TWENTY three shop owners are facing prosecution after refusing to comply with a law banning out-of-season sales, after a six week long police crackdown ended last month.
Police investigated 788 shops between September 1 and October 15, identifying 362 violations of the law. Most stores complied and ended their sales; however twenty three refused and will now go to court.
The shopkeepers’ and media backlash has even drawn Commerce Minister Antonis Paschalides into the fray. He denied suggestions that he favoured a Soviet market model and said that shops could sell products at any price so long as they do not present that as a sale.
Paschalides told the Cyprus Mail: “If people want to sell for nothing it is fine, but when there are sales they must be real sales.”
He added that a major problem was a lack of education among consumers, which his ministry is tackling through advertisements and training programmes for people in the retail industry.
One retail firm, which owns and manages several chain stores in Cyprus and recently held sales, has been contesting the law in court for two years now.
A senior manager within the firm told the Cyprus Mail: “We are handling this through our lawyers because we cannot accept that sales appear only twice a year. This is a democracy, we are in a crisis and with the recent hot weather we want to hold clothing sales.”
He added that the law restricts price competition and favours the small shopkeepers, who trade face to face and can therefore haggle on each sale. Large stores are unable to do this because of the scale on which they operate.
The marketing manager of another large retail chain seemed less concerned, saying that it would be two years before the latest prosecution attempt reached the courts, but beyond that declined to comment since it was a legal issue.
Unsurprisingly, the small shopkeepers union (POVEK) defended the regulation of sales seasons, since it prevents larger chains to undercut them and, in their view, regulates prices for the consumer.
POVEK Secretary General Stefanos Koursaris said: “Small shopkeepers cannot advertise on television like the large stores.”
Asked about the law’s effect on prices, he said: “Imagine if there was no law and everybody could do things the way the want – prices will go up. No one works without profit.”
Consumers Association president Petros Markou also supports the law, which he claims benefits consumers by creating order in the market and preventing shops from “taking advantage” of consumers during the time when there is not a sale.
Markou disagrees with the view that sales benefit the customer. He said: “If there is a regular sales period then we can say that the consumer is benefitting. The principle behind (the law) is to have an orderly sales market so that the consumer knows when there are sales.”
He likened the restriction on sales to that of shop opening times. He said that when shops are closed at weekends, consumers adapt their lifestyle to the fit with shop opening times, and added that the law encourages shops to maintain low prices all year round.
However these views seem to conflict with the economic theory that increasing competition among rival shop owners (produced by sales or longer opening hours for example) result in lower prices, which would obviously benefit the consumer.
The most errant city to emerge from the police crackdown was Nicosia, with 178 violations of which four were reported. Limassol had 117 violations, of which five were reported. Larnaca had 20 violations with 12 reported and Paphos had 47 violations with two reported.
