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The department store chain Inno puts half of the shop staff in its 16 Belgian branches on temporary unemployment until the end of June. According to Inno, the shopping behavior of consumers has changed due to the succession of crises.
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In the 16 Inno locations in our country and the head office, temporary unemployment has been applied to 50 percent of the shop staff since Monday. A quarter of executives and department heads have also been placed on temporary unemployment. Inno uses the government framework for temporary unemployment due to corona. The measure applies until the end of June. Only in the week of May 2, when the group celebrates its 125th anniversary, is everyone allowed to work.
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Consumers do what they always do in periods of uncertainty: postpone purchases.
Gino Van Ossel
Retail expert Vlerick Business School
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In a statement, Inno points to the changing shopping behavior of consumers. ‘We have just come out of a crisis and are entering another, a war in Europe,’ says trade unionist Valérie Van Walleghem (BBTK). ‘That has an impact on inflation, oil prices and energy, so consumers are quite cautious.’ According to the management, the measure would be stopped as soon as the situation recovers.
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An important nuance is that a large part of the staff is on the payroll of clothing brands for sale at Inno. ‘The shoe, textile and underwear departments are outsourced,’ says retail expert Gino Van Ossel (Vlerick Business School). ‘But that doesn’t make the signal any less alarming. Inno does not take such a measure lightly. The situation is not yet dramatic, but there is considerable unrest in the retail sector. Nobody knows what’s coming.’
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Labor
It is not surprising that chains such as Inno now attract fewer people. ‘Consumers do what they always do in periods of uncertainty: postpone purchases’, says Van Ossel. ‘We see these signals of adapted behavior in all sectors, but certainly in fashion. It already came out of a difficult corona period. February is also traditionally the weakest month for fashion. And then the war broke out in Ukraine as well.’
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The government framework for temporary unemployment due to corona is a handy lifeline. ‘You can quickly switch to it and the staff retains part of their income,’ says Van Ossel. ‘It is possible that other chains will follow, but you still have to take into account the shortage on the labor market. Companies that put employees on temporary unemployment run the risk of losing them permanently.’
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It is also not the case that the malaise in the clothing sector is complete. Van Ossel: ‘Many players have thrown in the towel or had to downsize considerably. That means whoever remains is stronger and able to stabilize their position. Think of the Dutch chain van Haren (which recently acquired 38 Brantano stores, red.).
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Companies that put employees on temporary unemployment run the risk of losing them permanently.
Gino Van Ossel
Retail expert Vlerick Business School
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thunderclouds
Thunderclouds have been hanging over Inno for some time – which sells clothing, shoes and interior items in its 16 Belgian branches. Galeria Karstadt Kaufhof, the German parent group of the department store chain, received another quarter of a billion euros in state aid of the German government. It pointed to the impact of the corona measures, but according to critics, Galeria was already in troubled water before the outbreak of the pandemic.
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Although the Belgian subsidiary has long been one of the strongholds of the group, Inno shares according to the most recently published annual accounts join the clap† In the broken financial year 2020, Inno noted 20.3 million euros in the red. It recorded a turnover of 247 million euros, almost a quarter less than the 321 million in 2019.
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Because Inno did not have an online store, it ran into payment problems due to the lockdowns and Galeria granted it an emergency loan of 6 million euros. Inno arranged a credit line of 14 million euros with Belfius, which was later increased to 17.3 million. It is not known whether that line of credit was also drawn. Last year Inno got a webshop and it came with a renewal operationbut that did not prevent the department store chain from being in trouble again.
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