The Tribune

By ANNELIA NIXON

TRIBUNE Business Reporter

anixon@tribunemedia.net

THE BAHAMAS Chamber of Commerce and Employers’ Confederation’s (BCCEC) chairman yesterday said merchants are increasingly being squeezed between rising operating costs and the need to keep prices competitive.

Don Williams, speaking as the Government steps up enforcement of price control laws, said higher fuel, shipping, transportation and logistics costs have made it increasingly difficult for businesses to maintain affordable prices, particularly as consumers have more options to purchase goods online and have them shipped directly to The Bahamas.

“That’s the constant struggle that merchants have,” Mr Williams said. “So while prices increase, whether at the fuel pump, whether it’s in respect to shipping, transportation or simply logistics, the merchants are finding it harder to have that delicate balance of being as affordable and competitive.”

He added that global geopolitical uncertainty, especially in the Middle East, and increases in fuel prices over the past several months have resulted in some merchants absorbing higher costs rather than immediately passing them on to consumers.

“You’ve seen a lot more merchants that have absorbed a lot more of those costs in the interim because they still want to ensure that they are competitive and they keep that customer base,” Mr Williams said. However, he acknowledged that some companies have already had to increase prices to remain sustainable.

Mr Williams also argued that the existing price control framework needs to be more responsive to rapidly changing business conditions, calling for greater dialogue between Government, merchants and other stakeholders.

“Currently the price framework, it needs to be whereby there’s a lot more dialogue between all of the key stakeholders in that regard,” he said. “While the framework is in place, it does not account for the rapidly-changing global environment. And, as such, there are so many fluctuations on a day-to-day basis in the marketplace.”

His comments come as the Department of Consumer Affairs intensifies enforcement of price control regulations, with 15 of 17 merchants prosecuted over the past year pleading guilty to violations.

Rex Adderley, the Department’s director, previously said the agency has also received complaints about retailers displaying one price on shelves but charging customers more at the cash register, with some businesses allegedly refusing to honour the lower advertised price.

Mr Williams said the Chamber supports enforcement and efforts to protect consumers, while noting that the vast majority of businesses comply with government regulations.

“I can’t speak to the mindset of the merchants that decided to obviously violate the laws in respect to price control,” he said. “But you would note that there is a considerable amount of merchants in our country, business owners, that abide by all of the rules and regulations of the overnment.”

Mr Williams said the Chamber views the Price Control Unit as a strategic partner and supports its efforts to identify non-compliant businesses. “We applaud the efforts of Price Control to ensure that the Bahamian consumer is able to receive the best quality goods at an affordable pricing,” he said.

The Chamber is also involved in addressing complaints surrounding merchants charging additional fees to customers who use credit and debit cards, with Mr Williams saying it has worked with both Price Control and the Central Bank on the issue.

Mr Williams also backed the Government’s Price Pal app, saying digital price monitoring can help consumers identify price differences while giving regulators another tool to detect potential violations. “The digital price monitoring is an effective tool,” he said, adding that its usefulness depends heavily on consumer participation. “The more consumers that are using the app, the more useful it becomes as a tool.”

He added that the platform could also provide a clearer picture of competition in the grocery market by showing consumers that many merchants are already offering competitive prices. “It gives a level of understanding from both sides,” Mr Williams said.

However, the owner of Kenneth’s Food Store, Ivan Carey, said his business has not yet joined Price Pal because of limited manpower and the demands already being placed on his staff.

“Our hands are so full right now that we just have not taken on anything else at this time because we are just kind of overwhelmed with work,” Mr Carey said. He added that participating would require employees to input pricing information, something the store currently lacks the resources to manage.

“It’s just that you have to have your persons put those prices in,” he said. “We just kind of short on manpower to deal with it.”

Mr Carey also said his store has not experienced significant problems with shelf prices differing from prices charged at the register, although he acknowledged that mistakes can occur. “There’s always some room for human error,” he said. “You can give them the right price, and they still miss and put the wrong price on the items.”

Instead, Mr Carey said Kenneth’s reduced its overall mark-up by an additional 10 percent after the Government removed VAT from certain grocery items and has not used the matter as an excuse to raise prices.

“When the Government took the VAT off of some of the items, the grocery items, we actually reduced our entire mark-up by 10 percent throughout the whole store,” he said. “So our prices actually went down, and not up.”

Mr Carey said the store has kept prices generally steady or reduced them, with increases largely limited to products affected by higher freight costs. He said the lower prices have produced a slight increase in customer traffic, although the reduction in margins has come at a cost.

“It definitely cut into the profit margin for sure,” Mr Carey said. “But I guess it somewhat balanced out because we also see more traffic in the store.”

For Mr Williams, the challenge is ensuring the price control system can account for those changing costs without weakening consumer protections. He said a framework that is regularly updated through consultation with businesses and other stakeholders would better reflect the realities merchants face.