Analysis: It is, to say the least, a challenging equation

Once again, the Christmas trade will set a record - just like every year. This is because the increase in Christmas trade is driven by population growth and the rate of price increase (inflation). In relation to GDP, the value of everything we produce and do in Sweden, instead, diminishes the importance of retail.

That being said, Christmas trading is by far the most important time of the year for the Swedish trading industry and the one that can turn a loss into a profit for the full year. This year, the negative interest rate and increased housing prices are believed to make the Swedes feel richer. At least that's the hope.

In spite of a long economic boom, there is a crisis in the retail trade and the clothing trade is particularly pressured. In the autumn report flood, it was noted that several clothing chains are struggling and have to take in new money from the owners, the profits and also go into reconstruction to manage their debts. Often, a reconstruction means that both staff must be terminated and unprofitable stores closed. The reason is by no means new but has accelerated in recent years. We shop more and more online and the fashion world is globalized. It pushes prices both in-store and online and makes it difficult for companies to catch up. In addition, we are more aware that consumers and sustainability have sailed up as a factor when we shop.

Here in Sweden we see several examples of pressed chains in both sports and fashion. The Norwegian sports chain XXL has received both new money from the shareholders and a profit warning. The Twilfit underwear chain is under reconstruction and is closing stores. Retail and Brands, which operates among others Brothers and Polarn o Pyret, are suffering a considerable loss and have recently changed the CEO.

To meet the fact that we are increasingly shopping online, US sales Black Friday and Cyber ​​Monday are now increasingly important for the electronics trade. Last year, a concern about housing prices made us hold harder on the money when it came to cheap goods like electronics gadgets and toys. Then Hui bombed his analysis and the Christmas trade, which is defined as the trade in December, became significantly worse than expected. But it has also become more difficult to define what Christmas shopping really belongs to.

The new normal is that the Christmas shopping now starts with a sale at the end of November / beginning of December at the same time as it ends with a more extended mid-day sale that can last until January or even into February. This means that the stores sell less and less at full price and squeeze their profits. Last year, it was the clothing chain JC that went bankrupt after a heavy Christmas trade. The question is whether we will see more victims this year. Increasingly less visits to stores, which means that more clothing chains have to reduce their rental costs for expensive store premises, the number of employees and reduce the size of the stores. And that while companies must invest in online platforms and make trading in stores more experience-based in order to have a sigh of survival. It is, to say the least, a challenging equation.