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Business / Finance

Little tragedies. What is left of small business in Italy after quarantine

Banki.ru: themes of the day 14.05.2020 at 21:00

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40% of small shops, bars, trattorias in Rome did not live to see the end of the year. Stop business for a few months and stringent rules operating in the absence of the former stream of customers dealt a most severe blow on individual entrepreneurs and small businesses.

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may 13 and 14 in Italy there was a strike of employees of gas stations. Two months quarantine of sales fell by 92%, however, the government did not allow them to close or reduce hours of work. Now the owners of gas stations waiting from the state for some help. And not only them. The quarantine has hit the country, the Foundation of the economy which is small and medium businesses. Quarantine ends, but not all enterprises are ready to start work. Someone did not survive the closing, and someone will not survive open in the new conditions.

Retail trade in Italy fell in March: minus 21.3 percent compared to previous month and 18,4% compared to March 2019. Most strongly by 36% in money terms decreased sales of non-food goods. In this group the most affected sellers of clothing and fur (down to 57.1% compared to March 2019), games, goods for sport and active leisure (minus 54.2 per cent) and footwear and leather goods (down by 54.1%). Sales of food products remained unchanged.

quarantine Mode changed and the sales channels: online sales grew by 20.7%, however, again it touched food. Remote sales of consumer goods fell during the same period by 40.5%. The reason is not only the reduction in demand from buyers, but in fact that major retailers such as Amazon, focused on the delivery of food. And the smaller the retailer, the more he suffered. If large companies, such as networking, sales fell 9.3%, the small stores lost an average of 28.2% of turnover compared to March 2019.

these figures published recently by the statistical office Istat Italy, there are real stories of people, the owners of those small shops and stalls. Add to this the many artisans lost their distribution channels. Owners of restaurants and bars, as well as farmers who supplied them the products, owners of salons and small hotels, tour companies and private guides... Small and medium-sized enterprises (with annual turnover up to EUR 50 million) provide jobs for 82% of employees in Italy and create 57% of GDP (in the southern regions of the country — 83%). And a considerable part of them was on the verge of death from coronavirus.

Stop business for a few months, uncertain until the last moment the new sanitary requirements and uncertain prospects for this year — a reality faced by small business in Italy.

the first Hard phase of the quarantine lasted from 10 March to 3 may. May 4 began the phased restoration work. Steel work construction and fashionable factories, restaurants, and bars began to serve in the "take-away". However, 800 thousand enterprises across the country remain closed. To work full time restaurants and bars had to start from 1 June, then planned opening of hairdressing salons, beauty salons and Spa. Under pressure from governors, the Prime Minister, Giuseppe Conte agreed to move the opening on may 18.

However, not all companies will open their doors to clients: many did not survive long closure, and others recognized that the resumption of business in the current environment will only hasten death. C may 8 to may 22 Istat conducts a survey of small companies all over Italy to gather as much information about their health and the effectiveness of state aid. Consolidated picture, we learn later, but some of its history is known now.

Restaurants: no romance

In the sphere of public catering of Italy, employs 1.2 million people in the country. Or rather, not working since March. And therefore did not earn.

"I protest, because Calabria is now dying more from starvation than from coronavirus!" — with these words the owner of the bar in Cosenza in southern Italy Giovanna the Mirabell chained herself in front of the private bar on the morning of 10 may in protest against the cancellation at the last moment the permission of local authorities to serve from may 11 customers of bars, if the tables are placed outdoors. Here it is necessary to clarify that Italian bar format is more like our cafe. It is the center of local social life, where in the morning Italians have Breakfast with croissant and cappuccino, and then during the day go to drink a Cup of coffee and to exchange a few words.

"I spent all my savings to convert your bar under the new rules, but now I need to close and sell coffee take-out only, and this in a region where the number of patients with coronavirus tends to zero", — says the Mirabell.

Calabria is actually one of the least affected regions — 1 138 cases by 1.95 million inhabitants (for comparison: in Lombardy, more than 82 thousand cases in the region's population of just over 10 million people). Two months ago, the Prime Minister shut down the entire country into quarantine and may indeed have saved the regions where at that time there were only isolated cases of the disease. However, two months later, he said that in and out of the quarantine regions simultaneously, which caused confusion the governors and the population: why are the regions where the incidence rate was at the level of, for example, Germany, can't go back to work, leaving closed their borders?

a Few days earlier in the North, in the centre of Milan, 50 owners and managers of bars and restaurants staged a flash mob, putting the empty chairs as symbols of their business affected by the quarantine. "We risk not to open: we need clear rules by which we are able to serve customers rather than just talking about partitions made of plexiglass. No restaurant can exist if he is allowed to serve only one client at a time," said restaurateur Alfredo Zini. One of the participants, Paolo Polli, said: "in Order to keep an average restaurant, it takes about 30 thousand euros per month, and, according to our calculations, under the new sanitary rules we will be able to earn only about 15 thousand. So it is better not to open at all."

