According to the National Debt Register (KRD), the debt of the Polish retail sector has already reached 2.6 billion PLN. More than half of this amount is owed by sole proprietorships. The sector’s debts have grown by nearly one-fourth over the last three years, reaching 1.4 billion PLN. “And this is not the end of the problems for small shops. Added to this is the deposit return system, which may generate additional costs and affect competitiveness,” warns the portal krd.pl.
Overdue liabilities of small retail shops have been rising for months. A year ago, they amounted to just under 1.3 billion PLN, and now they have reached 1.4 billion PLN.
“The smaller the company, the more it is affected by operating costs, such as rent, storage costs or hiring staff. Additionally, small shops must compete on margins with large retail chains, which, due to their scale, can offer significantly better prices to customers. Another factor is the development of e-commerce and changing consumer habits, as more and more people prefer to shop online. According to data from the National Chamber of Commerce (KIG), in September this year online sales grew by 8.8 percent year-on-year, surpassing the growth of overall retail sales (6.6 percent),” reads krd.pl.
As if the existing problems were not enough, in October the government introduced a deposit return system aimed at increasing recycling levels and reducing the amount of waste ending up in landfills. When purchasing plastic bottles up to 3 litres, aluminium cans up to 1 litre and reusable glass bottles up to 1.5 litres, customers will pay a refundable deposit. Only large shops with a floor area exceeding 200 square metres that sell products in such packaging are obligated to join the system and run collection points. Smaller shops must accept only reusable glass bottles, provided they offer them for sale. For all other deposit-covered products, participation in the system is voluntary. Nevertheless, as krd.pl notes, market pressure may force them to join the programme. The implementation of the deposit return system may become yet another cost and challenge for small retailers.
“As indicated by the Polish Chamber of Commerce (PIH), if a shop does not join the programme, customers will have yet another reason to choose large stores for convenience. Based on experiences from other countries, the Chamber forecasts that revenues may drop by as much as 30 percent,” the portal warns.
According to the National Debt Register (KRD), the deposit return system may entail additional expenses. Installing software in shops, assigning employees to handle collections, and “pre-financing” the deposit while waiting for the customer to buy the product and pay it – all of these are real challenges for the smallest businesses. “Meanwhile, small retail shops already owe their creditors 681.4 million PLN. There are more than 22,000 of them listed in the KRD, and the average debt is nearly 30,000 PLN. The record holder has accumulated more than 3 million PLN in debt. For a small business, even a temporary loss of liquidity can be a threat, which is why companies are looking for ways to avoid trouble,” reports krd.pl.
Sole proprietorships engaged in wholesale trade have accumulated 759.6 million PLN in overdue liabilities. Nearly 17.9 thousand of them are listed in the KRD, and the largest debtor owes 6.8 million PLN.