One of the clearly visible indications of economic stagnation in Lebanon is the hundreds of discount signs on windows of shops and stores in some of Beirut’s famous shopping streets.
The generous discounts, which range from 30 percent to more than 70 percent, seemed like a desperate attempt by frustrated retail merchants to sell their stock to cope with a slowing sales season.
Most merchants interviewed by The Daily Star said that despite the big discounts on garments, shoes, electronics and gadgets, consumers seemed reluctant to buy.
The drop in sales can be attributed to several factors, such as high inflation, political instability in the country and the absence of expatriates and tourists.
Nicolas Chammas, the head of Beirut Traders Association, focused on the impact of slow economic growth on the retail market in the country. “Lebanese consumers will keep finding it difficult to buy when the lira has less purchasing power and the government is not yet ... formed. Consumers are not motivated to buy when political unity is in jeopardy; they end up saving for the worst-case scenario,” he added.
According to a World Bank 2018 report, the yearly inflation rate dropped to 6.7 percent in August from 7.6 percent earlier in July.
The average cost of housing and utilities like water, electricity, gas and other fuels decreased from 9.3 percent in July to 8.6 percent. But consumers insist that the cost of living in Lebanon remains too high.
Dani Issa, owner of the recently open El-Paso shoe store, says most of his days have been tedious and that less than half are good sale days.
Issa puts most of that blame on the diminished number of tourists this summer.
In order to overcome this obstacle, El-Paso has been mostly dependent on its loyal base of customers and word of mouth.
Perfume store owner Mohammad Biro suggested that the Mar Elias shopping street was a bit chaotic, noting that sometimes 10 stores can close in a month then two open in another location, without the guarantee of a successful return.
Faced with this dilemma, some stores have resorted to social media platforms to promote their business and improve sales.
Some merchants complained that the spread of major shopping malls in most Lebanese regions has also drastically affected their somewhat modest business.
Owner of Champ Sport Abdel-Kader Antar said his supplier was selling the same product for the same price at a mall.
“People only window-shop these days, and I wish they would buy something – instead they want to haggle prices,” he said.
Antar said his profit margins dwindle considerably when he slashes the prices just to sell stock.
Mar Elias shop venders expressed belief that the shrinking numbers of tourists each summer is part of the cause of the slowdown.
They said it was hard for store owners to depend on Lebanese consumers to come in large numbers to buy clothes from such stores, as most consumers are going to malls where all their needs can be satisfied in one air-conditioned location.
Hamra street venders shared a similar weary attitude toward making proper sales this month and said they had been forced to lay off staff to cut down on expenses.
The well-known Red Shoe store and many other stores took this opportunity to put their older selections on sale.
Daren Zaher, a store clerk at Red Shoe, said the 70-percent sales had improved business a little bit this summer, but admitted things were far better 10 or 20 years ago.
Another store clerk, Fadia Sowda, said she felt that the situation was somewhat hopeless.
“We are only making excuses for ourselves,” she said.
“Most places end up being food shops, like Mowla Jewelry that has recently shifted to an Arabic sweets shop,” she added.
Store owners’ best options appeared to involve cutting pay or letting go of employees. An employee at Max Hamra said the store had to dismiss 12 employees due to budget cuts and low return.
Bekdash Sewing Store is said to be having trouble bringing in interested customers, with the availability of ready-made clothes pushing the hobby of sewing out of fashion.
Other niche stores suffer the same fate and are finding it difficult to widen their consumer base.
However, a Bekdash clerk observed that on a high sales day, other businesses like fabric sellers and sewers make a good profit as well.
Consumer stocks are becoming a major problem for the Beirut Traders Association, which is trying to overcome the economic hurdle.
Chammas said that inventories are supplied but that retailers need to put products on sale at a discount almost all year round to motivate buyers. By doing so, the initial value of each piece drops.
“The inventories are oversupplied but we need to consolidate the stock while optimizing our returns as much as possible, even if it’s in an untimely sale that lowers the average return rates,” he said.
Store venders and shop owners are finding cost effective and innovative ways to promote their products on the ground.
With the expansion of e-commerce and online shopping websites on the global market, it looks like Lebanon is ready to follow suit.
In fact, Lebanese company *.Technology s.a.r.l. will announce the launch of an online mall for store venders to use and buyers to view all their options in one place.
