THE STATE OF EU RETAIL IN 2018
COUNTRY PROFILES Table of contents:
1 Austria 2 Belgium 3 France 4 Germany 5 Italy 6 Netherlands 7 Poland 8 Spain 9 Sweden 10 The United Kingdom
Methodological Note
2 2 Austria
3 Austria
• Retail turnover has increased by 2.6% in 2017 to reach €63 billion following years of continued growth. • Favourable economic conditions, growing per capita income, household purchasing power and consumer spending (for a yearly increase of 1.4% in 2017) supported retail sales. • These trends are expected to continue in 2018, despite weaker retail confidence reflecting strong competitive pressure in retail, growth of on-line sales and declining numbers of traditional shops and retail space. • Most dynamic retail sectors are retail sales of sporting equipment in specialised stores, retail sales of music and video recordings in specialised stores and retail sales of electrical household appliances in specialised stores. • The top 3 food retailers make up 85% of the grocery retail market.
4 Austria
On-line sales are growing significantly:
• E-commerce sales amounted to 7 € billion (2017), half of which (3.5 billion) were cross-border purchases – representing 111,000 jobs per year abroad and a sales tax loss of about 700 million EUR for Austrian retailers;
• 4.3 million Austrians between 15 and 60 years buy regularly - online; 57% buy on-line at least once a month;
• The key factors behind this consumers’ shift towards on-line sales are opening hours, greater choice, larger price discounts by online retailers;
• Brick and mortar stores are investing in digital, and 85% of Austrian retail companies have now initiated an omnichannel strategy.
5 Retail sales have constantly grown since 2008
Retail Turnover in absolute values* (€) and year-on-year growth rate, percentage, 2017= provisional
5 70.000 Retail Turnover, EUR million (right scale) Year-on-year growth rate, % (left scale)
4,5 62.963 60.000 61.367 4 59.745 56.990 58.323 54.229 55.591 51.908 50.000 49.908 50.277 3 3,2 2,7 40.000 2,4 2,6 2,5 2,5 2,3 30.000 2
20.000
1 10.000 0,7
0 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017p Retail sales are increasing, reflecting a favourable macro-economic environment and growing consumer spending. Total retail sales grew by 2.6% in 2017 *Excluding retail sales of automotive fuels; Sources: Eurostat and Handelsverband 6 Total retail sales have shown slow developments since Q1 2016; food sales remaining weak
Retail Sales (Deflated Retail Turnover Index), year-on-year growth rates, %
5 Total Retail Food
4 4,0
3
2
1
0 -0,3
-1 -1,1 -1,7 -2 -2,1 -3
-4
-5 2008Q1 2009Q2 2010Q3 2011Q4 2013Q1 2014Q2 2015Q3 2016Q4 2018Q1
7 Inflation is up, after years of weak price developments; food prices follow the same trend
Inflation (Consumer Price Index, %), monthly data
10 All items Food 8,4 8
6
4 4,0 2,9
2 2,3 1,7 1,0 0
-2 -1,8
-4 2007M01 2008M05 2009M09 2011M01 2012M05 2013M09 2015M01 2016M05 2017M09
Inflation went above 2% in early 2017, after years of weak price developments, and has been stable since then. Food inflation was more volatile during 2018 (1% in Dec. ‘18).
Note: EU-Harmonised index of consumer prices 8 Disposable income increased since 2009
Gross disposable income of households per capita in PPS, annual data
30.000
26.684 26.660 26.134 25.691 25.649 25.000
24.586 24.321 24.383 24.228 23.880
20.000 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Annual household gross disposable income has continuously increased between 2009 and 2015 and is expected to remain at a relatively high level 2017, contributing to a positive environment for consumers.
