The German shoe industry association, HDS/L, is working on a special program for retailers together with the BDSE, the federal association of shoe retailers, according to Schuhkurier. Each brand or manufacturer should define the shoe models from the current, already delivered, spring/summer collection whose sale will be postponed for the coming 2021 spring/summer 2021 collection, allowing the retailers to plan selling these shoes for the next season and to reduce the pressure on their sale for the shortened time window caused by the current store closings. This information is to be sent to retailers in the next few weeks, either directly or via the HDS/L or BDSE.
The two associations want to see financing of the stored goods to be guaranteed through KfW loans or buying cooperatives. The industry will also store the defined articles intended for reordering and reserve them for the spring/summer 2021 season.
When retailers open their stores again, in the middle of the spring/summer season, many fear a massive discount battle. According to the HDS/L, it would be advantageous if the regular sales season is extended by the months of June and July to give retailers the opportunity to regularly sell as many goods as possible at full price during the summer months. This way, the long-discussed step of finally adapting the sales time to the weather conditions and the season could also be implemented. In order to support the shift of the end-of-season sales period, goods for sale in the coming autumn/winter season should not be delivered to retailers before Aug. 1.
Sabu, one of the German voluntary groups of shoe retailers, is supporting the extension of the clearance sales for the spring/summer season by at least six weeks so that retailers are able to sell more seasonal goods. The delivery of goods for the coming autumn/winter season will be postponed by four to six weeks. The regular clearance time of the autumn/winter season would also be moved back by six weeks. The delayed deliveries and the related invoicing would improve the liquidity situation of the retailers.
For the 2021 spring/summer season, Sabu proposes to move the dates of its order and trade fair dates back by four weeks, resulting in later delivery dates and a clearance time postponed by one month. Seasonal sales will be delayed voluntarily by retailers by one month to avoid early discount battles for the benefit of all market participants.
The HDS/L is also currently working on a digital data platform for data exchange between the industry and trade, which has been under discussion for a long time. The focus is on a common format that is supported by all participants.
Meanwhile, German suppliers and retailers can count on further public aid to help weather the storm caused by the coronavirus pandemic because of the lockdown of non-essential commercial activities in the country. On April 6, the German government announced a package of additional financial aid for small and medium-sized companies with 11 to 250 employees. The government will assume 100 percent of the credit risk on loans of up to €800,000 without an assessment of the risks, depending on the size of the company.
Under a previous aid program launched by the German government, the government only covered 90 percent of the credit risk for companies directly affected by Covid-19, but the interest rate for the new financial aid program is higher. The government and the KfW, a state-run bank in charge of supporting privately owned companies, expect a large number of applications.
The KfW loans, which are available for small and medium-sized companies with more than 10 employees, essentially include the following measures: Provided that the company has recorded a profit in 2019 or on average over the past three years, KfW grants a so-called “instant loan.” The amount can be up to 25 percent of the annual turnover in 2019, with a maximum of €800,000 for companies with more than 50 employees and €5,000 for companies with up to 50 employees. One condition is that the company was not in financial trouble by Dec. 31, 2019.
ZGV, a task force for small and medium-sized companies headed by Günter Althaus, former president of the ANWR Group, feels that the new measures launched by the German government are fullfilling some of its demands, but it also sees the need for adjustments. The lower limit of ten employees is worth considering, because a large number of medium-sized companies have fewer employees. The task force hopes that companies in need can get liquidity help before Easter.
The German government decided to provide additional financial aid, for companies with eleven to 250 employees, on April 6. According to Olaf Scholz, finance minister of Germany, and Peter Altmaier, economics minister of Germany, small and medium-sized businesses should be able to receive up to €800,000 without a risk assessment, depending on the size of the company. The state assumes 100 percent of the credit risk.
In the previous aid program launched by the German government, the state only covered 90 percent of the credit risk. However, the interest rate for the new financial aid program is higher than with the existing loan support. Companies that only got into difficulties due to the corona pandemic can get a loan quickly. The government and the KfW, a state-run bank in charge of supporting privately owned companies, expect a large number of applications.
The KfW loans for small and medium-sized companies essentially include the following measures: Provided that a medium-sized company has recorded profit in 2019 or an average over the past three years, KfW grants an so-called ”instant loan.” The loan is available only to medium-sized companies with more than 10 employees who have been active on the market since at least Jan. 1, 2019. The credit volume per company is up to 25 percent of the annual turnover in 2019 with a maximum of €800,000 for companies with more than 50 employees and €5000 for companies with up to 50 employees.
As of Dec. 31, the company should not have been in trouble and must have orderly financial position at that time. The interest rate is currently 3 percent with a term of 10 years. The bank is exempted from liability by KfW in the amount of 100 percent, secured by a guarantee from the federal government. The KfW rapid loan has now also been approved by the EU Commission.