Jordan retailers abandon profits to stimulate Eid cash flow
Eid Al-Adha, which used to mean peak season to Jabal Hussein shop owners a few years ago, is now only a time to sell below cost to escape stockpiling and draw badly-needed cash. Some have quit their businesses. Some have fled the country because of their debts. Others are considering leaving Jordan or changing their profession altogether.
A day before the Muslim 'sacrifice' feast, shop owners said this year's pre-Eid period was the worst in terms of sales, and has not met even minimum expectations. "Sales for these occasions have been deteriorating gradually over the past years, but it has never been as low [as this year], in terms of volume of sales," said a shop owner located in the Ashnaneh Complex in Jabal Hussein, one of Amman's commercial centers.
His neighbor, selling women's wear, said sales have dropped by 60 percent compared to previous Eids. “I sell many items with minimal or no profit at all. But I have financial commitments to fulfill," said the salesman, preferring anonymity.
The complex, which used to bustle with shoppers until the early hours of the morning, nowadays closes its doors at 11pm. In Shmeisani, shops are open until around nine in the evening. According to retailers, discounts of 50 percent or more are inevitable in order to prompt cash flow and get rid of the goods that will be out of fashion come next year.
"We have to sell at discount rates now. Otherwise, the clothes will stay in our faces for another year as we are towards the end of the winter season," said Abdul Latif Ali, owner of two shops. "The only real demand is from the upper class people, who are willing to buy at any time. But I cannot rely on this minority," said Ali, explaining that most of his customers are middle-class citizens who are "refraining" from shopping.
His colleague, selling children's wear, said if he had known the situation would be like this, he would not have imported clothes especially for the Eid. "Sales went down by half. If things go on this way, there is a good chance I will look for something else," said the man who supports five children, two of whom were on hand in the shop to help their father in case business suddenly picked up.
Jabal Al-Hussein is no exception among Amman retail areas. In Sweifieh, another important shopping area, a shop owner said that, compared to previous years business is going down, down and down. "We usually count on the Eids and the beginning of seasons for business to flourish. It is getting worse. Some shops already closed down. If trade does not change, then it is a serious problem," said the man, who preferred not to be named. Asked about the masses of shoppers roaming the streets, he said, "they just walk and look, but few buy."
An ice cream and sahlab vendor near a commercial center also reported dismal sales. "Even ice-cream used to sell more before Eid Al-Fitr in December, when it was chilly and cold. The same is true for Sahlab," the young man told the Jordan Times.
The jewelers association announced on Saturday, March 3, that Sunday—usually the jewelers’ day-off—would be a working day. But two jewelers saw no hope that last minute Eid shoppers would save the day. "Until this day, work has been like any other day with no signs of the healthy feast sales. We hope things would be better, but the situation does not bode well for us," said Abdul Razzaq Dahnous, drinking coffee and waiting for potential consumers.
What adds to low sales is the winter season, when marriage rates go down naturally, he added.
Some merchants said they could not explain the real reasons behind the low demand. But there was a consensus that low salaries, the Al-Aqsa Intifada, growing competition, a weak economy and the near absence of tourists all played a role.
"The Arab Israelis used to breath life into our stagnated business during the Eid times. But now there is no trace of them," said one shop owner. Another said that business has never recovered from the initial shock of the Palestinian uprising that started on September 28, 2000. One went as far as to say that "unless the Intifada ends, we will be finished."
Others believe shopping has become a luxury, as people — especially state employees — would rather spend their money on basics, according to Dahnous. "People are just buying accessories for clothes they already have, an under blouse for a suit they already have for example," said a desperate retailer, selling some shirts for as low as three Jordanian dinars ($4.2).
Still, other businessmen say people are in no mood for buying and celebrating the Eid as they used to, due to the Intifada, which has claimed the lives of more than 420 people, almost all of them Palestinians.
"The meager disposable income is partly to blame for the sluggish economy," said Ziad Basha, an economist and financial analyst. Jordan's per capita income average is JD 1,168. "Goods are there, there is supply, but no demand as most people cannot spend on clothes, opting instead to spend on more necessary needs," he told the Jordan Times, adding that credit facilities in the Kingdom are weak. "There is idle cash in banks, there is money, but no credit that is necessary to channel cash and get the wheel turning," he explained.
For Basha, the government has to increase expenditure in order to enhance economic activity and induce growth. "The government should increase salaries, spend more on projects, and cancel the income tax, in order to [stimulate] more cash flow," said Basha in an interview.
Hani Khalili, member of the Amman Chamber of Commerce, blamed the low demand of recent years on the Central Bank of Jordan's (CBJ) strict monetary policy. "Interest rates of 12 percent or higher [in commercial banks], should be reduced in order to lure people into taking out loans and financing projects. "This would encourage investments and push the national economy, explained Khalili, who urged the CBJ to follow more flexible policies.
Meanwhile, retailers hold onto a sliver of hope that Sunday might see more sales, and miraculously make up for part of their losses. — ( Jordan Times )
By Rana Awwad
© 2001 Mena Report (www.menareport.com)