9 Food accounts for 12% of household spending; it is the third largest spending category
Breakdown of final household consumption by types of spending, 2016, %
Education 1
Communication 2
Alcoholic beverages, tobacco 2
Health 4
Clothing, footwear 5
Hotels, Restaurants 7
Furnishings, household equipment 7 and routine maintenance of the house
Recreation, sports and culture 12
Food, non-alcoholic beverages 12
Transport 14
Housing, energy 26
Source: Statistics Austria 10 Household consumption is growing more slowly than the overall economy
Real GDP growth rate and Final Household Consumption, year-on-year growth rates, %
Real GDP Final Household Consumption 6
4,7 4 3,3 3,0 2,6 2 1,0 1,1 0 -0,5
-2 -1,9
-4 -4,6
-6 2008Q1 2010Q2 2012Q3 2014Q4 2017Q1
Domestic demand has provided a smaller contribution to economic growth. Real GDP has increased by 2.6% in 2017 and final consumption by 1.4%.
11 Overall unemployment is on the decrease
Unemployment rate, whole economy, % of labour force, monthly data
7 6,2 6 5,7
5 4,8 5,0
4 3,8
3
2
1
0 2007M01 2009M01 2011M01 2013M01 2015M01 2017M01 2019M01
The unemployment rate in Austria is overall low (4.8% in Jan. 2019) and may generate tensions to fulfil retail vacancies.
12 Retail trade confidence remains weaker than overall economic sentiment
Retail Trade Confidence Indicator and Economic Sentiment Indicator (ESI), monthly data
30 120 Retail Trade Confidence Indicator Economic Sentiment Indicator 115,5 115,6 20 110
10 100
0 90 -5
-10 80 -10
-20 68,9 70
-26 -30 60 janv.-07 janv.-08 janv.-09 janv.-10 janv.-11 janv.-12 janv.-13 janv.-14 janv.-15 janv.-16 janv.-17 janv.-18
While economic confidence is up again, reflecting an overall positive macro economic environment, retail confidence remained weaker throughout 2017 and in H1 2018, reflecting stagnant household consumption.
Note on the ESI; above 90= positive economic expectations; Note on the Retail CI: below 0= negative expectations 13 Retail remains a significant employer with 357,000 people, that is one in ten employed
Number of persons employed in retail, thous. (left scale) and as % of total employment (right scale)
360 10
357 357 357 355
350 352 9,0 9,0 8,9 8,8 9 348 347 348 8,6 8,7 8,6 8,6 340 342 342 8,4 8,5 8
330
7
320
6 310
300 5 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
14 Retail investment remains overall lower than manufacturing, reflecting a mature market
Investment rate in the retail sector, %*, annual data
Retail Manufacturing
15
14 13 13 13 12 11 12 10 10 9 9 9 8 9 9
2008 2009 2010 2011 2012 2013 2014 2015
Investment rate in retail was 9.4% in 2015, in line with the pre-crisis levels in 2008, compared to 12.4% in manufacturing
* Defined as the ratio of business fixed investment to value added 15 The top 3 food retailers make up 85% of the grocery retail market
Key Players (food) and related market shares, 2017, %
Lidl 7% Others REWE 8% 32%
Hofer 22%
SPAR AG 31%
The top-3 players in the grocery retail sector in 2017 were: • REWE (with a €13.8 billon turnover), • SPAR AG (€12.7 billion) • Hofer (€4 billion) Source: Handelsverband 16 Belgium
17 Belgium: key findings
• Retail sales have grown continuously since 2008 at a relatively slow but stable pace; fiscal reforms, tax increases, terrorist attacks in March 2016 and low competitiveness made the economy relatively vulnerable in 2016 and 2017. In 2017, retail sales grew by 1.3%, thanks to stable economic recovery, moderate inflation and improved consumer confidence. However, retail confidence has been in negative territory since 2014. • Employment in retail remains strong with 330,000 employed in 2017, albeit slightly lower than in 2016. • Key trends in 2018 include: strong growing health awareness; decrease in frequency of purchase (-17.7% since 2008); continued growth of hard discounters and proximity stores; large retailers returning from peripheral areas to city centers. • E-commerce increased considerably in recent years, reaching 8.6 billion euro. Cross-border purchases are significant: in 2017, 28.3 % of Belgian households bought FMCG cross-border, on average 10 times a year, for an average purchase per household of 59 euro, representing a loss for Belgian retailers of 823 million euro. • The fashion retail sector is characterised by:
Strong growth of “fast-fashion” (+ 20% over the last 3 years)
Consumer budgets for clothing under pressure (decreasing for 5 consecutive years) • Market developments in IT and telecom sector:
Sales are slowing down, mainly due to slower growth in its major sub-categories (smartphones)
Relatively bigger growth is reported for media and entertainment
18 Retail turnover has grown continuously since 2008, but at a slower pace in 2017; retail confidence is low
Retail Turnover in absolute values and year-on-year growth rate, % *; 2017= provisional
10 100.000 Retail Turnover, EUR million (right scale) Year-on-year growth rate, % (left scale) 95.000 8 93.631 92.429 90.000
87.005 6,2 85.000 6 84.764 83.021 83.001 80.000 79.949 78.029 4 3,9 75.000 75.334 75.078 3,8 70.000 2,5 2,6 2 2,1 65.000 1,3 60.000 0 0,0 -0,3 55.000
-2 50.000 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017p
Total annual turnover in Belgium reached 94 bn € in 2017, after 4 years of continued growth. It grew by 1.3% in 2017, reflecting low retail confidence.
