Retail boss Kristi Grayston last night urged shoppers not to "sew up your pockets" after new figures showed Christmas sales went down for the first time in seven years.

Low sales in clothes shops and liquor stores throughout December are being blamed on residents tightening the purse strings amid concerns of the global economic crisis.

Last night, Chamber of Commerce retail division chair Ms Grayston warned the less money people spend, the more Bermuda's economy will struggle.

Responding, Finance Minister Paula Cox cautioned businesses against taking a 'woe is me' approach, and said that if they improve their fiscal practices the clouds of the economic storm could have a silver lining.

Ms Grayston told The Royal Gazette: "This makes the coming year more difficult for retailers. Buying is a challenge at the moment: how much do we bring in? The cash flow isn't there.

"Retailers are doing an exceptional job; if you walk around Hamilton you can see that. But people have had their wallets closed, they are looking at prices.

"It can become a self-fulfilling prophecy. Yes, buy the things you need to buy and be price conscious — but if you want to go out for dinner, go out for dinner. That's what keeps the economy growing.

"It's when you stop spending we have job losses. "Bermuda is open for business. Don't sew up your pockets. We need to keep the economy moving."

Ms Cox said: "It is very much a different industry architecture: the rules and roles that govern how participants do business has changed the business world dramatically. "Even in the midst of what appears to be an economic perfect storm the clouds may yet hold a silver lining.

"First though businesses should make fiscal fitness their top priority: improved cash management, a more relevant cost and pricing basis, more innovative methods, new risk structures and streamlined supply chains. "A 'woe is me' approach cannot be seen as a credible response.

" Neither can the mote be always in the other person's eye, notwithstanding that we are in unchartered economic territory where there is no single magic bullet.

"Retail sales have been soft for most of 2008. Consumer spending also seems to have fallen back more pointedly since September 2008 when the global financial crisis became more widely known.

There is a clear pattern of change in consumer behaviour since September 2008.

"Consumers are more discerning as to what they spend their dollars on as they are adopting in some circles a more cautious wait and see approach. This is understandable.

"Local sales and overseas purchases declared at the L.F. Wade International Airport declined in the last three months of the year compared to the previous year.

"It is normal for consumers to tighten their belts when economic conditions are not very bright.

"However it is important to continue to purchase necessities and to look forward to the time when conditions will improve as consumer spending is one of the dynamic drivers in any economy and no one wishes to see an economic paralysis and lockjam. We want to do what we can to encourage businesses to stay open."

Gross retail turnover for December was $110.8 million, down 1.5 percent from $112.5 million in December 2007 to mark the first negative growth for that month since 2001.

Once the rate of inflation is factored in, the volume of retail sales fell by 6.9 percent.

Clothes shops sales plunged 16.8 percent, liquor stores 4.3 percent and service stations 11.7 percent.

The overall figure was boosted by a 22.2 percent increase at motor vehicle stores, and 5.0 percent at food stores.

During 2008, the retail sector posted ten out of 12 months of real declines in sales activity, reflecting an average drop of 3.1 percent in sales volume for the year.

In recent months, Government has advised people to weather the economic storm by tightening the belt, with Home Affairs Minister David Burch saying the younger generation needs to be taught how to make do with less.

On this point, Ms Grayston said yesterday: "Nobody should spend more than they earn. Saving is important. It's important to decide where you want to spend your money."

She said people should concentrate on spending money locally, pointing out handling, shipping and clearance fees all mount up meaning shopping can be just as expensive overseas or via the Internet.

Gosling's managing director Charles Gosling said the fall in liquor store sales did not tally with his company's figures.

"Our experience with an economic situation such as this is that the on-premise accounts drop off and the off-premise will increase," said Mr. Gosling.

"There's nothing from our sales numbers over the last couple of months which would lead us to change our opinion on that.

"It's a silver lining on a particularly dark cloud, but when you look at performance of other markets it's a balancing weight."