György Vámos: Loan moratorium helps avoid big drop in retail sales

English2021. jan. 23.Növekedés.hu

Black Friday is an artificially inflated advertising campaign, György Vámos, chief secretary of the National Trade Association told növekedés.hu.

As online shopping has picked up due to the pandemic, we might get the impression that almost all people do their shopping on the internet. However, that is far from the truth.

As György Vámos pointed out to növekedés.hu, e-commerce has been growing by around 30-40 percent annually in recent years. There was a bigger jump at the height of the pandemic, but the average output in the first 11 months of last year barely exceeded the 2019 growth rate. In spite of the growth of recent years, the e-commerce market share is only around 10 percent, so customers still spend most of their money in traditional stores.

E-commerce will obviously continue to grow steadily in the future, but it is crucial how open customers will become to digitization, as the extraordinary situation brought about by the epidemic will not prevail.

It is also a fact that the competition between online stores is so fierce that they can’t keep up with each other without constant promotions, and that is why the superficial observer may have the impression that all shopping is done on the internet”. Black Friday is only an artificially inflated advertising campaign and, in fact, there are numerous online stores which are making a loss

Mr Vámos said, adding that 2021 will undoubtedly be more favourable for retail than 2020 was.

Depending on the virus situation, the market is likely to make a bigger step forward in the second half of the year; even a 3-4 percent expansion is conceivable in a best case scenario.

The number of stores will decrease, however, due to the unfavourable conditions in 2020. This year the situation will be enhanced by the loan moratorium for the first six months and the subsidies related to housing, giving a boost to the DIY, building materials, furniture and home furnishings markets as well.

On the verge of cash free retail

All retail outlets are obliged to provide an electronic payment option with all online cash registers from January this year. Related to this György Vámos noted that the government made the right decision, although there might be small businesses that find the transition challenging.

For them, in addition to possible market losses and a decline in turnover, fees charged by banks for bank card payments can also be a problem.

He added that electronic payment could cover up to 50 percent of consumer spending on average. A significant proportion of shoppers still insist on paying in cash.

About last year's performance, he said

according to the numbers of the Central Statistical Office, the volume of retail sales was 100.2 percent in the first 11 months, reaching the level of the previous year; although there was considerable volatility in terms of commodity groups and the specific phases of the virus situation. The decrease in retail output was 10 percent in April, followed by a 3 percent contraction in May; from August to November the reduction was smaller, so the retail sales turnover did not shrink at current prices because of inflation.

The annual output is expected to be the same as it was in 2019, although a small decline of around 1 percent is conceivable.

This is a reasonably good result given the roughly 6 percent decline in the economy, and personally, I believe that the moratorium on loan repayments played a decisive role in it. The food segment even managed to grow, while in the non-food segment some product groups saw double-digit declines

Mr Vámos said.

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