What future for the traditional commerce?

Despondency may reign, but it certainly hasn’t affected everyone. Take Pedro Gonçalves, 36, for example - a young businessman based in Portimão who has put his faith in traditional commerce, or, to put it another way, in the reinvention of latter-day retailing.In August 2007, Gonçalves opened his «mercearia bio». The concept is simple. He only sells certified biological products - and his grocery store is open to everyone in the Algarve to place their orders via the internet. With just one partner (recently taken on board) and a refridgerated van, «mercearia bio» supplies hundreds of families every week, as well as gourmet shops and various regional restaurants. In just the past year, he’s invoiced up to 120 thousand euros-worth of goods. “We’ve all come to accept that large shopping malls are here to stay – but as far as my experience goes, I truly believe that sooner or later people will start to seek out traditional shops again. They’ll make the choice because they’ll be buying produce grown locally, or because they prefer the more personalised service.” Pedro Gonçalves has a degree in hotel management, and his words are born out by the shop he runs – where he is the manager, distributor (travelling more than 1500 kms a week), warehouseman, even salesman.

“We’ve managed to bridge the gap between the producer and the consumer. Every week, we advise people on what’s freshest – and where our products have come from,” he explains. When asked if buying from his grocery is more expensive than buying from a hypermarket, Gonçalves puts things into perspective. “It is more expensive – but it is not exclusively for those people who have more money.

We have a lot of clients who are perfectly ordinary people with normal lives. They don’t have luxury cars outside their homes, or live in grand houses. They choose to spend their income on healthy eating” – which, on average, can cost between 80 and 100 euros a week.

All the «Bio» IT back-up was purchased from local retailers. “In a hypermarket, we would have saved up to 20 per cent of the costs,” says Gonçalves but adds that then they would have had expensive maintenance headaches.

This argument about a relationship with local businesses is also defended by Gilberto Sousa, President of ACRAL (the Association of Commerce and Services in the Algarve). ACRAL boasts 3470 associated businesses.

“Of course there are always advantages of buying locally. The low prices at hypermarkets are all illusory. They aren’t really cheaper at all. Not only that, people know that in a local traditional shop, if something has gone wrong, they’ll be properly attended to - as local shops have a completely different after-sales service to the malls. Unfortunately, the truth is that there’s a common misconception that shopping malls are all about progress. This is absolutely not the case. They signify the decapitalisation of the region: because they spell the elimination of local jobs; because they signify the end of encouraging young people to try their hand at self-employment in local commerce – because they see themselves up against a competition that is false and even unfair.”

But that’s not the whole picture, unfortunately. “There’s also a huge lack of professionalism which has contributed to people turning their backs on the high street,” laments Pedro Gonçalves.

“Here in Portimão, for example, what do we see in traditional commerce? We see rigid opening times… Please, don’t tell me there needs to be a law for people to stay open at lunchtime?!

“Also, there’s a question of professionalism. Very often, I go into the shops and see owners who are very obviously not pro-active. Their staff has little training or is otherwise simply not interested in working with the public.”

“So many easy solutions could have been put into action to save traditional commerce, but sadly, all I see is people wringing their hands at the crisis and not looking for solutions to overcome their business problems.” Perhaps this is why, according to Gilberto Sousa, nine thousand commercial establishments have closed down in Portugal during the last year. So, what does the future hold?

“We don’t want to be pessimistic. All we can do is try and incentivate shopkeepers and business people to hang on in there; review the way they run their business. But obviously, we are apprehensive,” said the ACRAL president who supports widespread reforms in commercial legislation. He also says that he “doesn’t understand the mayors” of the Algarve who have “mined” all town centres with parking meters which only serve to dissuade potential customers from visiting local shops.

But Gonçalves isn’t worried about the crisis – and says instead “we feel the market is bubbling. There are huge business opportunities to be had.” Soon, the entrepreneur hopes to expand his business, starting deliveries to the Alentejo and Madeira. He’s also keen to start a network of «Bio» grocers. Just like in the old days…

Greed or a short cuts to profit?

There’s also another reason behind the loss-of-face of the Algarve’s traditional retailers. “In the Algarve, the consumer – whether he or she is Portuguese or foreign – has been compromised a great deal.” With the excuse of being a tourist region, many shopkeepers have inflated prices, of even “normal everyday items”, Ana Pedro the regional coordinator of consumer watchdog DECO, explains from her Faro HQ. “It ends up being a question of greed. The Algarve retailer wants to take the least time possible to make that which his European counterpart will have the patience to wait for: the construction of a good business; one that will grow and offer prices that attract customers. The Portuguese retailer wants this process to be as quick as possible.” A kind of short-cut to profit, in other words. Only that this strategy doesn’t work anymore. These days “consumers can’t keep up with high prices and are better informed than ever before.” Maybe it’s time for a change...