Income from operations after tax and other costs €6,022,928 €2,442,216 €1,196,047 €1,196,047 €228,032 €300,978 LIDL SMART PAVI SCOTTS TOWER SHOPWISE Figures based on latest submitted company records. We tried to identify the main operations of companies responsible for supermarket businesses according to the level of turnover since various business groups split operations into capital and operations sub-groups "20 years ago, we small retailers were at the top of the pyramid, now we're at the very bottom. The authorities knew LIDL would destroy us."