Among the requirements that apply restaurateurs authorities to cancel the payment for garbage removal for the months that the restaurants were closed, to partially offset the cost of rent for the months of inactivity, to cancel the taxes in 2020, and to give the opportunity to use the maximum of seats in compliance with all safety precautions. Police fined protesters for 400 Euro each for illegal Assembly. Paolo Polli in protest now against the penalty remained on the square and declared a hunger strike until then, until the fine is not canceled.

the Claims that apply to the restaurateurs, similar to the claims of owners of beauty salons and clothing stores. In Italy very few of those who deny the coronavirus and the need for quarantine. However, the incidence curve goes down, the business time to open, but how? Entrepreneurs have no doubt of the need for strict safety rules. They only wanted to understand what the rules of the game to get ready for the official opening date. New podkarantinnoy state sanitary standards appeared only this week. If restaurateurs will execute them, they can open doors to customers on Monday, may 18. What are these rules?

the Number of seats in the restaurant is calculated on the assumption that each customer must have a minimum of 4 square meters, and the distance between tables should be at least 2 meters. If this distance cannot be met, in exceptional cases, allowed a smaller distance, but with mandatory installation between the tables of partitions of plexiglass. No paper menus: or electronically through a special application, or writing on the blackboard on the wall, or printed on a piece of paper for single use. No seats at the bar and no buffets. Everywhere beyond his Desk, the client must be masked. Allowed to make more compact tables for those customers who can document their relationship.

To the delight of restaurateurs, the list of mandatory requirements was not included remote measurement of body temperature of customers entering (the average cost of such devices in the Italian market — about 3 thousand Euro), and disinfection of footwear of clients (about 6 thousand euros). "In any case, I'll try to open one of its two restaurants to see how things go. Open both is guaranteed to fail," says the owner of two trattorias Sicilian cuisine Franco Russo.

Hairdresser: not available luxury

From June 1 to may 18 rescheduled opening hairdressing salons, beauty salons and Spa centres.

As in the case of restaurants, owners of these types of businesses don't know to rejoice or not. They also did not know until recently of new regulations and could not prepare for work. But those requirements, which was evident, for example, the distance between the clients, left no hope for the preservation of business in the same volume.

"Revenue in 2020 could fall by 80%, which entails a risk of close to 60% of hairdressers in Rome," says Secretary of the Rome branch of the National Confederation of artisans and small and medium sized businesses CNA Stefano di Niola.

All in Rome was 6 289 hairdressing, and in the capital region Lazio there are more than 19 thousand beauty salons and Barber shops, which employ about 43 million people. Mostly small companies with observance of the required distance will mean the service only one or two customers at a time. Not refusing to follow the rules of the company please state particular support. One of the proposals is to increase the working hours of hairdressing to 18 hours a day, seven days a week, which would allow us to serve more customers and to provide work for all the staff.

"In the end, the government would be beneficial to support us, because the Barber, not having the opportunity to work and earn money legally, will take clients at home where necessary to comply with sanitary norms impossible", warns the Manager of the barbershop in the historic centre of Rome, Luca d'amico.

Rome: something went wrong

However, instead of hairdressers support Rome received from the local authorities a fixed work schedule that threatens another loss. Mayor Virginia Raja issued a law according to which all enterprises, whether it's shops, hair salons and even gelaterias, have until June 21 to work on a fixed schedule. So, hairdressers and beauty salons are allowed to work from Monday to Saturday from 11:00 to 21:30. Sunday all companies, including supermarkets (even those who in time of peace worked around the clock), are allowed to work only until 15:00.