*Excluding retail sales of automotive fuels Sources: Eurostat and Comeos 19 Retail sales have shown subdued developments since 2008, especially in foods, reflecting a weaker retail environment
Retail Sales (Deflated Retail Turnover Index), total retail and food, year-on-year growth rates, %
7 Total Retail Food
5
3,4 3 1,5
1
-0,7 -1
-3 -3,3 -3,5
-5 -5,3
-7 2008Q1 2010Q1 2012Q1 2014Q1 2016Q1 2018Q1
20 Inflation has remained moderate for a few years (2.2% in 2017), while food prices decreased in 2009, 2014 and 2017 reflecting low demand
Inflation (Consumer Price Index, %), monthly data
10 All items Food 8,1 8
6 5,0 5,7
4 2,9 2 1,7 1,7
0
-1,5 -2 -1,7
-4 2007M01 2008M03 2009M05 2010M07 2011M09 2012M11 2014M01 2015M03 2016M05 2017M07 2018M09
Overall inflation has been around 2% in 2017 but then upped to 2.9% in November 2018. Food inflation was lower in 2017 but rose during 2018 (1.7% in September 2018)
Note: EU-Harmonised index of consumer prices 21 Continued growth in disposable income since 2009 has supported retail spending, with a slight decrease in 2016
Gross Disposable Income of Households per capita in PPS, annual data
25.000 24.833 24.000 24.341 24.520 23.682 23.000 23.392 22.814 22.000 22.509 22.200 22.070 21.696 21.000
20.000
19.000
18.000
17.000
16.000
15.000 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Household disposable income has continuously increased until 2015 and has only slightly declined in 2016.
22 Belgian households spend on average 18% of their income on food, which comes second after housing
Breakdown of final household consumption by types of spending, 2016, %
Education 0,4
Communication 2,2
Clothing 4,3
Household equipment 6,2
Health 6,3
Restaurants and hotels 6,4
recreation and culture 8,4
Transport 11,0
Miscellaneous goods and 12,6 services
Food+alcohol and tobacco 17,7
Housing 24,5
Source: BNB (National Bank of Belgium) 23 Economic growth and domestic demand recovered but remained fairly weak after the recessions
Real GDP and Final Household Consumption, year-on-year growth rates, %
Real GDP Final Household Consumption 5
4 3,9 3,3 3 2,5
2 2,3 1,4 1 0,6 0
-1 -1,5 -2
-3
-4 -3,8
-5 2008Q1 2009Q1 2010Q1 2011Q1 2012Q1 2013Q1 2014Q1 2015Q1 2016Q1 2017Q1 2018Q1
GDP growth remained weak throughout the post-2013 recovery but slightly higher than household consumption. Real GDP grew by 1.7% and final consumption by 1.1% in 2017 (in annual terms).
