Global trade forecasts

Friday, 04 February, 2022 Food From Poland 38/2022
Renata Juszkiewicz, President of Polish Organization of Trade and Distribution (POHiD)
Trade in 2021

2021 in trade was a period of relative stabilization, due exclusively to the actions taken by the industry. Trade companies have started regarding the pandemic as a phenomenon of continuous nature, forcing them to reorganize the way they run their businesses so they can respond flexibly. However, this does not change the fact that every restriction, be it tightening of customer limits in stores or lockdowns, is extremely onerous and severe to the industry, as it translates to a lower number of customer visits in stores and an outflow of some consumers to the e-commerce channel. A serious challenge to traders is posed by disruptions of global supply chains, bringing about limitations in the availability of components, as well as increases of raw material prices and freight rates.

The industry has put enormous effort and expenses into maintaining the continuity of the supply of food and essential articles to stores, ensuring the safety of employees and customers, and implementing innovative solutions to meet the expectations of consumers who wish to do quick, safe and convenient shopping during the pandemic. These include self-service checkouts, shopping apps, sales in the online channel or in the Click&Collect model, and non-cash payments, among other things. All of these solutions are becoming increasingly common and – as stressed by traders – are absolutely essential today if a company wishes to maintain its competitive advantage. Trade chains associated in the Polish Organization of Trade and Distribution (POHiD) have increased the number of self-service checkouts in their shops to 8,500. Their safety expenditures reached PLN 420 million. They also granted a pool of benefits amounting to PLN 290 million to their employees for working under pandemic conditions. They conducted more than 500 charity actions aimed at helping those most in need.

Human resources are shrinking due to demographic processes, which is the reason why the trade sector has been struggling for many years against the growing problem of personnel shortage. The pandemic contributed to the consolidation of this unfavourable trend, resulting in the reduction of the number of foreigners coming to Poland, who could provide an efficient remedy to the employee deficit on our market.

The recent years, including the current year, have brought increased legislative pressure and an increase in the fiscal burden imposed on the industry. Its amount is already approaching 20 levies. In 2021 alone, among those that came into force were business tax, sugar fee, capacity fee, advertising tax, and CIT for limited partnerships. The industry’s condition has been considerably impacted by the record growth of inflation, which reache the level of 7.7% in November. Trade companies are struggling with price increases in the purchase of commodities from manufacturers and suppliers, as well as with high operating costs related to the growing prices of fuel, gas, electricity, packaging, or labour.

Trade in 2022

The predictions for 2022 are, unfortunately, far from rosy. Market experts predict more difficulties in global trade chains, progressing employee deficit, as well as further growth of inflation and operating costs. Traders claim that the new burdens for the trade, scheduled by the government to start from the next year, such as the minimal income tax introduced under the Polish Deal, the digital tax, the carbon pricing, or increased excise tax for alcohol and cigarettes, will reduce the profitability of the industry, to ultimately result in a drop of investments and increased price pressure. It should be emphasized that since the beginning of the pandemic, despite difficult conditions, trade chains associated in the Polish Organization of Trade and Distribution (POHiD) have maintained their price competitiveness, protecting their consumers against large increases of food and industrial articles. However, this is becoming increasingly challenging. Starting from next year, the industry will also be forced to stand up to new ecology-related challenges. The direction of these measures and the final shape of the obligations to be imposed on companies will be determined in the package of environmental laws transposing EU directives into the Polish law, regarding, among other things, Single-Use Plastic, Closed-Loop Economy, or Extended Producer Responsibility.

Along with the coming into force of the amendment of the Sunday Trading Ban Act since 1 February 2022, large-surface trade will lose an opportunity to improve its condition, weakened by the pandemic, inflation, and excessive fiscal burden.

In such a difficult and unprecedented situation in which trade has found itself currently, close cooperation with the government is necessary. The industry will need a stable and predictable legislative environment, and above all, alleviation of the tax pressure inhibiting further development of the sector. Traders also demand government aid in the area of regulations facilitating the employment of foreigners.

Renata Juszkiewicz, President of Polish Organization of Trade and Distribution (POHiD)

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