Business Effects of COVID-19 on Austrian trade

Effects of COVID-19 on Austrian trade

Editor’s Choice85% anticipate a drop in sales

Rainer Will, managing director of the Austrian trade association. (Photo: Stephan Doleschal) In cooperation with EY, the trade association examined the effects of COVID-19 on Austrian trade. The results of the study show, among other things, that 85% (!) Of Austrian retail companies expect corona-related sales losses in 2020, and a third of retailers rate the government support measures as “not sufficient”.

The Effects of the corona crisis on Austrian trade serious, as a recent survey of domestic retail companies by the trade association and the audit and consulting organization EY confirms. All areas in retail and wholesale (i.e. the entire industry across all size classes and product groups – from EPU and SMEs to chain stores, as the trade association says) face massive challenges – Good 85% count this year Loss in sales of an average of 32%. Only a total of 15% see the current business year more optimistically: 6% of all retail companies expect to keep their sales level, almost 9% expect a slight increase, the majority of them in the range of plus 11 to 25%.

In the upcoming year Austrian traders are looking at the strongly negative level in 2020 a little more positive. However, the shadows of the crisis will also emerge in 2021, as many believe: only a quarter of the respondents (25%) assumes a return to the pre-crisis level. All other retail companies that do not expect their sales to return to pre-crisis levels in 2021 assume on average that their sales will not change in 2021 compared to 2020. Every fifth of these dealers (21%) expects one another minus of more than 10% compared to the current financial year. More than one in four retailers surveyed (27%) believe that they can improve their sales in 2021 compared to 2020.

Employment and personnel: Great planning uncertainty

Four out of ten retail companies (41%) stated all Keep employees so far to be able to but COVID-19-Reduced working hours have taken or intend to. The area of ​​activity of the employees has shifted in the case of very few: just under one in seven dealers15%) had to Employees elsewhere at short notice and without retraining. The outlook for development in the next twelve months is still uncertain: For 39% of those surveyed, it is currently not yet possible to predict how they will fare Staff levels will develop in the coming year. However, 41% of the retailers surveyed plan to do so Not to change the number of employees. 13% of companies are currently planning Job cuts and only 7% want hire additional employees.

“The current Developments around COVID-19 have a great degree of planning uncertainty generated. At the moment nobody can predict how the economy and trade in particular will develop. Accordingly, the assessments regarding personnel development are currently rather cautious, ”says Rainer Will, Managing director of the trade association. “After a Phase with 100 percent loss of sales expect around 2020 85% of dealers drop sales. The planning uncertainty worries us the most – with a view to purchasing power, but also with a view to the bureaucracy surrounding the payment of state aid. That shouldn’t go on like this, nor ever repeat itself. “

“When there is strong demand, grocers are required to secure supply chains and availability. Other retail sectors, such as the areas of fashion, interior design or sports shops, have against it with a massive drop in sales to fight. Each sector faces its own challenges – some were already visible before the corona pandemic, others formed overnight, ”analyzes Martin Unger, Partner, Strategy Leader and Head of Consumer Goods and Retail at EY Austria. “Very few people had the radar that a crisis of this kind could only 8% of retail and consumer goods companies had one Pandemic contingency plan, as the EY study on the effects of COVID-19 on Austrian companies showed. “

Rapid rethinking is required

In order to retain employees and to compensate for deficits in the best possible way, many companies had to rethink quickly. Stand for over half (57%) Cost optimization in the first place, followed by different measures in the area Online sales channels, digitization and supply chains. Especially the Sales strategy has strongly shifted to the digital area: 46% of the respondents stated that they had expanded or wanted to expand their own online shop in the course of COVID-19 – this has been the most important online sales channel for 62% for some time. One in three (33%) started or strengthened their presence in online marketplaces or still wants to do so. Austrian providers are particularly popular: (trade association) is used by more than half of the respondents (65%) as a regional web shop directory and is thus ahead of (36%) and the Falter online shop primer (31 %). 11% have been using since the Corona crisis, 5% shöpping.

Especially for many EPUs and companies with up to nine employees the past few weeks have been a wake up call that one professional website with digital services, if possible, a effective second pillar represents. Luckily, the jump into the cold water was a success for many – even those who have been shy about online trading for years. Hopefully, innovations that were created due to this emergency situation will continue to be expanded in the future – because the future for many retailers is at least partially on the Internet, ”said Unger.

Crisis balance: Many traders rate state aid processing as “not enough”

Only around every seventh interviewed Trading company is very satisfied or satisfied with the Government Corona Aid Package. The majority however, the company (57%) shows up unsatisfied, every third dealer even rates it with “not enough“. “The worst assessment of the aid package is by small retailers with annual sales of up to one million euros. In contrast, it is rated much better by larger dealers with sales of more than 10 million euros, ”reports Rainer Will.

