The deep economic crisis that has struck Lebanon combined with the COVID-19 pandemic to undermine consumer spending drastically during 2020 and 2021. This led to low demand for retailing, with non-grocery specialists hardest hit as consumers attention was focused on the daily essentials.
Throughout 2020 and 2021, Lebanon’s retailing industry was deeply and heavily impacted by the complex matrix of crises that the country has been going through in recent years. The country’s serious economic crisis erupted into civil unrest in October 2019, when street protests turned into a nationwide revolution movement.
Recent years have seen Lebanon’s population struggle to cope with the impact soaring inflation as the country’s political, financial and economic crises has deepened, with no viable resolution in sight. On average, food items at the end of 2021 cost in the region of five times as much as they did at the start of 2019.
The collapse of Lebanon’s economy towards either the review period led to a deteriorating social situation in the country. This resulted in widespread civil unrest as well as severe shortages of essential goods, including medicines and basic foodstuffs.
Lebanon’s deeply rooted infrastructure issues have been further exacerbated with the onset of the economic crisis. Power cuts, which were already all too common, have now become more frequent, resulting in long periods of total blackout that can last for as long as six hours.
Informal retailing has exploded in popularity in Lebanon since the onset of the current economic crisis. With household incomes under extreme pressure, it is natural for consumers to turn to informal retailing as a way of minimising the cost of living, with the parallel trade in clandestine imports representing the ideal solution to the problems caused by extremely high inflation.
With no end to the current economic, political and social crisis in sight, Lebanon has entered a new, very different economic reality. Spending power is unlikely to recover substantially before the end of the forecast period, if it recovers at all.
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Retailing
Sales of new and used goods to the general public for personal or household consumption. Excludes specialist retailers of motor vehicles, motorcycles, vehicle parts, fuel. Also excludes foodservice, rental and hire and wholesale industries (Cash and Carry). Sales value excluding or including VAT/Sales Tax. Retailing is the aggregation of Store-based retailing and Non-store retailing. Retailing excludes the informal retail sector. Informal retailing is retail trade which is not declared to the tax authorities. Informal retailing encompasses (a) sales generated by unregistered and unlicensed retailers, ie retailers operating illegally, and (b) any proportion of sales generated by a registered and licensed retailer which is not declared to the tax authorities. Unregistered and unlicensed retailers operate predominantly (although not exclusively) as street hawkers or operate open market stalls, as these channels are harder for the authorities to monitor than permanent outlets. Activities in the illegal market, which is usually understood to refer to trade in illegal, counterfeit or stolen merchandise, are included within our definition of informal retailing. Activities in the “grey market”, which is usually understood to refer to trade in legal merchandise that is sold through unauthorized channels – for example cigarettes bought legally in another country, legally imported, but sold at lower prices than in authorized channels – will be included as informal retailing if no tax is paid on sale by the retailer. However if the retailer pays tax – for example on cigarettes bought legally in another country but sold at a lower price than standard – the sale is included within formal retailing. In relation to click and collect purchases (i.e. where purchases are made over the internet but picked up at store) where the sales data is attributed depends on where the payment is made: If payment is made in store, then the sale is included in store-based sales. If payment is made over the internet, then the sale is included in internet retailing.
See All of Our DefinitionsThis report originates from Passport, our Retailing research and analysis database.
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