After 163 years, Trimingham’s disappears. Was it foreseeable? It was. However, I don’t have a multiplicity of letters after my name, and I’m from Pond Hill; so ‘big chiefs’ and ‘captains of industry’ may not pay attention to what I have to say.
That’s fair. They don’t have to. However, Trimingham’s – and HAE Smith’s – will still close.
Prior to the 1950’s Bermuda was a small isolated economic unit. Trimingham’s – and HAE Smith’s – were big stores. Big, that is, relative to Bermuda’s market and economy.
From the 1950’s through the 1980’s, Trimingham’s prospered. Tourists came and shopped by the half-million. Change came. Tourist numbers declined. A now wealthier Bermudian consumer traveled more and began serious shopping overseas. Then the internet with its portals open to the whole world. By the late 1990’s, retail in Bermuda had changed forever.
Trimingham’s long and special relationship with the Bank of Bermuda, coupled with Bermuda’s old exclusive style of doing business, meant that some old-established closely-held businesses became overly dependent on bank loans and overdrafts, and may not have regularly re-invested significant proportions of their profit. This wasn’t the best business strategy or wisest funding arrangement.
It depended on the ability and willingness of the bank to advance funds and carry debt as performing debt. As long as the Bank of Bermuda remained a truly local bank, the Bank would follow local norms and go on funding Trimingham’s.
The Bank didn’t stay local. The Bank became global. The Bank applied new global standards.
One look at the relationship between Trimingham’s and the Bank; a second look at the viability of Trimingham’s as an ongoing retail operation; a few moments thought; one or two sums on the back of an envelope; and the answer was clear.
The Bank should recognize that Trimingham’s would never be able to repay its loans and settle its overdraft. In global banking, there is no sentiment. There is calculation. Just calculation.
The Bank demanded settlement. Trimingham’s couldn’t settle. The Bank closed in. Trimingham’s would have to go out of business and settle its debts. The rules had changed.
One hundred sixty-three years of warm handholding in balmy Bermuda breezes passed. A fresh wind bringing a new reality blew across Bermuda’s still leveling playing field. The flag of a Bermudian flagship business was stripped from its flagpole. With that went the last of ‘Front Streets’ shrunken power.
In a conch shell, that is what happened.
There are other key issues. One is that Bermuda’s Customs Duty tax system was designed as a source of revenue when tourism was growing and providing 500,000 tourists as consumers. The system was incredibly simple. Half a million tourists buying sweaters and china and meals and booze would pay the bulk of Bermuda’s Customs Duty tariff. Bermudians, at 45,000, wouldn’t. Bermuda’s tax system had the tourist subsidizing himself as well as paying for us. It was – WAS! – an almost perfect tax system.
Tourism declined. Global buying patterns shifted. Today, Customs duty hits local retailers hardest. In some lines, it makes it impossible for them to compete with offshore sellers who sell through the internet. Additionally, Bermudians, now counting an overseas ‘trip’ as a birthright, no longer factor in the cost of travel when they swoop on North American malls and buy three of this and five of that…
Lastly, the City Fathers, made up of fading old-style businessmen, their thumbs still stuck up their bums, have still not made Hamilton a traffic-free people-attracting shopping area where people just go to hang and chill – and spend more dollars. Every other country has discovered this. Every old town once clogged with traffic saw a marked increase in overall revenue when they created traffic-free shopping areas.
Trimingham’s departure marks the end of Bermuda’s old style of doing business. Perhaps, now, businesses will raise capital by share offers. Perhaps Bermuda’s methods of imposing and collecting taxes will be rigourously re-examined. Perhaps we will all accept that in 2005 Bermuda is simply a pimple economy in a massive global game. Perhaps we’ll start to think nationally and objectively about how we really fit in the global game.
The City Fathers need to unstick their thumbs and ‘just do it’. We need to start revamping our tax system. Businesses still struggling with bank loans need to broaden their ownership.
As with Fabian’s winds, we are seeing strong winds causing more change. We Bermudians need to reach back into our long mutual heritage and sail, tacking and gybing together, in this new and stronger global wind.