Issue link: https://maltatoday.uberflip.com/i/761508
14 CHRISTMAS may be the season of joy and good cheer; but in Malta as everywhere else, it is also very much a season for shopping, eating (and drinking) out, and spending money. In a country where the vast majority of businesses are small and medium enterprises, with a high percent- age of retail operators and a densely competitive entertainment and lei- sure sector... we should not be sur- prised that 'the Christmas season' has also become a gauge with which to measure Malta's economic health as a whole. At this time of year, it is traditional for news outlets to interview shop- keepers on their expected (and later, actual) sales; just as tourism broadly relies on the summer months, for re- tailers it is Christmas that can make or break the financial year. This makes it a busy time of the year for the Small Business Cham- ber, which represents the bulk of Malta's small and micro retailers (in fact it still uses its earlier abbrevia- tion, GRTU: 'General Retailers and Traders' Union'). But as its CEO Abigail Mamo soon confirms, this Christmas has been busier than oth- ers. Immediately after this interview, Mamo will be joining other GRTU officials for a walkabout in Pace- ville: Malta's largest entertainment district, mostly composed of small clubs and bars. This is not an ordinary Christmas pub-crawl: the GRTU has voiced se- rious concern with the Paceville re- generation 'masterplan' unveiled last month, and will be touring the most vulnerable businesses. The plan itself has since been sent back to the draw- ing board, and a second draft is now in the pipeline. What sort of second draft is the GRTU expecting to see? "We are expecting that, if this was a sincere consultation exercise, the second draft should reflect the con- cerns that have been raised," Abigail Mamo begins in the boardroom of the GRTU's Valletta offices. "I do imagine that whenever there is con- sultation, they take stock of sugges- tions coming in. It is not necessary that they take 100% of the propos- als into consideration. There still has to be a masterplan, and maybe some ideas might not fit in. But we did see a number of shortcomings in this project. I don't think the short- comings were small; some of them were glaring. What we expect is that these, at least will be taken into con- sideration. And that is what has been promised..." Much of the controversy had to do with a perceived threat to many established businesses in the area. At a glance, the plan seemed to focus on attracting new investments and redesigning Paceville around them: even suggesting that private land could be taken up to accommodate the new (competing) industries. The details may change, but the overall thrust of the revised plan promises to be the same: with or without expro- priation, Paceville seems destined to grow and change in character... a bigger playground for bigger players. Is the GRTU concerned that small- er players may be left with no room? "That is what would happen if they went through with the origi- nal masterplan. We are not against improving Paceville, and generat- ing opportunities for new invest- ment. But Paceville should not go backwards, and undo what already has been done... remove everyone that has been established there, who made Paceville what it is today. Like it or hate it, Paceville is very popular. Business is very good there. We can't just go and wipe the slate clean to create space for new investment. We believe new investment can be gen- erated... and yes, Paceville does need a masterplan. But things have to be co-ordinated. What do we expect from these businesses: to just hit the pause button, and then see what in- vestment opportunities might arise? These businesses have invested mil- lions..." Mamo invites me to consider the difficulties in investing, operating and growing in such a competitive market. "Paceville is not an area celebrated for the traditional busi- ness model. To compete in that en- vironment, you have to always be innovative. You have to constantly make your product more interesting. These investments have not been there 20, 30 years. They are mostly very recent, and ongoing. "Some of the operators have bought land with the intention of making big investments. What should they do, if the areas they have bought are marked for expropriation, and have been devalued? We are very much in favour of investment, and will never speak against it. But you have to take stock of what there is today, to acknowledge that what we already have is working, and incorporate it as best as possible. We are not saying that the masterplan must incorpo- rate them all 100%: some might even choose to let their business go. But the strong players who have invested a lot there... they're still small busi- nesses. Their investments are doing well. We expect them to be incorpo- rated..." But how small are they, really? Re- ality is that Paceville has always been slanted in favour of big players any- way. Time and again we see smaller establishments bought out and incorporated into existing chains. Doesn't this mean that the difficul- ties envisaged in the masterplan al- ready exist? "Even the big players are SMEs. Most of them are below 250 em- ployees, which is the definition of an SME..." That's still quite big, though... "For Malta it is big, yes. But we still have to look at the European dimen- sion. Paceville is difficult not only because you have to be a big opera- tion to compete; but even because of how businesses operate there. For a small establishment, a family- owned business, one major problem concerns the hours you need to put in. The biggest difficulty they face is finding people to work. People don't want to work in Paceville – because it's Paceville – and they don't want to work those hours. This is why you end up with certain bigger establish- ments: they have a structure in place, they can employ people on shifts. It's a sort of necessity. But there are still some very small operators. Paceville isn't just about bars and clubs. There is E-Cabs, for instance; Stylish Bath- rooms... There is a very small sushi bar just next to E-Cabs, I believe. A tiny operation, just started... we can- not ignore the very small." Can such tiny businesses realisti- cally survive, though? It's not just about Paceville: everywhere you look, smaller businesses are being muscled out of the way. The corner grocery is giving way to Lidl and Pavi, small bookshops turn into Agenda outlets... the movement is all towards big names, big corporations, etc. "As time goes by it is always be- coming more difficult. They have to keep on innovating, meeting consumer demands... only estab- lishments of a certain size manage to do that in a certain commercial way. But small and micro businesses are finding niche opportunities; that is what they need to do. You can- not rely on numbers in such a small market capacity. You can't predict that people will end up at your shop because they find the others full. But you can target niche clients. It happens in the clothing business; in the restaurant business. You set up a concept which is different from these commercial big franchises; you get to know your clients very well, and tailor your product for their needs. Your clients feel they are well taken care of, and are ready to pay for that. And you have a specific niche. But if you are not ready to do that, unfortunately it is a time bomb. You will have a deadline, after which you will be out of business... But not everyone can hit on an original niche. There is a limit to how innovative a grocery can be when tailoring groceries for indi- vidual clients... "In cases like that their niche will not be because they have innovative products; their niche market might be between 7 and 9.30pm, or very early in the morning. They open out- side ordinary working hours. That is their niche..." This raises another competition issue affecting the GRTU's member organisations. Small retailers used to be traditionally against extend- ing shopping hours – in particular, to Sunday – arguing that they would not be able to compete with larger outlets. Yet now, they argue in fa- vour of more liberalised business hours... "It has changed. Not because they wanted to change, perhaps. Ideally, they would prefer Sundays with the family. Everybody would like to have office hours, and you need to see this in the context of families, working mothers, etc. But it had to change, especially with e-commerce. Today, you can buy anything over the inter- net, at your convenience... you don't have to drive around, look for park- ing, rush to reach the shop before it closes... it's all about what the cus- tomer needs. If your customer needs you to be open from 7 to 9.30pm, you need to be open at that time. You can choose not to open; and with the change of the law that will hopefully come in soon, there will be no obligation for anyone to open..." The GRTU is currently pushing for the removal of an administrative fee for extended opening hours. "At pre- sent, the law obliges you not to open outside ordinary working hours. To do so, you have to pay 700 euros eve- ry time. It's very difficult for a small operator to spend that amount just to open on a weekend... while for a larger supermarket chain, those 700 Interview By Raphael Vassallo maltatoday, SUNDAY, 11 DECEMBER 2016 Like it or hate it, Paceville is very popular. Business is very good there. We can't just go and wipe the slate clean to create space for new investment Just because we are going ahead with new investment, it doesn't mean we have to wrap up what we had before. We should build on what we have, not rebuild from scratch PACEVILLE INVESTMENT The free market must