Slowing pains evident in Welsh town

By Steven Duke
BBC News, Tenby, South West Wales

Getting a bargain in these tougher times is becoming more important

"If we're not taking money, then no one is," remarks Dorothy Williams, who runs Tenby's Famous £1 Shop.

The trouble is, in this Welsh seaside resort, people are saving their pounds.

Her shop is one of the few without a sale sign stuck in the window.

"We're probably faring better than most of the other little stores," she suggests.

Shop keepers and hoteliers here are used to bracing themselves for the worst when dark clouds appear on the horizon.

Sunshine and the tourists that follow are vital to many businesses here. But the economic climate is replacing the weather forecast as the main cause of concern.

"Last time it was this bad was the end of the 1980s," says Chris Osborne, managing director of the Fourcroft Hotel.

Situated overlooking Tenby's picturesque North Beach, the hotel has been in his family since 1946.

This doesn't look like it'll be a vintage year.

I've never found it so easy to say 'no' to people who are cold calling and trying to sell products to us Toby Rhys Davies, County Clothes In pictures: How employers are coping with tougher times

"Sales were down 6% last month, occupancy levels were 12% lower. July's looking rather sad for itself too," he suggests with a stoical shrug.

Staff numbers have already had to be cut.

He sees plenty of reasons why punters are staying away.

"People are concerned about their future employment, they're seeing prices rising and they've less disposable income in their pockets."

Twice the pain

For the hotel and bar trade there's a double whammy to higher food and fuel costs.

Not only does it mean people have less disposable income to treat themselves to meals out, but it means kitchen bills rise - with little room for clawing back the extra cost.

"We can't just change our menu prices, they are published in restaurant guides," Mr Osborne explains. "But at the same time our prices are going up, which means our profits are squeezed."

A little up the road, the rising cost of living is a worry for the owners of County Clothes, a gift and clothes shop.

Fewer tourists and rising costs are a headache for hoteliers

"If everything keeps going up, then our sales need to go up. And we definitely need a rise in sales to match those rising prices," warns salesman Toby Rhys Davies.

"We were doing well earlier in the year, but as of May, sales just flattened. I've never found it so easy to say 'no' to people who are cold calling and trying to sell products to us."

Welsh shops enjoyed growth of 4.2% during the first three months of 2008, part of a broader national jump in sales early in the year.

But, at the same time, it appears businesses in Wales were battening down the hatches fearing the worst. Wholesale trade - sales between firms - tumbled 9.9%.

Domino effect

There's a knock-on effect for the whole area when shops and hotels suffer, as Suen Andrews, owner of a driving school in the town, knows only too well.

"If parents running a local business are feeling the pinch, then the mortgage is going to take priority, not paying for your children to learn how to drive," he says.

"Our figures are considerably down on last year. Back then money couldn't roll in fast enough, we had to leave the phone off the hook at times."

While no one relishes the prospect of an economic downturn, some reap the benefits.

"People are now making their computers last a year longer, rather than just ordering a new one." says John Goodwin, who runs a computer shop and has seen repair call-outs pick up.

But his online business, selling computer parts, offers a faint reminder that the dark economic clouds are not confined to a small corner of Wales.

"We've never had a credit card declined in over seven years of business. But this week we've had two - one from America and one from Europe."

A special report on the economic picture in Tenby will be broadcast on Wednesday on the Six O'Clock News on BBC One.