"because Of this law we risk losing up to 25% of weekly earnings", — has told the owners Gelateria and pizzerias, working at the bar. The specifics of their business is such that the peak of revenue accounted for by the second half of the day of resurrection. At the hairdressers, the figure is less, but the revenue they get at the weekend. "We are amazed at the complete lack of understanding of our economic difficulties," said the Rome branch of the CNA. Argument with the mayor is simple: limit the work of the enterprises will reduce the burden on public transport. "But one of the principles when choosing a hairdresser or cosmetologist is closer to home, this is not the kind of business that creates the Roman traffic, but now carries the additional threat of the spread of coronavirus", — emphasized in the Confederation.

before making decisions about this new schedule CNA published the sad figures: in General, in Rome the risk of closing before the end of the year loomed over 40% of small businesses, primarily shops, hotels and Gelateria. Carlo Bruni, owner of perhaps the most famous gelaterias in Ostia, Rome's district, located on the sea, is now trying to draw in tax resolution to do home delivery. Earlier this was not necessary: it Gelateria is in the pass-through location near the beach, in the warm season here was the same half-hour queue. But now the rules of being on the beach and swimming in the sea have not yet been adopted, no tourists, so we need to find ways of survival.

the Clothes in the fitting room — only with gloves and mask

Among retail shops finally open and the shops of clothes and shoes. According to the adopted rules, if the shop area less than 25 square meters, the room can be used by only one client. Customers should not be crossed at the entrance, to try things only in a mask and gloves, and complete disinfection of premises should be carried out every day.

a few days ago when new rules were not published, the owner of a clothing store on the street Casilina on the outskirts of Rome Claudia Giuffrida nerves were on edge. "So far there are no clear rules. What is required of us? I already bought a machine that cleans floors steam at 100 degrees, I bought a dispenser with disinfecting gel, set a partition made of plexiglass in front of the cashier. What else should I do? Colleagues say about ozonizers, some of the expensive apparatuses for the disinfection of clothing after trying them on, but no specifics no. What to do if a product is dropped on the floor? Is it possible to exchange? I have a lot of questions that have no answer. Therefore, it is not clear whether I will be able to open on 18 may and what it will cost me".

the Final rule was less severe than expected. In this respect, at present, you can consider yourself lucky. However, for all small traders remains a painful question of the solvency of customers. Do they have enough money to keep afloat shop Claudia Giuffrida? "I hope for the summer and that people will want to please myself," she says.

Tourism: it is better not to think

Special pain of Italy is tourism. It provides employment for 4.2 million people and generates 5.5% of GDP, and taking into account indirect effects — more than 13% of GDP. Because of the coronavirus under the threat of closure was 40 thousand enterprises and 184 thousand jobs. "My husband just got lucky: our B&B (small hotel format Bed and Breakfast) in the property, so Yes, we lose money, but hold on, says Monica Bossi from Verona. Two families, our friends, are made from scratch B&B on the leased area, decided to close customers in this year, still almost never happens."

For many businesses — not only in tourism but also in the field of restaurants, hairdressers, shops, etc. — the question of survival depends on the owned or leased premises located. In most cases, are leased. In most cases the owners are private persons that do not make allowances for the period of quarantine. Yes, the government promised to make tax relief for two months, but, firstly, this amount is not enough, and secondly, the money is never seen again.

When the statistical service talk about the losses of the tourism industry, as a rule, we are talking about hotels, and sometimes about restaurants. However, tourism is tied much more sectors. Not only catering, including gelaterias, and shops, communication services, transport, events. And the contribution of tourism to the economy of the region grows as you move to the South of the country, where industry is becoming less and warm sea and wonderful beaches — all the more.

for Example, consider Sardinia. For the first quarter of 2020 in Sardinia was closed 354 travel companies (mainly in March), and was opened only 113 (primarily in February). This is the worst negative balance for the last 25 years. Over 1 325 companies under threat of bankruptcy. Even if a miracle happens and the season will open July 1, the tourism sector of the island will still lose 9.7 million tourists. This means that only the hotel will lose about 67% of guests, or 800 million euros, and will remain out of work more than 50 thousand people. All in all, the tourism sector of the island is likely to receive more than 2.5 billion euros. And it is an old settlement: now open from July 1 to say nothing, but promise a new date, mid-August, when the Italians comes the holiday season. So, the losses will be even greater. For example, now trying to survive a small company providing satellite communication services are very much in demand on the island, where still poorly developed infrastructure of cellular communication. Its main clients are owners of the remote villas, mostly foreigners, and the owners of companies dealing with rental cars and yachts. The first of the season probably won't come, and the second asking for the revision of the contract due to the lack of tourists. "If the borders open at least by September, then I have a chance to survive, although I'm already in the red this year. If this year foreigners will not come, I don't know what I'd do," says the owner of the company Giogio Zall.

Milena BAKHVALOVA for Banki.ru