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Forecast: Up to 40% of retail stores in Finland could go bust by 2030

Competition from online retailers will bring major upheaval to the sector in the next decade, a retailer lobby group warns.

Paketissa olevat bokserit hyllyssä
Although revenues in the retail sector have grown since the beginning of the year, employment has already begun to decline, the Finnish Commerce Federation said. Image: Lucas Holm / Yle

The structure of Finland’s retail structure is changing and not in favour of brick-and-mortar stores, says the Finnish Commerce Federation. The retail sector lobby group said on Monday that while industry revenues have been rising over the past few years, that trend is not likely to continue and growth will begin to fall over the next couple of years.

In an industry forecast, the federation said that by the year 2030, more than one in five retail stores will simply disappear from the Finnish landscape – and at worst that proportion could reach 40 percent. It added that urban specialty stores in particular would be hard hit by the development. The organisation cited foreign online stores as the biggest threat to such outlets in Finland, as well as in Sweden.

"No wonder that Sweden fears the arrival of Chinese online retailers and Amazon in the Nordics. Amazon has quickly taken over consumer markets in whatever western country it has gained a foothold," said the organisation’s head economist Jaana Kurjenoja.

"We have spoken about structural changes in retail and digital transformation for a long time, but now those changes are being seen more concretely and are being manifested as predicted. This needs to be recognised more in national and EU-level decision-making," managing director Mari Kiviniemi noted.

Future jobs on the line

The retailer lobby said that it is concerned about the sector’s future ability to provide jobs, noting that it is Finland’s largest employer, especially of young people. Furthermore, it added that it accounts for 10 percent of national output or GDP.

The federation said that since it is facing intense global competition, the sector should not be subjected to additional obligations or regulations that are not equally applied to foreign players. It also called for the dismantling of local monopolies to improve efficiency in the sector.

The group cited the cost structure borne by physical outlets and wholesalers as an encumbrance in the face of cut-throat price competition in international markets. It declared that there should be no moves to add to the cost burden by introducing additional taxes or regulation. A readily-available labour force as well as work-based immigration should also be safeguarded, the organisation added.

Kiviniemi described as "very important" the government's decision to draw up a report on the retail sector, noting that it could yield options for long-term strategic development of the industry.

"However, impartial expert work should begin immediately," she concluded.

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