Retail: Energy and price hikes slow sales turnover

By Matina Harkoftakis

Retail sales seem to have fallen flat in July as consumers appear restrained in their purchases. The outstanding month of sales has not, based on the data so far, lived up to expectations, as they point out in Capital.gr industry executives.

“The first picture we have from the sales, which officially started on the second Monday of July, is unfortunately not so encouraging. According to the first estimates, the retail trade seems to have moved to lower than expected turnovers, especially in areas where there is no the front of tourism, which is seen more strongly for example in mainland Greece”, points out the vice-president of the Hellenic Federation of Commerce and Entrepreneurship and president of the Piraeus Trade Association, Theodoros Kapralos.

The key factors

One of the main reasons attributed to the moderate performance is, as Mr. Kapralos mentions, “that the disposable income of domestic consumers has clearly decreased due to the increases in energy and also the revaluations, which occurred in the previous months. In addition, it is it’s clear that consumers choose the beach over shopping and shopping.”

Therefore, whatever money remains, the Greek prefers to spend it on his holidays or to spend some time on the beach, which he probably needs more than the so-called shopping therapy.

The above factors have led to retail sales in sectors such as clothing and footwear, home goods and linen, during the sales season, showing in July a lag both in relation to the expectations that had been created and in relation to in 2019 but also with last year.

“June and July showed much lower collections than what was expected to arrive this summer,” highlights Mr. Kapralos.

July is an important month for retail

It should be noted that July is considered one of the most important months of the summer season for retail as it traditionally presents the largest turnovers of the May-September period mainly due to sales. However, on the other hand, it is also a month of obligations for entrepreneurs, who are called upon to fulfill their obligations to the public (payment of VAT, etc.) while now they have been called upon to respond to new obligations such as, for example, the return of the refundable advance payment, the payment of which has already started since the end of July. To these should be added the obligations to suppliers as a large part of them have been transferred to July due to the fact that it is generally considered a “month of good turnover”.

In any case, the ones that show the strongest resistance are the areas with heavy tourist traffic, where retail trade appears to be profitable, as well as some large retail chains, which maintain stores in places with heavy tourist traffic.

Consumers are cautious about the second half of the year

As far as the expectations for the second half of the year are concerned, the consumer sentiment index is at -0.64, according to a recent survey carried out by the Business & Retail Association of Greece in collaboration with the ELTRUN laboratory of Finance University of Athens. “This means that there are reservations for the second half of this year. Energy costs as well as other price increases, which on average reach 10% have contributed to a drop in consumption,” he points out in Capital.gr the vice-president of SELPE, Antonis Zairis, and adds that “so far the retail trade has registered a satisfactory course as the year started quite well and an acceleration followed. And where there was an optimism from the pandemic front, which was controllable and consumers they started to go out and spend money, the war in Ukraine came, the energy crisis and the revaluations. So these factors justify the climate of discouragement that prevails for the prospects of the second half of the year.”

According to the SELPE survey, in terms of disposable income, consumers estimate that increases in energy costs reduce their disposable income by an average of 17%, with 2 out of 3 consumers (66%) stating that the their disposable income decreases by more than 20%, at the same time that 3 out of 4 consumers report that they buy products based on monetary expenditure.