The fact that things are not easy in retail is evidenced by the growing arrears. According to data from the BIG InfoMonitor Debtors Register and the BIK database, entities offering food, beverages and tobacco products in retail had PLN 884 million in unpaid liabilities at the end of February this year. The bulk of the debt comes from companies running butcher shops and fruit and vegetable stores. A record of over PLN 3 billion in overdue debts was broken in the entire retail sector.
At the end of March, the regulation under which food products were subject to a zero VAT rate expired. As a result, from April 1, the VAT rate on food is again 5 percent. The list of products that from April again have 5 percent VAT is: meat and fish and their products, milk and dairy products, eggs, natural honey, nuts, vegetables and fruits and products, edible animal and vegetable fats (olive oil, rapeseed oil, sunflower oil), cereals and cereal products, including bread and pastry, certain preparations and milk for infant and child nutrition, and dietary foods for special medical purposes.
Large discount chains, engaged in a fierce battle among themselves, present lists of products that will not increase in price despite the return of VAT. Customers may have reason to be happy, but in this situation small shops become even less competitive when faced with large ones. Meanwhile, as data from the business intelligence agency Dun&Bradstreet shows, their number is systematically decreasing.
– Large retail competes with each other, but it has also actually gone head to head with small shops that don’t have much room to maneuver and will simply have to raise prices. And large chains that offer thousands of products will certainly not lose out on this. Discount stores already have over 40 percent of Poles’ grocery shopping. Thanks to promotions and expansive advertising, their market share is constantly growing. Retail chains are systematically getting stronger and pose an increasing threat to the smallest entrepreneurs – indicates Dr. Hab. Waldemar Rogowski, Chief Analyst at BIG InfoMonitor.
At the end of 2023, the number of stores in Poland fell below 370,000, which means that it shrank by over 3,000 in a year, mainly the smallest ones, according to data from Dun & Bradstreet. Another 10,000 businesses were suspended during this period.
The same is happening in the grocery store sector, which is clearly decreasing, although with the number of outlets exceeding 90,000, they still dominate. The victims of this trend are mainly small, independent outlets. Retail chains, despite the decline in consumer optimism and spending cuts, are still doing well and many of them have not slowed down their pace of development. This can be seen in the example of the Żabka chain, which opened over 1,000 stores in 2023 and now has over 10,000 in total.
– Small shops are affected by the sudden increase in costs, high inflation, competition from the Internet and large chains. Even more important are the very rapidly growing costs of maintaining stationary outlets, where energy and gas price increases often reach several hundred percent. In addition, there are rising product prices, which does not allow for an increase in sales. In the case of food trade, the conditions of competition are imposed by large chains, especially discount chains, which, despite extremely difficult conditions, are still developing – emphasizes Dr. Hab. Waldemar Rogowski. According to experts, the situation may change even for retail chains, because they have to face many challenges, e.g. constant increase in operating costs. Ultimately, this will affect product prices. – And these are still too high in relation to the income of Poles and constitute a serious problem for the budgets of many families – adds the analyst.
What’s more, according to Dun & Bradstreet, Polish retail entrepreneurs are among the least optimistic about their future among all the markets surveyed in Europe. This is mainly due to VAT, which could largely put Poland back on the path of rising prices and rising inflation, and consequently further store closures and suspended operations.
It is also worth looking at the current situation of trading companies in terms of payments overdue more than 30 days for an amount of at least PLN 500. This analysis includes data reported by creditors to the BIG InfoMonitor register and delays in loan repayment, visible in the BIK database. These statistics show that among companies with PKD 472 Retail sale of food, beverages and tobacco products conducted in specialized stores, arrears increased by almost PLN 37 million (19%) over the past year to PLN 229.4 million at the end of February this year. Problems with repayment of current liabilities and loans are experienced by 2,937 active, suspended and closed companies, 90 entities less than a year ago. The only exceptions are companies involved in the retail sale of bread, cakes, pastry and confectionery products, where 9 new debtors appeared.
The bulk of overdue debt comes from companies running butcher shops (almost PLN 43 million) and fruit and vegetable shops (almost PLN 34 million), as well as companies trading in other food (PKD 4729Z), where it is PLN 35 million, almost twice as much as a year ago. A large, 55% jump in debt to over PLN 7 million was also recorded by fish shops and sellers of bread and cakes – by 41% to almost PLN 20 million.
The situation is completely different in the group of companies that have a wider offer, with PKD 4711Z Retail sale conducted in non-specialized stores with predominance of food, beverages and tobacco products. This includes, among others, retail chains and most stores offering food products. Here, arrears fell by almost PLN 117 million in the last year to over PLN 655 million, and the number of debtors decreased by 50 to 7,084 entities.
According to calculations by the Ministry of Finance, maintaining the zero VAT rate in Q1 meant almost PLN 2.75 billion in lost tax revenues. This is almost as much as the arrears of the entire retail sector (47 Retail trade, excluding retail trade in motor vehicles), which increased by almost PLN 349 million (12.4%) in a year to a record of almost PLN 3.2 billion at the end of February this year. 35,166 retailers have problems with timely settlements.
Source: BIG InfoMonitor