The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A major Bahamian retailer says its 20 percent "better than normal" sales performance has given it sufficient optimism to move ahead with an $8.2m investment.

However Jason Watson, Automotive Industrial Distributors (AID) president, told Tribune Business that plans for constructing new stores at the company's Blue Hill Road location and in Abaco could "change very quickly" amid expectations that current business volumes could drop-off as early as this month.

While the economy's post-COVID-19 re-opening and pent-up demand for vehicle repairs have given AID a boost, he warned that the tourism/hotel industry's revival - and the return of "large quantities" of tourists - will be vital if the retailer is to sustain its present buoyancy.

Any "drastic" reduction in sales, Mr Watson warned, would result in AID "freezing" investment plans that could expand its full-time workforce by 25 percent through the creation of 40 jobs.

He added that the ideal post-pandemic scenario would be one where stopover visitors are returning, but Bahamians are not travelling, as this would give AID and other local retailers the chance "to do much better than we have ever done" through the reduction in dollars heading to Florida and elsewhere on shopping trips.

Revealing that AID is 20 percent above typical trends "sales wise", Mr Watson told this newspaper: "It will most likely tail-off, but has been better than normal. It's a little disappointing that the hotels are not opening.

"The problem is that if the tourists are not coming in large quantities we will not be able to sustain that [sales level] much longer. We'll see how it goes. It depends on how many tourists come in, and hopefully they will find accommodation other than the hotels.

"If Baha Mar and Atlantis were open I'd be optimistic, but because they're not open and are unsure when they are are going to open it's difficult to say. If the tourists are coming we'll do very well. If the tourists are not coming, it's only a matter of time time before business tails off."

The surge in COVID-19 infections in the US, which hit 50,000 per say last week, gave Atlantis sufficient pause for thought to delay its planned July 7 re-opening by 23 days until almost the month's end. Among those worst-hit were states that make-up some of The Bahamas' key visitor source markets, such as Florida and Texas.

The Paradise Island mega resort's move put a further dampener on what was already projected to be a slow stopover tourism re-opening as international airlines gradually restored services to The Bahamas with the re-opening of the country's borders.

Meanwhile, Baha Mar, the Melia Nassau Beach Resort and Sandals Royal Bahamian have all postponed their re-openings until either October or November 2020, thus taking a sufficient portion of New Providence's room inventory off-line for a further three to four months.

And Baha Mar's decision to terminate 328 workers at the Melia, and 20 percent or 1,100-1,200 of the workforce at its main resort campus, will further depress the consumer spending and confidence that retailers such as AID rely on so heavily.

Mr Watson replied "probably by this month or at least by next month" when asked by Tribune Business when he expected AID's sales to taper-off "unless the hotels re-open and we start to recover quickly" in the tourism industry.

He reiterated that the timing and strength of the rebound in The Bahamas' largest industry will be critical in persuading the Wulff Road-headquartered auto parts and housewares retailer, and vehicle repairs/service provider, to fully follow through with its planned capital investment in new and expanded store locations.

"We did freeze everything for a while, but after re-opening and getting strong demand, we decided to go ahead with the projects we have," Mr Watson told Tribune Business.

"We're in the process of knocking down and demolishing the store we have on Blue Hill Road, and building a new one, and are in the process of building the new store in Marsh Harbour. We have another project for a small warehouse."

Asked whether AID was fully committed to going through with its $8.2m outlay amid the current economic uncertainties, Mr Watson replied: "At this point, yes, but that could change very quickly if sales tail-off drastically.

"Every day we're checking to see what the situation is, what sales are, and looking to see what the hotels are are really going to do..... We're definitely moving ahead at this point.

"We know that if, at any time the economy collapses, we can stop at a particular phase, finish it and freeze it until things improve so we do not extend ourselves too far," he continued.

"We're very cautious about the expansion. We're coming in with very low debt, so it's very easy for us to withstand unease in the economy and the loss of sales for a short period of time. If the tourists are not coming it will be very difficult to continue with these projects."

Mr Watson said the new stores, when completed would add 40 new jobs to AID's existing 160-strong workforce, taking the total staff complement to 200 and representing a 25 percent increase.

He explained that AID's existing Blue Hill Road store and the apartments behind it will be torn down, and rebuilt from the ground up, while its Abaco location will have "the same exact footprint" but be "better organised internally". The structural strength of both new buildings will also be elevated above what was there before.

Mr Watson said that while The Bahamas was unlikely to receive 2019's 7.2m visitors any time soon, the return of the stopover segment with sufficient numbers and expenditure was critical to keeping the economy afloat in the short-term.

"The situation in the US is not encouraging at this point," he added, "but our government is allowing tourists to come if they have a negative COVID-19 test. That should not stop us receiving visitors, but I don't think we'll get five, six, seven million tourists for a while.

"If those coming are staying in hotels or Airbnbs, they will be better than those coming by cruise ship as they will be spending more money. Even if there are less tourists staying overnight, that will bode well. At some point we need tourists to come. As an open economy we import everything we consume, and we need foreign currency to buy those imports."

Mr Watson, though, said one potential positive from the COVID-19 fall-out for local retailers is that the health risks may make many Bahamians reluctant to travel to the US and elsewhere to shop.

Although the pandemic will likely increase online shopping, the AID chief pointed out that the twice-yearly $500 duty exemption thresholds were creating an incentive for Bahamians to shop abroad.

"If it's a case where tourists are coming and Bahamians are not travelling that much, we will do much better than we ever did even with high unemployment because so much money is spent elsewhere by Bahamians," Mr Watson told Tribune Business.

"Hopefully Bahamians will resolve to do a lot more here if they are not travelling as much. We'd see a huge improvement in sales if Bahamians were more of the mindset to shop locally. Bahamians shop locally as a last resort rather than it being the first thought that comes to mind."