Retailers feel import-cost pressure

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scalating freight, customs clearance and operating costs are forcing Bridgetown retailers to raise prices, as families prepare for the new school year and demand grows for back-to-school assistance, Barbados TODAY has learned.

The retailers continue to grapple with the cost of importing merchandise while trying to remain competitive and keep prices affordable for consumers during difficult economic times.

With the school year due to begin in two weeks, charities report that more people are seeking financial assistance to buy essential back-to-school items.

Business owners Tamasia Yearwood of 28 Deluxe and 28 Fabway, and Keann Walters of Jireh Styles and Fashion, told Barbados TODAY that the rising cost of bringing goods into Barbados was adding to the financial pressure of running a retail business.

Tamesia Yearwood. (Photo Credit: Lourianne Graham)

Yearwood said the cost of importing items had gradually increased over the past five years, with the overall expense also affected by where goods were shipped from, the shipping company used and the time of year.

She said the cost of shipping and clearing goods in Barbados had increased, along with other business expenses.

“Shipping clearance in Barbados has increased tremendously. Customs clearing, brokers, everybody just took out their prices, then obviously try to absorb as much as you can, but sometimes you have to pass on the increase on to the customers because you still have rent to pay and rent don’t always include all utilities in it, rent, and rent in Bridgetown, it’s not cheap.”

Yearwood said businesses also had to weigh the cost of shipping against the need to get merchandise into Barbados within a certain timeframe.

She explained that while sea freight could take roughly two months, businesses sometimes had to choose faster options depending on the season and demand.

Walters, who buys wholesale from suppliers in Los Angeles, New York and China, said rising oil and freight costs also contributed to increases further down the supply chain.

Keann Walters shows a pair of tights as one item purchased wholesale. (Photo Credit: Lourianne Graham)

“The prices have definitely increased, from what I’ve been hearing over the last few months and even years, mostly because of oil and what’s happening in the street.”

“The oil prices have increased and once oil prices have increased, freight is going to increase, the items from the wholesalers are going to increase, so everybody down the chain down to we who buy wholesale is going to feel that increase.”

Retailers then had to factor those additional costs into the prices of their merchandise, Walters said.

While wholesale prices could appear inexpensive, the cost of getting goods to Barbados and preparing them for sale was significantly higher, she added.

“I might get this [tights] for $3. I have to pay freight on all of my items.  [This] can run me – depends on the amount of stuff you’re bringing – up to $1 000. Then I have to pay the duty.”

Businesses also had to cover the cost of brokers, rent, staff, National Insurance contributions, bank fees, water and electricity. 

“These things are not free,” Walters said.

She used a pair of tights as an example, saying an item bought for $3 could ultimately have to be sold for $25 after the various costs were taken into account.

Consumers sometimes compared the prices of goods sold locally with more affordable prices found online, without taking into account the expenses faced by businesses importing commercially, Walters said.

“People were saying, well, I can get this thing for $4.99 cents, which is true, but they’re not buying wholesale.”

She noted that retailers importing in bulk had to pay shipping, duties and brokerage fees, in addition to the other costs associated with running a business.

“We have to pay shipping. We have to pay duties. We have to pay the broker for doing the paperwork to pay the duties.”

These costs meant retailers could be thousands of dollars out of pocket before receiving their items. 

“So you are owed thousands of dollars before you get it to the store to try to recoup your money.”

She said another challenge for traditional retailers was the growing number of consumers purchasing items online and using shipping companies to deliver them.

Walters gave a specific example, saying that, as far as she could remember, duty on clothing was 87 per cent plus VAT, which she believed could push the total charges to more than 100 per cent.

“So many people are now exposed to online shopping that they’re buying their own stuff from overseas and bringing it in.”

Walters said this was making business more difficult for local retailers, although she noted that customers continued to shop locally when they did not have the time or opportunity to order items themselves.

Despite those challenges, she said periods such as back-to-school and Christmas continued to generate stronger and faster sales for retailers.

Yearwood also raised concerns about the cost and process of bringing items through the airport, saying she preferred using air or sea freight and, in some cases, a broker to clear goods.

Several other businesses in the City interviewed by Barbados TODAY raised similar complaints, saying the cost of bringing in items was becoming increasingly expensive. Some claimed that Barbados was more expensive than other countries.

According to the Barbados Electronic Trade System, customs duty varies according to the specific tariff classification. Barbados’ official online tariff covers clothing under Chapters 61 and 62. The standard VAT rate is 17.5 per cent.

For Trinidad and Tobago, official Customs information lists new clothing at 20 per cent customs duty, with 12.5 per cent VAT.

The Bahamas government’s fiscal measures indicate 20 per cent duty on new clothing and 7.5 per cent VAT on standard taxable imports.

Charges in Jamaica are commodity-specific and can include customs duty, GCT, a 0.3 per cent Standard Compliance Fee, a 0.5 per cent environmental levy and a Customs Administrative Fee, among other applicable charges.

(LG)