Going out of business in Greece: 1,000 stores per week

greekreporter.com ^ | 05/10/2012 | Kathimerini

[MamaDearest]

ATHENS – While Greek politicians squabble over who can – or can’t – form a coalition government in the wake of May 6 elections in which anti-austerity rage caused a fractured result, more than 1,000 businesses in Greece are closing up shop each week, victims of a deep recession caused by pay cuts, tax hikes and slashed pensions that have made many Greeks simply stop spending on anything than goods needed for their survival.

Figures released by the National Confederation of Hellenic Commerce showed that retail sales during the Greek Easter period were down 18 to 21 percent in the apparel/footwear category and 11-13 percent at department stores compared to last year, despite offerings of up to 60-90 percent off. Shoppers in major retail stores reported seeing almost no one buying in recent days as political instability over the elections and expected new elections have rattled Greeks as much as European officials who fear Greece could be forced out of the Eurozone of countries using the euro and return to its ancient drachma, completing the country’s economic collapse. Turnover was also down from 2011, declining to $5.82 billion from $6.46 billion in 2022.

The newspaper Kathimerini reported that the the slump in local retail operations is also reflected in company results which until recently had been registering rising turnovers. Attica Department Stores, a major figure downtown, saw a decline in sales at its downtown Athens store which reached 17 percent during Easter and 15 percent in the first quarter of the current year. Attica’s Managing Director Constantinos Lambropoulos said that more businesses will close this year as figures released by the European Commission showed that the Greek retail sector is going under with projections for the first six months that another 26,000 businesses will close, in addition to more than 111,000 that have already shuttered. Athens has the highest vacancy rate in Europe.

Vassilis Masselos, president of the Hellenic Fashion Industry Association said the problem is getting worse as foreign buyers and suppliers don’t believe they will be paid by Greek businesses at the same time that local demand has “collapsed.” Even some of the country’s major department stores are bleeding money, such as Notos Galleries, which reported a 15 percent drop during Easter, destroying the company’s profit projections for the year. Anxious company executives said they will try to get customers buying again by collaborating with furniture group Neoset at its Notos Home store on Kotzia Square in central Athens, among other ventures.

Fokas department stores are facing some major financial difficulties which have made the company unable to pay workers, who are protesting and trying to receive unpaid wages. The company said it may have to slash prices even further, but such is the fear in Greece that stores practically can’t give products away because fearful Greeks are hunkering down. If a government can’t be formed, Greece could collapse completely economically and be unable to pay workers or pensioners or import food, fuel and medicine, a catastrophe unseen since WW II.

Stores are cutting prices but unable to attract buyers. Businesses such as apparel firm Raxevsky and furniture stores Habitat, Entos and Neoset are lowering prices by 20 to 30 percent. Kathimerini said that research conducted by the Boston Consulting Group found that 73 percent of Greek consumers are consuming far less, 90 percent are spending less on goods which are not defined as necessities, while 75 percent are now spending more time seeking out lower prices. An exception is the country’s rich elite, who are continuing to profit and spending without regard to the crisis.

[MamaDearest]

Emphasis mine - Hmmmm, Obama insisting on higher taxes, pay cuts, job losses, union pensions, economy in the gutter while leadership golfs, vacations, parties with celebrities?

[DocRock]

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[DB]

This is what happens when you feed and grow your dependent class to the point of consuming everything. No different than feeding the wild animals in the forest. When the food runs out they starve because they no longer know how to fend for themselves.

Good intentions that repeatedly result in great pain and suffering. When will man learn?

[OldPossum]

Good post. Very insightful.

[ExCTCitizen]

An exception is the country’s rich elite, who are continuing to profit and spending without regard to the crisis.

Hmmm... is the Greek version of Warren Buffet telling the GREEK GOVERNMENT to tax him and others more???

[11Bush]

The difference is the wild beasts of the forest will not burn down your city in a fit of rage when you stop feeding them.

[bgill]

Time to get those businesses online and selling to other countries. Notice it’s not agriculture and good stores not going under. With nearly everyone around the world in economic slumps, the Greece tourism is likely to be hurt so they shouldn’t count on that to help out this summer.

[Moltke]

Shoppers in major retail stores reported seeing almost no one buying

I'll take "what's wrong with this sentence" for 500, Alex.

[BfloGuy]

Austerity -- tax increases and spending cuts will cause a recession if not accompanied by something else to spur private economic growth. Labor and environmental regulations must be relaxed; taxes on capital must be reduced.

Greece must cut its government and grow its economy. Austerity, alone, won't solve anything. It probably just makes things worse.