A majority of restaurants and clothing retailers continue to hold a negative outlook for the coming months, although the digital shift has yielded results, with 71 per cent of respondents saying their investment in online channels has yielded satisfactory results.

These findings emerge from the PwC Malta Middle Market Barometer which interviewed around a hundred respondents from two sectors hit hard by the COVID-19 pandemic.

Invariably, all participants in the barometer reported a drop in business during the last six months, with 70 per cent of the total respondents suggesting that turnover dropped by 50 per cent or more.

Outlook for the next six months is bleak, especially amongst restaurateurs. Only 5 per cent of those interviewed hold a positive outlook. 31 per cent anticipate a stable level of business, whilst the majority, 64 per cent, are braced for a sharp downturn in business.

Retailers in the clothing business are marginally more upbeat, with 21 per cent of those interviewed anticipating a recovery in business in the next six months.

Nonetheless, the overwhelming majority, at 67 per cent, hold a negative outlook for the months ahead, which overlap with the festive period, traditionally an intense period for business. In the June 2020 barometer, the negative outlook feeling was more pronounced, at 84 per cent.

The measures aimed at fighting the novel coronavirus implemented over the past months have accelerated the investment in digital supply channels.

In the June 2020 barometer, 59 per cent stated that current circumstances pushed new business initiatives on digital platforms. In this barometer participants were interviewed about the return on investment of such new initiatives.

An encouraging 71 per cent of businesses have invested in processes to adapt to the new circumstances, suggesting that such initiatives were indeed positive. Retail fashion operators, at 76 per cent, edge restaurant owners in commenting positively on the leap into digital markets.

In a further sign of resilience, 69 per cent of the total participants in the barometer indicate that further plans for investment in digital and innovative business initiative are in the pipeline. Owners of retail fashion outlets, at 92 per cent, demonstrate the strongest resolve in reshaping the trajectory of their business distribution channels by further investment in digital platforms.

It appears that the most common investment, across the board, was the enhancement of the digital presence of the business on the internet, through upgrades to the respective website’s functionalities and potential.

Half of all respondents indicated investment in their website, with the other half of fashion retailers turning to Facebook to improve their digital presence, as compared to only 20 per cent of restaurants. The other 30 per cent of restaurants chose to invest instead in an app. No respondents invested in Instagram.

The current and anticipated drop in sales and clientele is the topmost concern which resonates from this barometer. 89 per cent of business interviewed in the barometer indicated this when asked to list the causes of business apprehension. A scenario where the Government terminates the COVID-19 supports schemes emerges as an equally significant business concern.

Over half, 58 per cent, of the participants could be mulling scaling down operations and making employees redundant if the current stressed level of business had to persist in the next months.

Another business concern identified by 53 per cent of the businesses is the maintenance of bank financing repayments, once moratoria expire.

In introducing the results, PwC Territory Senior Partner, David Valenzia, commented on how the current pandemic has exposed the fragility of particular industries. He stated that whilst Government support for industries under stress is vital and necessary at this juncture, the need for the innovation of business processes and consolidation in certain sectors of the economy are key factors that will drive businesses to be prepared for the recovery of the economy that will occur.