IELKA: One in four companies in the retail trade and food industry expects losses in 2022

Wednesday, July 13, 2022

---

As it turns out, the price increases, and the effort to contain prices have greatly influenced the findings of this research. More specifically, 56% of businesses expect a worse financial result in terms of their profitability in 2022, while only 11% expect a better financial result. 33% of businesses have either not yet formed a clear picture, or do not expect any financial change. One in four companies in the retail and food industry expect losses in 2022, while one in two companies expect profits, but even of these, half of the companies expect marginal profits below 2%.

 

Prices in energy costs are the most important factor in price increases

According to the executives who participated in the IELKA survey, the cost of energy is the most important factor with 100% of the respondents recognizing this cost as influencing prices by 15% too much or 85% too much. Additionally, particular weight is given to international prices of raw materials with 98% and transport costs with 97% related to fuel. 47% of executives believe that the war in Ukraine has too much of an upward effect on product prices. The remaining factors recorded in the survey also have an increasing effect on prices according to market executives, but with much less intensity, namely indirect taxes, labor costs, the monetary policy of the European Union, the costs of the pandemic and the cost of borrowing.

 

Figure 1: Assessment of the financial result of retail and food industry businesses

Figure 2: Factors affecting prices

They absorb the appreciations

Nine out of ten businesses have absorbed a quarter of the markups they have received from their suppliers and not passed them on to their customers. 26% of businesses have absorbed up to 10%, 26% have absorbed 10 – 25%, 27% have absorbed 25 – 50% and 20% over 50%.

 

Figure 3: Absorption of appreciations

 

Source: Food Reporter #0763/2022-07-05