reports.

SALES in the month of October could be even worse for Bermuda shops than September, pointing to a slow down in spending for the second half of 2000, according to local retailers.

The drop has been attributed to the falling numbers of tourists, the rise in Internet shopping and locals buying more overseas -- seriously impacting on the amount stores are selling.

"We do think there has been a slow down in spending in the second half of the year,'' said George Grundmuller, chairman of the Visitor Retail Division of the Chamber of Commerce.

Shops that cater for visitors have been harder hit due to the fall in air passengers arriving on the Island, seriously cutting into their bottom line.

But there is no quick fix to the problem, and retailers will have to work hard to counter the move to buy off Island, according to Mr. Grundmuller.

He said after a meeting of his division this week: "We are very concerned about the drop in sales, especially in light of the fact that preliminary figures show that October was also a month that was very weak.

"Most shops that catered to tourists in particular indicated their sales were low.

"In general there is a concern about the drop in air arrivals, who generally spend more than cruise ship visitors.'' But he said that they were not certain as to why October was so hard hit. He said: "It could be the stock market, the uncertainty over the US elections or simply the poor weather. But two consecutive poor months is not a good thing.'' He said that the two main factors established by the Retail Division as contributing to the reduction were a fall in the number of tourists and locals buying more overseas. In September the Retail Sales Index recorded the volume of sales dropping by 1.7 percent for the month and the Government recorded the gross turnover in the retail sector was $50.7 million, down from $51.5 million in August and $56.9 million in July.

This was despite there being 25 shopping days in September, one more than in September 1999.

The largest percentage increase was in the amount of goods bought abroad and declared by residents. Residents coming back from holiday and business trips declared $3.22 million worth of goods -- up 12.2 percent on the same period last year.

The cumulative total spending of residents abroad for the first nine months of this year amounted to nearly $25 million.

According to the statistics, this represents roughly six percent of the gross turnover of the retail sector in Bermuda for the same period.

Spending slows Mr. Grundmuller said that shops were worried about the amount being spent not only overseas on trips, but also on the Internet.

He said: "There is concern about residents spending more overseas, because if you combine it with Internet shopping, it seriously affects our business.'' In the general retail sector, consumer demand remained relatively weak as gross revenue flows -- the amount of money -- in the stores fell below the previous year's level, down 4.9 percent. In August the amount of money in the stores fell by 3.4 percent on the same period in 1999.

Gross receipts for tourist-related stores declined with these retailers experiencing mixed sales performance levels, the Government said. Mr.

Grundmuller said: "There is no easy solution to the problem. There seems to be a feeling with shoppers that there is more selection overseas and on the Internet. And we have to try to compete with this. The other complaint is high prices. But we have high rents, high direct expenses and salaries paid. All of that leads to higher operating expenses and higher prices in the shop.

"We believe to combat all of this retailers have got to find a way to bring the cost down and to continue to be innovative in order to succeed, but it is difficult and challenging.'' He said: "There is not really a quick fix.'' He added the division continued to work closely with both the Department of Tourism and the Department of Finance to help find a way to help their sector develop and progress.