The number of contacts made due to the situation of the specialty goods trade has exploded both at the Finnish Commerce Federation and Service Union United PAM during the last couple of weeks. The number of layoffs is increasing at an astonishing rate, and the industry is not expected to be spared from bankruptcies or extensive unemployment.
According to the Federation and Union, the rather large-scale decisions made by the Government on supporting businesses have been very important. However, more is needed.
The Finnish Commerce Federation and Service Union United PAM therefore demand the Government makes quick decisions on all possible support measures with which the specialty goods trade can be helped to survive the exceptional situation caused by the coronavirus pandemic.
“The future of many Finnish specialty goods trade businesses is being determined now. The Government must quickly provide information about the direct support which the State is prepared to give to avoid a wave of bankruptcies in the specialty goods trade,” says Mari Kiviniemi, Managing Director of the Finnish Commerce Federation.
“Employees of the specialty goods trade are in enormous distress. The Government needs to quickly make decisions to calm the situation down – only this can ensure that there will also be jobs after the pandemic,” Annika Rönni-Sällinen, President of Service Union United PAM, adds.
Lessors must also shoulder social responsibility
Even though the Finnish Commerce Federation and Service Union United PAM were able to swiftly agree on exceptional provisions for the collective labour agreement, the specialty goods trade was still left with significant running expenses. Rent and other fixed expenses have not disappeared, and shops must be kept in shopping centres even though there are no customers. Few entrepreneurs have major financial buffers for paying bills for several months without customers.
“It is essential that direct subsidies can also be granted to compensate for rental expenses because borrowing and taking on additional debt are not an option for SMEs in particular. Lessors must also shoulder their social responsibility for the survival of the specialty goods trade and take part in sharing the costs of the crisis,” the Federation and Union demand.
Several specialty goods trade businesses have reported a collapse of 80–90 per cent in sales in recent weeks. The crisis also affects specialty goods shops of all sizes. Citizens are staying inside their homes and, in practice, they are avoiding making purchases other than groceries and medicines, which can even be seen as the complete lack of customers in specialty goods shops.
Many operators in the specialty goods trade sell seasonal products, which now must go straight to the discount bin due to the lack of buyers or remain completely unsold. The festive season in the late spring and summer is a significant sales season for the clothing trade, for example, but with no parties organised, no party clothes are bought, either.
In addition, products need to be ordered well in advance from manufacturers, and it is too late to cancel orders for the summer or autumn seasons. Therefore, the specialty goods trade has a lot of capital tied up in inventories, which is translated into cash flow in normal times; now, however, the value of inventories is collapsing with the disappearance of customers.
The specialty goods trade is a major provider of employment
Finnish Commerce Federation and Service Union United PAM call for decision-makers’ understanding of the importance of the specialty goods trade to both employment and the economy in Finland.
As many as 62 per cent of Finland’s approximately 18,000 retail sector businesses are department stores and specialty goods shops. Approximately 18 per cent are grocery shops, while the remaining 20 per cent are other retail businesses, mainly fuel distributors and pharmacies.
The specialty goods trade also plays a significant role as a provider of employment: in full-time equivalents, specialty goods and department store trade employs 45 per cent of employees in the retail sector and pays 47 per cent of the sector’s total amount of wages and salaries. The grocery trade accounts for 44 per cent of the retail sector’s FTE employees and 42 per cent of the total amount of wages and salaries.
Bankruptcies and closures of shops in the Finnish specialty goods trade would impoverish both the urban landscape and online supply, as well as cause considerable unemployment in the retail sector. At the same time, it would be increasingly easy for the large international operators, such as Amazon, AliExpress or Zalando, to capture the market.
“A lot has been talked about the situation concerning restaurants and hotels, which is of course important, but facing severe problems, the specialty goods trade must not be forgotten in this discussion, situation assessment and solutions,” the Finnish Commerce Federation and Service Union United PAM emphasise.
Mari Kiviniemi, Managing Director, Finnish Commerce Federation, tel. +358 50 511 3189, mari.kiviniemi(at)kauppa.fi
Annika Rönni-Sällinen, President, Service Union United PAM, tel. +358 50 378 0270, annika.ronni-sallinen(at)pam.fi
The Finnish Commerce Federation represents commerce—the largest sector of economic life. Commerce employs around 300,000 people in Finland. The Federation has around 7,000 member companies and represents both retail and wholesale commerce in industry policy and labour market lobbying. www.kauppa.fi
Service Union United PAM is a trade union for people working in private service sectors. PAM has almost 210,000 members and 80% of them are women. The majority of PAM’s members work in retail trade, property services, security services as well as tourism, restaurant and leisure services. www.pam.fi