Business bankruptcies to continue to rise for the time being, association says

Erik Ziengs, the chairman of Ondernemend Nederland (ONL), which is an independent association for businesses in the Netherlands, is expecting more bankruptcies of trade companies and catering businesses to follow the current wave. "It continues one after the other. It worries me enormously. Every time, iconic shops disappear, and often those square meters are no longer filled," Ziengs said.

The cosmetic shopping chain The Body Shop was declared bankrupt on Wednesday. E-bike manufacturer Stella requested protection from creditors a day earlier, and then was declared bankrupt on Friday after years of continuous losses. Retail chain Blokker also asked for deferral of payments on Monday.

Ziengs thinks that many companies are struggling to survive financially due to debts incurred during the coronavirus pandemic. "They don't have the money to pay off these deferred tax debts or to invest anymore. And, in that case, the easiest way is to pull the plug. That way you're rid of all those debts right away," said the ONL chairman. "And hopefully a fresh start can take place."

Many companies used the option to defer the payroll tax and their VAT during the coronavirus pandemic. However, these payments must be made within five years. "But entrepreneurs also had to deal with an explosion in wage costs, an energy crisis, a shortage of staff, and significant rent increases. They can no longer cough up the amounts and become discouraged, which often leaves them with no other option than to close down the company."

Retail specialist Paul Moers also fears more retail groups getting into trouble financially in the future. "The problem is that consumers are incredibly frugal. We have about 480 billion euros in the bank, we are saving like crazy," said the retail expert.

In addition, according to him, many companies are struggling to innovate, which is why they are losing customers. Moers also points to the high debts from the pandemic and "explosively rising costs" as the cause of the financial problems.

The number of physical retail outlets in the Netherlands has dropped from 96,000 to 81,000 in the last 14 years. However, Moers did add that not all companies are struggling. “IKEA is performing very well, HEMA has reinvented itself, and Dille & Kamille, Apple, and Rituals are all performing excellently.”