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Practical signs of a Swedish economic fall or just change of shopping habits? More Stores are dying and the death is spreading

Wednesday, 28 September 2011
More and more stores are being closed down in Sweden and now the question is whether the weakening Swedish consumer confidence is affecting the demand in the stores or just a changing pattern in Swedish people’s purchasing system.

The fall in purchases in stores has made it that, so far this year, the number of bankruptcies in the retail trade sector increased by 5 percent and growth lowest in 15 years.

“In particular it is the electronic commerce sector that has seen strong competition in stores and lead to them being closed,” says Jonas Arnberg, an analyst at HUI, Swedish Research Institute of Trade.

At the beginning of the year, the dismal development was marked by the stock market collapse and the fears of global economic collapse. This has led to the fall of the 14 years of continuous growth in the retail sector.

Above all, it is the smaller shops that have been knocked out by foreign retail chains, large shopping malls outside the cities and strong ecommercial stores.
“We see this as part of a restructuring. Many of the stores would still have been knocked out, but the economic situation is now accelerating the development. 2011 is the worst year since 1996,” says Jonas Arnberg.

At the beginning of the summer it was the Swedish electronics chain, Onoff that gave up first among those that are more exposed. Clothing chains, Kapp-Ahl and RNB have reported profit warning and many traders have reported weaker sales. It has forced companies to cut back on staffing by a fewer working hours. Yet, however, no notice has been given for mass layoffs.

Normally, it would be expected as usual that furniture dealers, building materials and electronics trade would suffer more in a recession, but now even major supermarkets are beginning to see problems.

“Consumers are very cautious and are holding back even though they equally have thick wallets now than before. The trend is that many people choose cheaper versions of products and savings have increased,” says Yvonne Ingman, vice president of industry organization Swedish Federation of Trade.

She also believes that the retail trade's weak performance in 2011 could be a first sign of product saturation and an overall reduction in consumption desire.
“Maybe people think that they have enough supplies and have changed their consumption behaviour. Any form of second-hand sale and reuse increases. Clothes Companies Polar'n & Pyret, Gudrun Sjdn and Peak Performance have also opened their own stores for second hand clothing,” said Yvonne Ingman.

Thomas Svaton, CEO of Swedish Food Retailers, notes that over the past 20 years, approximately 100 new stores such as Coop Forum and ICA Maxi have been opened. The turnover of these stores on average has reached a half a billion made by the big ones and it is difficult for stores with low turnover to survive.
Those who are eliminated are small shops in rural areas, where there is little of no population base. Although poorly managed stores in big cities can also go bankrupt, but then, they are often used by others. New low-cost operators Lidl and Netto have managed to continue operating many small shops.

In less than ten years, the German Lidl and Danish Netto together opened over 300 new stores across the country. With a more limited range and slim bodies, the international discount chains out compete many small Ica, Konsum and independent stores.

According to Thomas, Svaton Lidl and Netto have dealt an incredible stimulus for the Swedish clogged food market. They have increased competitive pressure, which was quite low some 10 to 15 years ago. Within five or six years, they may well have doubled the number of stores around the country.
By Scancomark.se team

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