How is the top down method adapted for wholesale and retail trade?

Section G, wholesale and retail trade, requires a specific adaptation of the top down method. Paragraph 89 of the introductory guidelines states that requirement, and paragraphs 90 to 95 set out the adaptation. The adaptation is statistical only, described here in the abstract, and it does not determine a code for a specific reader.

Why does trade need an adaptation?

Paragraph 90 states the reason. Trade is partitioned into wholesale and retail trade, and a unit may perform horizontally integrated trade activities under various possible forms. If the goods sold do not correspond to a single class accounting for at least 50 percent of value added, then application of the top down method requires special caution and consideration of additional levels. The ordinary four step method, section to division to group to class, is not sufficient on its own, because the trade divisions contain an extra distinction, between specialised and non specialised trade, that must be decided before the group and class are identified.

The adaptation therefore inserts decisions before the final top down steps. For wholesale trade, the first distinction is between wholesale on a fee or contract basis and other wholesale trade. For retail trade, the first decision is whether the principal activity falls to intermediation service activities for retail trade. Only after those decisions does the method categorise the activity as specialised or non specialised, and only then are the group and class identified using the top down method. The extra decisions are part of the method, not exceptions to it, and they apply to trade units in the abstract as the manual describes them.

What are the steps for wholesale trade in division 46?

Paragraph 91 sets out the wholesale sequence. Within division 46, wholesale trade, a first distinction must be considered between group 46.1, wholesale on a fee or contract basis, where the wholesaler does not assume ownership of the goods traded, and the other groups of division 46. In the case of wholesale other than on a fee or contract basis, the next step is to decide whether to categorise the principal activity as specialised wholesale trade, an aggregate of groups 46.2 to 46.8, or group 46.9, non specialised wholesale trade. Finally, the group, if not already identified, and class must be identified using the top down method. Paragraph 92 states that Figure 3 in the manual represents the decision tree for division 46.

Paragraph 95 states the specialised test that governs the middle step, and it is set out in full in the retail section below. The test turns on the number of classes counted, with each counted class holding at least 5 percent and less than 50 percent of value added.

What are the steps for retail trade in division 47?

Paragraph 93 sets out the retail sequence. Concerning division 47, retail trade, the first decision is whether or not to allocate the principal activity to intermediation service activities for retail trade. If the principal activity is not classified to intermediation service activities for retail trade, the next step is to categorise the principal activity in either group 47.1, non specialised retail trade, or in specialised retail trade, covered by groups 47.2 to 47.8. Finally, the group, if not already identified, and class must be identified using the top down method. Paragraph 94 states that Figure 4 in the manual represents the decision tree for division 47.

The specialised test in paragraph 95 applies to retail trade in the same form. If the products sold correspond to no more than four classes in any of the groups 47.2 to 47.8, the unit is considered to be carrying out specialised trade. If the products sold correspond to five or more classes in any of those groups, the principal activity should be considered non specialised trade, in group 47.1. For non specialised retail trade, a further rule applies: if food, beverages and tobacco account for at least 35 percent of value added, the unit should be classified in class 47.11; in all other cases, the unit must be classified in class 47.12. The 35 percent threshold is a stated rule in paragraph 95, and this guide reproduces it as a rule, not as advice for a specific unit.

How do the thresholds fit together?

| Threshold | Where the manual states it | Effect |

|---|---|

| At least 50 percent | Paragraph 90 | Single class case, special caution not triggered on that ground |

| At least 5 percent and less than 50 percent | Paragraph 95 | Classes counted for the specialised test |

| No more than four classes | Paragraph 95 | Specialised trade |

| Five or more classes | Paragraph 95 | Non specialised trade |

| At least 35 percent, food, beverages and tobacco | Paragraph 95 | Class 47.11, otherwise class 47.12, in non specialised retail |

The table gathers the thresholds from paragraphs 90 and 95, in the order the manual applies them: the 50 percent test, the counted classes, the four class boundary, and the 35 percent food test for non specialised retail only. The decision trees in Figures 3 and 4 show the order, and the institute or register that holds a unit’s record applies the order to the unit’s data.

What does this classification not decide?

A classification entry describes an activity for statistical purposes. The introductory guidelines give the limit in their own terms: the entry does not decide tax, social security, a collective agreement, licensing or funding eligibility for a specific unit. The authority or register deciding those questions, under the law governing each question, is where they belong. A reader who treats a statistical entry as a decision about eligibility is reading more into the entry than the classification states. Stated in the guardrail box, the same limit is repeated here, and the institute or register holding the record confirms the entry for a specific unit.

Where is the entry confirmed?

The checking sequence for this subject is short. First, the introductory guidelines for the rule as Eurostat published it. Second, the explanatory note for the category, for what the category includes and excludes. Third, the institute or register, for the entry actually held. No other source in this guide replaces any step in that sequence.

Follow the trade decision trees in order, apply the class count and the 35 percent test only at their stated steps, and confirm the entry with the institute or register that holds it.