Both government support services there is clearly a favorite that so far half of the companies (49%) has taken up: Corona short-time work. Further 3% have a Application planned. An increasing number of EPUs and companies with up to nine employees said they did not meet the conditions for short-time work – 41% applied for support from the Hardship Fund for SMEs / EPUs. In addition, almost half of the dealers (48%) turned around Tax deferrals a quarter (25%) is planning an application for the Corona Aid Fund, 19% have already asked. To date, only 17% have filled out applications for loan guarantees and interest subsidies.

Investment backlog

The study also shows: Eight out of ten Traders (78%) are unlikely to make or postpone at least part of the investments planned for 2020. Are on average 46% of investments currently on hold or are deleted. “The retailers are currently fighting for every euro in the till and thus for every consumer. Interestingly, the gross lack of liquidity only leads to discount campaigns for every third trader, but almost 80% of traders put the brakes on investments. This affects the entire economy, ”Will reports.

Fresh start: saving on advertising instead of discount battles

While it’s important to get potential buyers into the store or enlarge the shopping carts, half (50%) on the Avoid strengthening price and discount campaigns, a good quarter (28%) is planning discounts for all consumers. In contrast, only 3% will offer price advantages exclusively for members of their bonus card or customer loyalty program.

Will says: “That slow start-up of the economy started long ago for retailers – and as you can see, the demand and willingness to buy is currently somewhat larger than expected. SMEs and EPUs were often able to switch quickly to their home office and are now more flexible with the ‘post-corona organization’. In order to gain a foothold after the Corona crisis, it is important not to disappear from the scene and to stay on the ball. “

“The good frequencies on the first days of the complete opening of the store, in any case, should not distract from the structurally precarious situation. After all, there are currently more than 588,000 people unemployed in Austria and more 1.2 million in short-time work, that is, these consumers now have to make do with significantly less income. Hence now Measures to sustainably stabilize purchasing power are essential, otherwise consumption will continue to deteriorate, ”says the GF trade association.

Future focus: online sales, regionality and sustainability

“The fact that more investments were made in social media advertising and at the same time savings were made on TV ads shows that here too Trend towards online goes – after all, one in five companies would like to focus more on omnichannel in their business strategy in the future. This is one of the keys to a successful restart after the restrictions: Being broad and close to the target group, ”explains Martin Unger.

If changes are expected for the future, the Increase in online orders, with which almost three quarters (73%) of dealers expect. The stronger one is in second place among the predicted long-term changes for retail and consumer behavior Focus on regionality (64%), in third place is the focus sustainability (40%). “Especially here you can especially smaller companies score. EPU and SMEs convince through authenticity – they are close to the customer and therefore particularly credible with sustainability efforts and regional promises. In many retail sectors, cohesion is more pronounced than ever before, ”said Unger.

“Three quarters of the dealers will assume in future increasing online orders from what increases the pressure to make digital investments. This goes hand in hand with a noticeable shift of consumers towards regionality and sustainability. It is now important to map this in order to keep customers in crisis, ”Rainer Will sums up.

Claims of the trade association

The trade association has campaigned for an advance of the already reformed tax reform, whereby the lowering of the wage and income tax tariffs should be in the foreground in order to secure the purchasing power sustainably. In addition, nationwide 500 euros “Austria checks“For people with their main place of residence in Austria, this” so that even low-income earners with an annual income of less than 11,000 euros would gain in purchasing power who would not benefit from a reduction in wage tax. A perfect complementary immediate measure for immediate support that is urgently needed now, ”said Will.

The Introduction of platform liability should be incurred in the event of product counterfeiting, incorrect payment of VAT by third-country retailers and incomplete payment of waste disposal fees if the retailers listed on marketplaces cannot be directly used. “Anyone who makes a profit in Austria should also pay into the health and social pots here – like all other domestic dealers,” says Will, who is vehement against the plan of the EU Commission who already fixed for January 1, 2021 Postpone the abolition of the 22 euro exemption limit for parcel deliveries from third countries. On the contrary: “The end of the 22-euro exemption limit is overdue, as it would finally close a 150-million-euro tax loophole, especially for Asian online retailers,” said the GF trade association.

After the health crisis now it applies the economic crisis to fight with the same determination. The bureaucracy is currently between the state aid funds and the companies. The proposed set of measures could reduce suffering, but it does not relieve the EPU, SMEs and employment-intensive companies from finally being able to receive the money they have promised. If the platform liability and taxation do not come from the first cent, this would be a shot in the economic leg, while the trading location is already lagging due to Corona. A third of all Austrian retailers are now threatened with closure, ”Rainer Will appeals to politicians.


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