Swedish retailers have sold more than ever this year, but profitability goes down due to the large summer sales.
And next month, it will be more expensive to hire young staff.
Now, the indicators of future faith drops to the lowest level this year.
The Swedish retailers Future indicator continues to fall, from -16 in June to -21 in July, which is the minimum level so far this year. The reason for the weak faith in the future is that the industry is seeing a decline in profitability and planning fewer new hires in the next three months. It shows the Svensk Handel’s Commerce Barometer.
The weak profitability is partly due to the summer sale that affects many traders’ profitability. 61 percent responded that the sale has a negative effect on the store’s profitability. At the same time more goods were sold on sale.
In July were merchants also asked about the sale and its impact on sales and profitability. Customer expectation to be able to shop on sale have increased during the past three years. Three out of ten retailers say they now sell a larger proportion of goods on sale than three years ago.
”With constant sales we’ve created a monster that increases store sales short-term, but in the long term create a consumer who expects constantly low prices and erode the industry’s profitability,” says Jonas Arnberg, chief economist at the Svensk Handel.
Expectations of an increase in sales remained at a positive level, but even in this area the confidence has decreased since the previous month.
”All the indicators are pointing down as employment fees will be raised on August 1st. It will be a tough fall for Swedish youth job creator number one, retail,” says Jonas Arnberg.