24 Economic confidence has improved, but remains weak. Retail confidence negative since 2014
Retail Trade Confidence Indicator and Economic Sentiment Indicator (ESI), monthly data
20 130 Retail Trade Confidence Indicator Economic Sentiment Indicator 15 120 10
5 110
0 100 -5 90 -10
-15 80
-20 70 -25
-30 60 janv.-07 janv.-09 janv.-11 janv.-13 janv.-15 janv.-17
The economic sentiment indicator has remained at low levels since early 2014, reflecting slow macroeconomic improvements. Retail confidence has been negative since August 2014. Note on the ESI; above 90= positive economic expectations Note on the Retail CI: below 0= negative expectations 25 Retail employs 330,000 people (one in 13 workers), accounting for 7.3% of total employment. In 2017 it was slightly below 2008 levels
Number of persons employed in retail, thous. (left scale), and as % of total employment (right scale)
375 10
365 10
362 362 355 9 354 352 351 350 345 349 349 348 9 8,0 8,1 8,1 335 7,9 8 7,9 7,9 7,8 7,8 333 325 8 7,7 7,3 315 7
305 7
295 6
285 6
275 5 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
26 Unemployment rate has decreased from high levels since late 2015
Unemployment rate, whole economy, % of labour force, monthly data
9 8,8 8,6 9
8
7,8 8
7 6,8 7
6
5,6 6
5 2007M01 2009M01 2011M01 2013M01 2015M01 2017M01 2019M01 Overall labour market conditions have improved in recent years, with the unemployment rate falling from 8.7 % in H2 2015 to 5.6% in Jan. 2019.
27 Retail investment remains fairly high reflecting a high degree of store renovation in a mature market
Investment rate in the retail sector, %*, annual data 25 Retail Manufacturing
23 23 23 22 22
20
20 20 19
18 18 18 18 17 17 16 15 16
10 2008 2009 2010 2011 2012 2013 2014 2015
* Defined as the ratio of business fixed investment to value added 28 The grocery retail market has many players with the top three making about 70% of the market
Key Players (food sector) and related market shares, 2016, %
Colruyt 25
Delhaize 24
Carrefour 21
Lidl 9
Aldi 8
Louis Delhaize 5
Makro 4
Others 4
The Belgian food retail market is relatively more fragmented than other comparable EU countries. The top three players make 70% of the market but none has more than 25% market share, reflecting a competitive environment.
Source: Comeos 29 Large retail and supermarkets are the most popular grocery formats
Food sales by distribution channel, 2016, %
Large retailers, hypermarkets 50
Average-sized retailers, supermarkets 30
Hard discounters 15
Small retailers 5
With 70% of all stores, large and average supermarkets are the most popular formats, reflecting the growing trend towards convenience.
Source: Comeos 30 E-commerce is growing fast; consumers’ willingness to spend on-line is increasing
Total e-commerce sales, billion euro
10
9
8 8,6 Belgian shoppers are buying more and more often online. The fastest growing categories in 7 7,4 2016 were those Belgians are already accustomed to buying online, such as apparels 6 6,5 and footwear, media products, and homewares 5,6 and home furnishings. 5 4,9 4 The most important factors influencing online 4,3 shopping decisions are previous experience 3 with the brand, with the retailer and available information. As consumers grow more 2 confident and knowledgeable, they are becoming more demanding too. Delivery 1 methods have thus become one of the key issues for on-line retailing. 0 2012 2013 2014 2015 2016 2017
Source: Comeos. Please note that these figures are estimates 31 Belgian households are buying more and more cross-border
Cross-border purchases (FMCG products purchased by Belgian households abroad)
2017 Year-on-year change compared to 2016 (%)
Value (000 €) 823,086 -4.4
Average purchase per buyer (€) 593.41 -3.7
Frequency (#) 10 -5.4
Average purchase per trip (€) 59.32 +1.8
Cross-border purchases by Belgian households amounted to 823 million € in 2017.
