The coronavirus crisis has affected the turnover of commerce sector companies dramatically.
“Two fifths of companies have lost more than 50% of their turnover. For more than a quarter, sales have collapsed almost totally, by up to more than 70%,” says Jaana Kurjenoja, Chief Economist of the Finnish Commerce Federation, reporting the results of the survey.
Almost 40% of the daily consumer goods and supermarket sector operators have reported a fall in turnover; however, on the other hand, sales have increased for more than half of these operators. Specialty goods and department store trade has seen a clearly more dramatic fall in turnover, with up to 87% of companies reporting a decline in turnover, and for almost 50% the loss of turnover has been almost complete.
Wholesale trade is also suffering, investments have been suspended and consumption is declining. Half of all wholesale trade operators have reported a decline of at least 50% in turnover. The food service wholesale trade has been affected by the closure of restaurants, hotels and schools, while the decline in consumer purchases is reflected in the wholesale trade of household goods.
“Even though the coronavirus crisis is devastating for the specialty goods trade in particular, the impacts are clear also for daily consumer goods stores located, for example, in closed holiday resorts in Northern Finland, service stations on main roads, border trade points or stores located on previously busy commuting routes and near public transport stops,” says Kurjenoja.
Sales has also begun to decline in technical trade, which serves construction and industry, with more than 50% of companies reporting a loss in turnover. For the time being, technical trade has managed better than other wholesale trade and specialty goods and department store trade, but disruptions in logistics and in the availability of various components, materials and equipment are already causing problems. If industry and construction slow down in Finland and internationally, the impacts will be reflected in the turnover of technical trade more than now.
Some, but not even close to all, commerce sector companies have managed to transfer sales to online stores. Responses to the survey indicate that half of companies do not yet have digital sales channels. The stores using digital sales channels are reporting an increase in online sales as a consequence of the coronavirus crisis. Online sales have increased in the daily consumer goods trade in particular.
“The transfer of purchases to online channels is not sufficient to compensate for the decline in overall demand as even specialty goods and department stores who have had well-functioning and frequently used online stores for a long time already are reporting losses in sales,” says Kurjenoja.
Digital sales channels have been used in both technical and other types of wholesale trade for a long time, but sales through these has declined, particularly in wholesale trade, more than in other sectors.
Layoffs continue in the commerce sector
More than half of commerce sector companies have reported reductions in the number of employees by the beginning of April, mainly through layoffs.
The number of employees in daily consumer goods trade and supermarkets has not changed much, but the situation is different in specialty goods and department stores, with up to 77% of them reporting cuts, above all layoffs. Two thirds of wholesale trade operators have reduced the number of employees as various private and public services have closed down or demand has declined. In technical trade, the share of operators having implemented staff cuts, 29%, is still moderate in comparison with other sectors of commerce, but there are fears of the situation getting worse in that sector as well.
“Companies that have implemented staff cuts include a high number of large employers in the commerce sector. In fact, survey results indicate that the smallest and largest companies have reduced the number of employees most in relative terms. As a whole, the commerce sector has already reduced the number of employees by one quarter,” says Kurjenoja.
Well over 50% of companies intend to implement more cuts or continue the staff cuts already implemented for the next four weeks, which means that layoffs in stores will continue. Survey results indicate that staff cuts focus particularly on specialty goods stores and wholesale trade, but technical trade is also preparing for layoffs.
Almost a quarter of companies in the commerce sector are uncertain whether they will be able to continue in business. The degree of uncertainty is highest in specialty goods stores and department store trade.
The support measures implemented by the Government so far do not help the commerce sector
The survey by the Finnish Commerce Federation also reveals that the Government’s support measures, including the funding by Finnvera, Business Finland, ELY centres and municipalities, or the tax administration’s payment arrangements, have not helped the majority of companies in the commerce sector. Up to 65% of respondents stated that the support measures have not had much influence on the financial situation of their company.
“The likely reason for this is that the measures implemented by the Government do not help with the problems that the coronavirus crisis has caused for commerce, including in particular the decline in demand and excessive fixed costs, such as personnel and rental costs,” says Mari Kiviniemi, Managing Director of the Finnish Commerce Federation.
In the Finnish Commerce Federation’s opinion, it would be crucial to target direct support to companies struggling with the fall in turnover. Fixed costs include not only rents but also capital tied up in inventories, which remain full without sales.
“It would be absolutely crucial that the Government enhances the efficiency of support measures for companies so that the measures could also be targeted at fixed costs and tackling the acute liquidity crisis. These problems cannot be solved by means of loans only,” says Kiviniemi emphatically.
For further information, please contact:
Jaana Kurjenoja, Chief Economist, Finnish Commerce Federation, tel. +358 (0)40 820 5378, firstname.lastname@example.org
Mari Kiviniemi, Managing Director, Finnish Commerce Federation, tel. +358 (0)50 511 3189, email@example.com
The survey, targeted at the Finnish Commerce Federation’s member companies, was conducted 2–6 April 2020. The survey looked into the situation of companies in various sectors of commerce during the coronavirus crisis. The survey was prepared and the results analysed by the Finnish Commerce Federation. The survey can be generalised to cover all members of the Finnish Commerce Federation.