Retail has been under great pressure for years, more and more shops are struggling to keep their heads above water . Even in the news , we have regularly heard in recent years that large retail chains are failing and having to file for bankruptcy. These large bankruptcies have changed the high streets and consumers are now increasingly used to buying online.
However, most retailers in the Netherlands cannot live on online sales alone. This market is still dominated by a few well-known websites. Despite the fact that many shops now have their own webshops, online sales in the apparel sector account for only 20 per cent of revenue. The closure of shops, due to corona measures, did increase online sales slightly. But this increase does not come close to regular sales.
Bankruptcies in recent years
- 2015: Dixons, Schoenenreus, DA, V&D, Miss Etam en Promiss
- 2016: Scheer & Foppen, MS Mode, La Ligna, Scapino, Perry Sport en Aktiesport
- 2017: Charles Vögele, Witteveen, The Phone House, McGregor en Gaastra
- 2018: Kijkshop en Men At Work
- 2019: Intertoys, CoolCat, Op=Op Voordeelshop and Sissy-Boy
- 2020: Didi
Closed shops while the spring collection is already long and widely sourced
As the retail sector too, from 15 December 2020,has their doors have had to close, most retailers have had minimal income in the recent period. This while fixed costs continue and the spring collection is already arriving in dribs and drabs. Of course, those suppliers also want to be paid, which can lead to big problems if the retailers are not sufficiently supported. There are no revenues and the bills just have to be paid. In< INretail ‘s blackest scenarios will one at four< clothing- and shoe shopswill not survive the > lockdown . Besides the fact that there will be even more vacancy in high streets, this, with more than 100.000 workers in the sector, lead to a terrible wave of redundancies.
Tsunami of bankruptcies
Even if the lockdown is not extended again in February 2021 , most Dutch, with spring around the corner, will no longer buy new winter clothes. This also applies to winter sports gear for the 2020-2021 season and Christmas gear, which could no longer be sold at the end of December. Most retailers will therefore be left with much of the winter stock, forcing them to sell at very high discounts when they open or online. Well-known retail chains such as H& M, Mango and Bijenkorf already advertise online with discounts of up to 70 per cent . These discounts are only enough to get rid of some of the stock and certainly not to make a profit. INretail therefore fears a tsunami of bankruptcies in the retail industry. In a poll of 1.300 industry association members, more than 60 per cent indicated that they would have to downsize if there is no solution to the purchased winter stock.
Current stock allowance unrealistic and insufficient
Retailers’ organisation INretail said even before the lockdown was extended that the cabinet ‘s proposed stock allowance is unrealistic and should be much higher. Besides, the scheme also dupe entrepreneurs in other areas, as the scheme is calculated on a quarterly basis . This while retailers have been hit in the last few weeks of the 4th quarter of 2020 and without further extensions, also the first six weeks of 2021. The effects of the current lockdown certainly seem, as they are spread over two quarters in the middle of the Christmas and winter season, are going to have an immense effect on the Dutch shopping street. Indeed, many retailers will just end up between shore and ship based on the current rules. To date, 20 million euros have been set aside by the ministry. However, the industry association expects the damage from the stock write-downs is more likely to reach several hundred million euros.
Extension of aid package crucial
The ministry has following the extension of the lockdown, announced that the support package will be further extended. This extension will be crucial for many entrepreneurs. The three major credit insurers Atradius, Euler Hermes and Coface predict in all analyses a gigantic wave of bankruptcies. Government support has so far been able to >avoid them. The question >remains; when will the surge come or will we make it with all of them net< save it?
Source:
Koninklijke INretail
