Greek shoppers look but don't buy as economic crisis bites

 

Helena Smith in Athens

guardian.co.uk, Monday 30 January 2012 15.02 GMT

Athens shopping streets may be busy, but thousands of stores are going out of business in the sector's worst crisis in decades

Ermou, Athens – the shopping street has been bustling, but many in Greece are now opting to window shop. Photograph: George S de Blonsky/Alamy

In recent weeks Antonis Megoulis, who heads the national confederation of Greek commerce, has been playing spot the shopping bag.

Standing on Ermou, an Athens street that once commanded Europe's highest rents from retailers, he counted the number of shopping bags carried by passersby. "If you do it yourself you will see there are hardly any at all," he said. "Consumers are out there looking but no one is buying."

As winter sales began in Greece, Ermou was certainly bustling, but even with prices slashed by as much as 70%, cash-strapped Greeks were still more interested in window shopping than snapping up goods.

Consumers suffering wage and pension cuts, rising inflation and a recession of a severity not seen since the second world war ensured that shops had one of their worst Christmases on record, with retail sales down 30% on the previous year.

"It couldn't be worse," said Megoulis. "Our monthly surveys are shocking reads. Sales are down, businesses are closing every day and there are no signs of optimism on the horizon."

To say that the country's retail sector is experiencing its worst crisis in decades would be an understatement. Since mid-2009, when the global economic slowdown began to bite, until mid-September last year, some 65,000 stores have been forced to shut their doors.

Tough austerity measures, including a wave of new levies and tax increases demanded by the foreign lenders keeping the nation afloat, have pushed another 50,000 to the brink of bankruptcy.

About 55,000 employees working in small- and medium-sized enterprises (SMEs) – the mainstay of Greek enterprise – have lost their jobs with many more to follow, according to the confederation of Greek commerce, Esee.

Esee does not hold out much hope the discounts on offer until the end of the month will see sales improve. "What we are seeing is a very serious liquidity crisis," said Megoulis. "People have been pushed to their limits. They haven't got any money to spare."

With Greece's economy expected to contract by a further 6% this year, Esee and other independent chambers of commerce estimate as many as half of the remaining 324,000 SMEs will soon be forced to shut – in sharp contrast to big chains such as Kotsovolos, Greece's leading specialist electrical retailer, which was acquired by Dixons in 2004. Its 102 stores are doing relatively well.

As SMEs account for 85% of employment in the private sector, the closures will exacerbate the economy's other silent killer – joblessness – also at a record high, of 18.5%.

"Most of those affected are women as they make up the vast majority of the retail sector's workforce," said Dimitra Gournari, who heads Esee's statistics office. "Seventy percent of the newly unemployed are female and young."

Worse still, with little or no vocational training available to redirect them, the prospect of future job options are few and far between.

Outside major cities, where privately owned businesses are also run as family affairs, retailers frequently keep Greek rural areas alive.

Fears abound that if the sharp downturn continues, with more locally owned enterprises replaced by foreign-owned monopolies, it won't only be the marketplace that suffers but also Greek consumers. The eradication of Greece's middle class could also spell political trouble as disenchanted shop owners turn increasingly to extremist parties on the left and right.

"If small- and medium-sized businesses disappear and multinationals, which can better afford to work at a loss, begin to dominate the market, the lack of competition will inevitably mean higher prices," said Megoulis. "What we are seeing is a reshaping of Greek society but in a way that is haphazard, disorganised and frankly frightening."

While clothing and footwear sales have dropped precipitously, sales in the food and drinks sector have fared better. All over Athens, new restaurants are doing well – testimony to the adage that even in hard times people continue to splash out on food and drink.

"We're busy, at times too busy," said John Higgins, an American who opened Mama Roux, a no-nonsense restaurant specialising in international cuisine on a busy boulevard with a view of the Acropolis.

But it is big brands such as Nike, which has just opened a giant store in Syntagma Square, and Marks & Spencer that look set to emerge as winners in Greece's economic crisis. Customers emerging from the UK retailer's Ermou store last week were among the few in possession of a shopping bag.

Greek shoppers look but don't buy as economic crisis bites | World news | The Guardian

Any source