De Facto

Ieskats 31. janvāra "De Facto" tematos

De Facto

De Facto

Veikali meklē iespējas pārdot iekārotās preces; EM sola risinājumus

LTV's De Facto: Plans being drawn up to reopen stores as businesses struggle to survive

Take note – story published 2 years ago

Latvian Television's De Facto investigative show reported January 31 that plans are being drawn up by the Economics Ministry to re-open the retail sector as businesses face increasing strain under current regulations.

According to De Facto the proposals include not only broadening the range of retail goods available to purchase in person but the reopening of services provided by hairdressers and beauticians.

The proposals are likely to be put to the cabinet for discussion this week but will not be put in place until the epidemiological situation has improved considerably, De Facto said. 

Draft regulations suggest stores will have to provide at least 25 square meters of space per visitor, meaning many smaller stores will be able to accommodate just one person at a time. Larger stores, including shopping centers, will have to set up store visitor tracking systems, as well as designate a responsible person who will have to monitor visitor numbers and flow at all times, and be a contact point for police enforcement of the rules.

"We want a conceptual agreement to be reached as soon as possible, and then give businesses time to implement these new norms. [This will allow us] To have the system in place as soon as possible, when the epidemiologists will allow it to be implemented," said Minister of Economics Jānis Vitenbergs.

The draft proposals also envisage that if stores flout the regulations, they can be shut down for a period of ten days as a form of punishment.

Bending the rules

However, in its report, De Facto also demonstrated how loopholes in the current law allowed people to buy goods not on the list of prohibited goods at a hardware store if they possessed a discount card in the name of a business rather than an individual. Businesses and other legal entities can buy the full range of goods on offer, while individual persons cannot.

Meanwhile police have most often been called in connection with violations in the use of masks in stores. Since November 9, 900 proceedings have been initiated on this single issue.

Summarizing people's experiences of shopping in different stores, De Facto concluded that several 'creative' solutions are being used in places where both allowed and restricted product groups are located in close proximity. For example, when picking up a product that is not allowed in a store, a person is directed to a place that is designed as the collection point for distance purchases. Elsewhere, a seller asks shoppers to send a text message to the number listed at the checkout to qualify it as a distance purchase. Distance purchases are unrestricted.

The police have also initiated cases based on such violations, but only in a few cases, and police noted that there can be a "stretched concept of distance selling".

"It is clear that with the presence or arrival of the police, these activities are stopped immediately. Here, a lot of responsibility should be taken by the merchants themselves - to be responsible for what they do," said Normunds Krapsis, Deputy Chief of the State Police.

But many stores who have suspended their operations face severe hardship, even if they have stringently followed government guidelines.

Frustration at speed of support

Used clothing retailer RDA operates 64 stores and employs around 250 people. It is also an important source of cheap clothes to families across Latvia. It has closed all its stores since this was a legal requirement but distance selling is not economically viable as the cost of postage or delivery is in many cases greater than the cost of its clothing items.

Under current regulations it could in theory sell second-hand hats, scarves and gloves but none of its other garments, shoes and accessories. Opening stores on such a basis would make no sense, either.

RDA's employees receive downtime benefits, and now the company has applied for a working capital grant. In one month, about fifty thousand euros are needed to fulfill contracts with foreign partners. But up to 170 thousand (in the winter months) go on rent and utilities alone. The stores are still there and landlords still demand their rent.

"To be honest, it is very, very difficult,” said Eva Vidovska, Director of SIA RDA, suggesting promised support from government has not been delivered as quickly as necessary to ensure companies can survive the crisis.

Since December 21, the State Revenue Service (VID) has received more than four thousand applications for support from retailers. About two hundred decisions are being made each day.

"Of course, the big difference with grants is that it is state aid, and there the evaluation procedure is much, much more complicated. There is a need to assess, firstly, more criteria... and, moreover, everything that relates to European requirements - that is, firstly, the size of small, medium-sized and large companies, secondly, their affiliates, partnerships, thirdly, those in difficulty or not.” said Santa Garanča, Director of the VID Tax Promotion Department, admitting that the sudden need to conduct such unfamiliar evaluations on a large scale had inevitably meant a steep learning curve.

An initial lack of clarity about the support mechanisms available and subsequent tinkering has lead to what De Facto called an "absurd situation" in which entrepreneurs who did not apply for support grants in November and December, can no longer apply for them. However, support for January is not yet available, as the latest rules await approval from the European Commission. It is not known when precisely this will happen.

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