Fighting for customers in Lebanon

Marketplace Staff Oct 9, 2006

KAI RYSSDAL: The fighting in Lebanon has been over for almost two months. But for businesses there the struggle to survive goes on. Small firms dominate the Lebanese economy. Cut-throat competition was already the rule and many had expected the summer to be peak sales season. Since the war, though, those entrepreneurs have been fighting over the customers who are still spending. From Beirut, Ben Gilbert has more.

BEN GILBERT: Depending on what side of the deal your on, Beirut is a great place to shop, or it’s dismal. Beaudart Issah’s company called Manasseh Incorporated has sold very expensive crystal, silverware and porcelain since 1880. A “25 percent off” sign hanging off the merchandise makes Issah downright despondent.

BEUDART ISSAH:“We don’t make sales. Never. In the life of this company maybe have done one or two.

Major reconstruction projects are taking a long time to ramp up. The Lebanese government is leaning heavily on small businessmen to keep the economy afloat. To help them, the government has postponed the collection of sales tax and lowered penalties for late tax payment. They are offering low-interest loans. The problem is that Lebanon is so competitive that businesses like Issah’s are struggling.

ISSAH:“The economy is not improving. It’s not taking off.”

Most aren’t waiting for help, and they’ve taken the initiative to save their business. The most visible is the classic slash-and-burn technique.

On the streets of the capitol’s Hamra shopping district, clothing shops are selling their stocks at 50 to 70 percent off. Competition between these tiny businesses is so fierce, grabbing a market edge could mean something as small as selling a particular brand of tomato paste or a fig jam.

Khaled Hassan owns a grocery store in a neighborhood full of 20 similar shops. His draw? Loyal customers like Maria Iksander, who want his unique homemade yogurt, called libna.

MARIA IKSANDER:“Best libna, best leban mezze. Best everything.”

At a tiny mobile phone shop near the American University of Beirut, 24-year-old Reehab Sahreeahtee hopes to draw newly arrived students to her shop through a tried and true sales gimmick.

REEHAB SAHREEAHTEE:“We are trying to do some advertisements, to make some flyers, and to get someone who can dance with the telephone costume. So we have our plans.”

Reehab says her brother will parade through the neighborhood dressed as a Nokia “telephone” handing out flyers. She says anyone would do it these days for what she’s paying: $10 for a few hours of humiliation. She says if her ad campaign doesn’t draw more customers, she’ll likely have to close.

The Lebanese government says at least 900 businesses were destroyed during the war. Those that remain are struggling to survive the competition.

In Beirut, I’m Ben Gilbert for Marketplace.

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