Tumultuous politics and competitive pricing spelled a difficult year for Cayman retailers focused on tourist foot traffic in 2016.
While cruise ship and stay-over arrivals held steady with around 2 million visitors, retailers felt the effects of depressed exchange rates out of Europe and uncertainty created by the U.S. elections.
Chris Kirkconnell, vice president of operations for Kirk Freeport, said he noticed a slowdown last summer that has carried over into the new year.
“When we look at any U.S. election, you do see people hold back on consumer spending,” said Kirkconnell, who manages duty-free shops, jewelry stores and boutiques on Seven Mile Beach and at Bayshore Mall, among other locations in Grand Cayman.
“With a new U.S. administration that is only days in, we’re still waiting to see how that affects consumers out of North America,” he said.
He hopes planned improvements in tourism infrastructure, including a cruise ship berthing facility and a new airport, will bring a boost in 2017 and encourage greater foot traffic.
Phuong Buettner, Cayman retail manager of Penha Freeport, said marketing to cruise ships and hotels can be difficult.
While she has seen Penha’s cosmetics and perfume shops increase in popularity among local shoppers, the tourist segment remains difficult. Shopping opportunities on ship and loyalty shopper programs make for strong competition with cruise ships.
“They are selling the same products, fragrances, cosmetics, etc., and they also give a very deep discount to their customers,” she said.
Ships carrying Latin American and European passengers typically produce better sales than those from the U.S., she said. In January, she noticed particular interest from passengers from Spain, Costa Rica, Venezuela and Brazil, drawn in by competitive prices compared to shopping back home.
Kirkconnell pointed out that one benefit of duty-free shops on Grand Cayman is the wider product variety they offer compared to stores on ship.
While new hotels like the Kimpton Seafire Resort also create opportunity [for marketing], Buettner said, she will keep her focus on local shoppers. Unless stay-over tourists see an ad in a local magazine or get a tip from a hotel concierge, she said, it can be difficult for them to find shops in town.
Despite barriers, Cayman’s wholesale and retail trade grew 7.6 percent in the first half of 2016, according to the Cayman Islands Economics and Statistics Office. Buettner attributes this growth to local shoppers rather than to tourism.
A strong local economy and low unemployment have Buettner anticipating 5 percent sales growth or greater for 2017.
Island Companies CEO Matthew Bishop said retail in Cayman remains challenging. Difficulties arise as a result of high operating costs and market volatility, at times linked to bad weather that can dampen tourist shopping opportunities.
“We are also operating in an increasingly competitive space, not just from other on-island entities, but increasingly also from the internet,” Bishop said.
Traditionally the cruise ship segment has been the focus of his shops in Island Plaza, Camana Bay and the airport. He saw muted growth from this sector in 2016, however, and anticipates it to remain slow in 2017.
Local sales will also drive his focus for the year, in addition to stay-over tourists.
Bishop suggested a two-tiered duty approach to support local retailers. He proposed government offer lower tariffs for locally owned companies.
“This might help reduce the cost of living while also protecting jobs,” he said.
Bon Vivant owner Cynthia Hew said she also depends on local shoppers for her luxury kitchen retail shop. She hopes to better target client needs and improve marketing channels to increase sales in 2017.
“Our customers want to have an experience, so our focus in 2017 will be to make shopping with us an experience where they learn about us and our product through other methods and not just when they stop in to the store. If they can’t come to us, we will go to them,” she said.
For a strong sales year, she recommends stores take the time to train staff and deliver on promises.
She suggested, “Making promises that you can keep, knowing your product better than anyone so you can educate the end user and training staff to lead with your brand values and responsibilities. Sometimes it’s hard to do all of these at once, but deliver on these three things and you will have a customer for life.”