Losses of Ukrainian retailers as a result of hostilities amounted to at least $1,7 billion

Losses of Ukrainian retailers as a result of hostilities amounted to at least $1,7 billion

08.06.2022 11:15
  3014
Іван Зайцев

This can be corroborated by the study conducted in May by the Retail Association of Ukraine and the Ukrainian Council of Shopping Centers. The evaluation included 295 trading companies – large networks and small business owners. The total losses on these network retailers is $1,7 billion.

In May 2022, the Retail Association of Ukraine and the Ukrainian Council of Shopping Centers studied the losses of retailers in Ukraine during two months of hostilities. These data were also used in the release of the Russia Will Pay Project, which is supported by the Office of the President of Ukraine, the Ministry of Economy, the Ministry of Reintegration of the Temporarily Occupied Territories, and the Ministry of Infrastructure. Trading companies were asked to estimate their losses in real estate, equipment, commodity stocks and inventories, etc. for the period from 24 February to 23 April 2022, excluding lost profits. The general population of the study consisted of 295 network retail companies in Ukraine, represented by 28,549 stores and retail space of 15.4 million square meters. In particular, the study presents small companies with 3 to 20 outlets (43%), medium-sized companies (21-50 outlets) – 25% and large networks with more than 50 facilities (32%).

“Occupation of the territories of Ukraine and retail losses caused by hostilities due to physical damage to stores, destruction of warehouses and goods is a situation that is not the first time since Ukraine’s independence. Everyone remembers 2014, when trading companies suffered significant losses due to the occupation of Donetsk and Luhansk regions, as well as the annexation of Crimea. And if then there were no precedents of compensation for losses, now the business got this chance,” says Andrii Zhuk, the Co-Founder and Chairman of the Retail Association of Ukraine.

The total direct losses in the trading environment is estimated at $1,7 billion (on average $1000 per 1 square meter of the area of ​​damaged outlets, or $594 871 per one damaged store). The study has shown that 41% is accounted for by the damage to buildings, store premises, utilities, finishing, etc. out of $1,7 billion in losses. Losses on inventory balances in stores (estimated at purchase price) and equipment losses amounted to 17%, losses on goods in warehouses – 14%, losses on warehouses, industrial, office buildings/premises and equipment therein (owned by companies) amounted to 9%, another 2% are other losses.

“$1,7 billion is not all the direct losses suffered by Ukrainian retail. At this stage, we have evaluated only the largest and most active network companies. Many small regional networks, non-network companies, outlets in the markets remain unaccounted for. Therefore, the real direct losses will be much higher. In addition, we have not yet estimated the total losses of retail, which should include lost profits for 3 months of the war, given their steady growth. As a result, the amount can be 3-4 times higher,” said Maksym Havryushyn, Chairman of the Ukrainian Council of Shopping Centers.

In terms of product groups, food chains suffered the most – 60% of losses in the industry. In second place, fashion retailers, which losses amounted to 11% in the trade industry. The three most affected trade sectors include sellers of brown and white goods – 7% of losses in the industry.

According to the study, as of 23 February 2022, on average 96 outlets operated for one company, the average size of the outlet is 540 square meters. Two months after the outbreak of hostilities, 70% of pre-war outlets continued to operate on 74% of the pre-war area (i.e. 20,060 stores with a total area of ​​11.4 million square meters out of 28,549 stores from the pre-war period). During the two months of hostilities, 2,910 outlets with an area of ​​1.6 million square meters were significantly damaged (10% of outlets from the pre-war number and 11% of the area), 30% of outlets remained closed two months after the war.

 


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