EXTEND TRADING HOURS: What time should retail shops close?
This week, we have been running a series looking at the merits of extending trading hours in Malawi to offer more flexibility to consumers. We have also looked at the constraints that need to be addressed for such a regime to work in Malawi. As part of that series, we reproduce a feature which Times Group’s journalist GRACE THIPA wrote in 2014 looking at Malawi’s trade regime and competitiveness among others.
For most salaried individuals, lunch-hour breaks are most ideal for making purchases but, in Malawi, shop owners, save for big retailers and those operating in open space, often close their shops during the same time as they seemingly also dash off to grab a bite for lunch.
Most shop’s trading hours are also limited to five o’clock; ironically, this is the same time that people in employment with the disposable income to buy their goods knock off from their daily work engagements.
The same trend is also evident during public holidays when most shop owners close their premises to take an apparently deserved rest, thereby forcing consumers to align their shopping time to the local retailers’ trading hours.
The issue of whether or not to regulate trading hours is not a new phenomenon on the global front. Analysts say restrictions on shop trading hours have varied objectives, including the opportunity for some small businesses to trade without competition from larger retailers and to reduce the need for retail employees to work outside ‘traditional’ working hours.
For consumers, they say restrictions on trading hours impinge on consumer choice regarding when (and where) to shop, causing inconvenience and congestion costs.
Competitiveness vis-à-vis trader’s habits
But, according to Executive Director of the Competition and Fair Trading Commission, Wezi Malonda, in a liberalised economy like Malawi, there is no regulation related to trading hours, unless if the city council enforces by-laws regarding that.
She says, on the other hand, it is the lack of competitiveness in Malawi’s market structure which causes local traders to slacken in the way they render their services because they know that the consumer will wait anyway.
“In other countries just across our borders, some banks open until 4pm because they are operating in a competitive environment and it makes business sense to open longer hours.
“This is the kind of innovation that comes with competitive markets and in Malawi, it is very sad that we are still behind in some aspects. Let us strive to bring in more competition and we will see things changing,” Malonda advised.
She gave an example of how local banks in the past never opened during weekends but quickly adapted when more competition came in.
“It is because the demand was there and they did not want to lose their market share to their competitors who were trading in a consumer-friendly manner. So, as an empowered consumer, if you see a business model which doesn’t suit your taste or convenience, you take your business where there is value for your money,” she said.
While the absence of trading hours’ restrictions generally implies more flexibility and greater variability in opening hours as retailers more closely align their opening hours with consumer demand, in Malawi, it seems the trend is that retailers choose trading hours that suit them rather than to satisfy their customers.
Economic analyst, Chikavu Nyirenda, agrees with Malonda, pointing to the industry’s lack of competitiveness as being the main thrust.
“It would appear as if trading hours in Malawi are not regulated and individual businesses make their own decisions in this regard. Competition seems to be the major driving force and we have seen this in banking where opening and closing times have changed drastically over the years; of course, the introduction of ICT-based delivery platforms has also virtually extended opening hours to a 24-hour basis via mobile, internet and ATMs,” he said.
He added: “In the retail sector, the small retailers have inexplicably maintained a traditional system of opening late, closing over lunch hour and closing early, normally by 17.00 hours.
“This is rather archaic and not in line with modern trends. You can contrast this with the major retail chains that have earlier opening hours, remain open throughout the day and usually close much later than smaller retailers.
“The argument for deregulation of trading hours in more advanced countries is ongoing with proponents arguing for wider consumer choice while others believe that there are social and economic costs to be considered; social by way of employee welfare, leisure time and quality of life, among others, and costs in terms of labour costs, overtime and other overheads that impinge on profitability.”
Which way for Malawian small retailers?
He said traders can afford to be more flexible and should look at the opportunity of longer opening hours, especially given the fact that their clients are freer to shop during certain times like lunch hour or after hours.
“However, the decision has to be based on prospective additional sales, attendant costs and impact on profitability. But on the balance, they need to change if they are to compete effectively against the major retailers and chain stores.
“One major issue to consider though is that after-hours trading brings to the fore the issue of security as well as the fact that they may not generate significant additional sales due to the poor transport systems in our cities and locations. You will note that after 18.00 hours, our cities are virtually dead,” Nyirenda says.
He said it is difficult at the moment to weigh the economic impact of longer trading hours to retailers as the impact is a function of disposable incomes and currently, he says, Malawians may not have sufficient disposable incomes to support a dynamic retail industry.
“We need to create more employment and increase the pool of prospective customers for the retail sector for us to see noticeable impacts. The existing retailers are struggling as it is and longer opening hours may simply add to costs and reduce profitability which would impact negatively on the economy.
“Also, Malawian consumers are likely to wait until their shop is open or they may opt to purchase the product from an alternative, usually larger retail store that is open. In conclusion, small retailers need to change and adapt to changing circumstances and ensure that they are open at times that are convenient for their customers; otherwise, they will keep losing business to the large retail chains that are more flexible,” Nyirenda says.
Labour laws vs consumer behaviour
But, according to former president of the Malawi Confederation of Chambers of Commerce and Industry Newton Kambala, the situation has come about because of laxity in Malawi’s labour laws which, he says, allows workers to abandon their duty stations whenever they so please.
He says most shop owners are aware of this fact; hence, they take advantage of the situation knowing they will get people to buy their wares during anytime of the day.
“Yes, people close shops at 12oclock and five in the afternoon when most working people are free. In my opinion, the reason is the way an average Malawian works.
“Our labour laws protect workers too much. People do not get paid for what they do as the laws are so lax on productivity such that people can leave their workplaces anytime to go shopping and they will not be punished,” Kambala said.
He said in places like Dubai, where trading is done 24 hours, labour laws are strict and people have to observe office hours as they are paid for what they do.
While elsewhere across the globe trading hours are regulated with retailers banned from trading on Sundays, both Malawian traders and consumers should begin to take advantage of the unregulated trade regime as it gives room for more flexibility and competitiveness.
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