Recent increases in import duties
are reducing the profit margins of George Town’s merchants at a time when sales
are down because of declining numbers of cruise passengers.
Kirk Freeport Managing Director
Gerry Kirkconnell said his stores are having to absorb the cost increases.
“We can’t pass it on,” he said,
explaining that the prices here in Cayman have to stay in line with other
cruise passenger destinations. “We have to stay competitive.”
Cruise tourists are the primary
market for most downtown merchants. Other retailers in Cayman, whose primary
market is residents, simply increased their prices when the duty rates
The duties on most of what the downtown
shops sell were increased in January of this year. Jewellery duties increased
20 per cent, from 10 to 12 per cent of the cost. Duties on watches increased 40
per cent, from five to seven per cent of the cost. Although perfume remained
duty free, the duty on other perfumery, including cologne and eau de toilette,
increased from 25 per cent to 27 per cent.
The downtown merchants are
experiencing a simultaneous reduction in sales volume as a result the global
economic recession and the decline in cruise passenger visitors. Although
cruise tourists were up about 2.3 per cent over the first six months of this
year, the figures are still down considerably on what they were between 2002
In addition, Cayman has lost port
calls of some of the more lucrative cruise ships, a trend that will continue
next year when Royal Caribbean, Princess Cruises and Celebrity Cruise make a
combined 54 fewer calls here, a 26 per cent decrease.
Diamonds International General
Manager On Azriel said the decrease in those particular cruise calls will hurt
“It’s not only the numbers of
ships, it’s the quality of passengers,” he said. “The Royal Caribbean passengers
probably spend double what the Carnival [Cruises] passengers spend.
“It might represent a 26 per cent
decrease in ships, but it’s maybe 50 per cent of the buying power.”
Mr. Azriel also agreed that the
increase of duty has hurt the profitability of Diamond International’s three
stores, the flagship one of which only officially opened in March.
“We will be considering closing one
or more stores,” he said.
Other downtown shops have already
closed recently, including Caribbean Emporium and the Kirk Freeport store Far
Mr. Kirkconnell said more store
closings would occur in the future as the company combines some of its
He said he has been told by the
government that it was a mistake to have increased the duties on jewellery,
watches, and colognes and that the increase was supposed to be taken off in
“But it wasn’t taken off.”