Trade is by far the largest sector in the real economy, accounting for a quarter of the number of employees and more than half of turnover. At the same time, it is the most connected sector to other industries, the dependence of the latter to the access to the local market is crucial. Retail trade has been unevenly affected by the pandemic. Grocery stores stayed open during the quarantine period, and some even had increased sales due to the fact that agricultural markets, restaurants, cafes and bars were closed during that period. However, clothing and home appliances stores were severely affected. Although the decline in sales was almost equally accompanied by staff reductions, the sector’s solvency and, with it, access to finance were seriously affected.

Even after the relaxation of restrictions the situation did not improve significantly. Even if they operate normally and apply hygiene rules imposed by the authorities, buyers have changed their consumer preferences. Household appliances, clothing, etc., not representing goods of prime necessity, sell more slowly. In particular, it shows the absence of the corporate sector, which represented a good part of consumer demand. Overall, in March there was a slight increase in turnover (estimated 4-5%) due exclusively to the supermarket segment. In April, sales are down 20% compared to the same month of the previous year. It is very plausible that this level represents the “new normal” and will last for the rest of 2020.

In the event of a new wave of restrictions, it would only make sense that they are not applied without sufficient substantiation. The real risks to public health that can be proactively managed through the application of hygiene measures should be taken into account. Frequency of abuses by control bodies was also identified. Fines were sometimes arbitrary and unreasonably high. Predictability of working conditions is also important. New sanitary rules and operating conditions involve (including financial) adjustment efforts, and compliance is difficult when they come into force the day after their adoption.  Some sanitary measures (e.g. thermometry at the entrance into retail establishments) are considered inefficient, given that the margin of error of appliances is 70-80%, while compliance costs (a dedicated person) are quite high for small retail units.

An important aspect of adjusting to the “new normal” is online trade. Although the demand for online trade has skyrocketed, the supply in stores is limited due to logistical reasons. Even if online sales solutions are accessible from the point of view of information technologies, there are major shortcomings when it comes to the logistics of sales operations. In particular, most traders do not have real-time tracking systems of inventory. Respectively, without a visual check, it is impossible for them to confirm to the potential buyer whether or not the requested quantity of goods is at the warehouse. Similarly, for the transportation of food items (which are of several types – frozen, fresh or ready made) specially arranged transport units are needed. There is no special regime for taxation of delivery services. From the point of view of taxation, distributors are made equal to sellers, being obliged to pay VAT on the “purchase” of goods and charge VAT at the “sale” of goods from the final consumer

* This information is collected during the discussions conducted by the experts who elaborate the Impact Study of the COVID-19 pandemic on the sectors of the economy. The data can be taken from the website www.consecon.gov.md only with the obligatory mention of the source “Economic Council under the Prime Minister of the Republic of Moldova” and the specification that “The impact study of the COVID-19 pandemic on the economic sectors is carried out by The Economic Council jointly with the Ministry of Economy and Infrastructure, with the support of the European Bank for Reconstruction and Development and the United Kingdom Government Fund for Good Governance. ”

The Secretariat of the Economic Council to the Prime Minister is supported by the European Bank for Reconstruction and Development, funded by the UK Government’s Good Governance Fund, and the International Finance Corporation’s Investment Climate Reform Project funded by the Government of Sweden’s International Development Agency.

The Secretariat of the Economic Council to the Prime Minister is supported by the European Bank for Reconstruction and Development, funded by the UK Government’s Good Governance Fund.