The turnaround in the growth of commerce will be postponed to next year

At the beginning of the year, a turnaround was anticipated for this year, as the growth in purchasing power, supported by slowing inflation and lower interest rates, was expected to be reflected in the sales of retail trade and wholesale trade serving the consumer sectors. In the technical wholesale trade, orders were expected to pick up, especially as industrial investments accelerated and residential construction reached its bottom level.

Although the purchasing power of Finns has improved, fluctuations in customs policy, the new escalation of the situation in the Middle East and declining employment have created new uncertainty about the future. Even the weather has not favoured commerce.

“The cold and rainy weather of spring and early summer decreased the sales of both daily consumer goods and specialty goods trade. Seasonal products have had to be sold with early sales before the next season begins, which weakens the profitability of small specialty goods stores in particular,” says Jaana Kurjenoja, Chief Economist of the Finnish Commerce Federation, describing the development of the spring.

According to the Finnish Commerce Federation’s forecast, the sales volume* of the retail sector is expected to continue to shrink this year and to increase by approximately one per cent next year.

“Although the turnaround in the retail sector is delayed, it has not been cancelled. The long-standing uncertainty among consumers will not disappear in an instant, but the improvement in purchasing power is gradually starting to be reflected in commerce,” says Kurjenoja.

The lower interest rates, on the other hand, enable the implementation of planned investments in commerce sector companies, which ultimately improves productivity and the international competitiveness of commerce.

The transformation of commerce, the economic cycle and international competition are reducing employment

International and domestic competition in both wholesale and retail trade has increased the need for higher efficiency of operations and for cutting costs. Productivity has been increased particularly by utilising data and accelerating artificial intelligence and digital development and automation. This development is reflected in the number of employed people, which has been trending downward since 2011 in the retail sector.

“In addition to the long-term development, employment in the commerce sector is, of course, also affected by the poor economic situation at the moment. During the first half of the year, the number of working hours decreased by more than 12 per cent in the retail sector and by four per cent in the wholesale trade from last year” says Kurjenoja.

According to the Finnish Commerce Federation’s forecast, employment in the retail sector will decrease by approximately five per cent from 2024 to 2026, meaning almost 8,000 employees. The decline will primarily be reflected in non-managerial tasks and supporting operations, which are needed less than before due to better utilisation of data, digitalisation and the development of artificial intelligence.

“However, commerce will continue to be by far the largest employer in the corporate sector, which is why the employment trend in commerce affects employment in the private sector as a whole. Political decision-makers planning tax and industrial policy should understand this,” says Kari Luoto, Managing Director of the Finnish Commerce Federation.

Sustainable economic growth relies primarily on services

While exports of goods from Finland have developed slowly and export markets have been lost, service exports have increased. Nevertheless, the role of the service sectors as a driver of growth is not recognised. In order to support growth, industrial and economic policy should focus more on the operating conditions of the service sectors and the international competitiveness of services.

“For example, specialty goods and wholesale trade would need more support for intangible investments, the development of digitalisation and the first steps towards internationalisation,” says Luoto.

According to the Finnish Commerce Federation, Finland has not exerted sufficient influence at EU level to create equal competitive conditions with, for example, Chinese low-price commerce. In Finland, too, the necessary measures have not been taken, such as intensive monitoring to promote the safety and compliance of orders from China.

There has also been insufficient determination in enhancing the functioning of the market – for example, the liberalisation of the sale of wines with an alcohol content of less than 15 per cent and a wider range of over-the-counter medicines. The increase in the general VAT rate, which entered into force last autumn, weakened the operating conditions of the already struggling domestic specialty and household goods trade.

“The budding growth of consumer services should now be supported by a tax policy that strengthens purchasing power and work in Finland, and not by making solutions that would raise the price of domestic labour and cut purchasing power,” says Luoto.

Attachment: Commerce sector outlook II 2025 (only in Finnish)

Further information:

Kari Luoto, Managing Director, Finnish Commerce Federation, tel. +358 (0) 400 688 708, kari.luoto@kauppa.fi

Jaana Kurjenoja, Chief Economist, Finnish Commerce Federation, tel. +358 (0)40 820 5378, jaana.kurjenoja@kauppa.fi