Source: Comeos 32 France
33 France: key findings
• Retail sales reached about €440 billion in 2017; they recovered in 2016 and 2017 after a drop in 2015, reflecting an improved macroeconomic environment. • Economic growth is recovering, and inflation remains low. Consumption has grown more slowly than purchasing power in 2017 (1.1% vs 2.1%) as a rebound after the one-off events in 2016 that boosted the economy (European football tournament, etc). • Retail provides employment to 2 million people (7.5% of total employment). The labour market is recovering, as the unemployment rate has decreased to 8.8% in April 2018. Job creation is getting momentum and the economic sentiment indicator has been around very high levels since end-2017. • Changes in consumer behaviour are considerably reshaping the French retail environment:
• Consumers have become “professional shoppers” and use digital tools to compare products and prices;
• Online sales represented 8% of retail sales in 2016 (5% out of the food products market);
• Retail activity remained dynamic mostly thanks to non-food retailers, especially in the sub-sectors of household appliances and electronic products;
• Food retail sales in volume remained stable but increased in value as consumers have shifted to “premium” products in some food sub-segments. Lower prices, particularly on national brands, have enabled consumers to increase purchases of premium products such as organic food (the national organic food market increased by 20% in value). SMEs accounted for 97% of food retail growth during the first 10 months of 2017 (71% in 2016). Channels like Click & Drive and Convenience continue to grow.
34 Retail turnover amounts to € 438 Bn; it recovered in 2016-17, after a fall in 2015
Retail Turnover in absolute values* (€) and year-on-year growth rate, %, 2017= provisional
5 Retail Turnover, EUR million (right scale) Year-on-year growth rate, % (left scale) 450.000
437.540 440.000 3,5 432.352 432.156 433.156 3,5 2,8 429.303 3 430.000 2,7 420.487 421.173 420.000
1 407.415 406.402 1,2 410.000 0,9
400.000 392.633 -0,7 -1 390.000
380.000
-2,8 -3 370.000 -3,6 360.000
-5 350.000 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017p Annual retail turnover in nominal terms has recovered in 2016 (for a year-on-year growth of 2.7%) after the 2015 drop. The trend has slightly slowed down in 2017 with a growth rate of 1.2%. *Excluding retail sales of automotive fuels Sources: Eurostat and FCD 35 Total retail sales re-gained momentum in 2016, but slowed down in 2017 and 2018
Retail Sales Developments (Deflated Retail Turnover Index), total retail and food, year-on-year growth rates, %
6
5,0 4,6 4,5 4 3,2
2 2,0
0,8 0,6 0
-2 -2,6
-4 Total Retail Food
-6 2008Q1 2009Q2 2010Q3 2011Q4 2013Q1 2014Q2 2015Q3 2016Q4 2018Q1
Retail sales have gained momentum since Q3 2016. In Q3 2018 total sales increased by 3.2%. Food sales decreased in 2014, then recovered up to a growth of 4.5% in Q3 2018.
36 Overall inflation and food prices have remained around 2%
Inflation (Consumer Price Index, %), monthly data
8 All items Food 7 6,9 6
5
4 4,0
3
2 2,0 1,7 1
0
-1 -1,7 -2 -1,9
-3 2007M01 2009M01 2011M01 2013M01 2015M01 2017M01
Overall inflation has returned above zero since 2015 and has slightly risen more recently (1.9% in Nov. 2018). Food prices have remained low and followed the general trend in prices (2% in Nov. 2018) Note: EU-Harmonised index of consumer prices 37 Household income increased since 2010 (except in 2016)
Gross Disposable Income of Households per capita in PPS, annual data
26.000
25.000 25.280 24.814 24.418 24.000 24.009 23.594 23.000 23.294 22.901 22.664 22.507 22.000 22.191
21.000
20.000 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Disposable income in France has increased constantly since the recession of 2009, with the exception of a small decline in 2016. The trend is similar to Austria and Belgium.
38 French households spend 15% of their income on food, which comes second after housing
Breakdown of final household consumption by types of spending, 2016, %
Other retail 1,2
Business services 2,1
Household equipment 2,6
Transport 3,5
Fuels 3,7
Other services 3,9
IT and communication 4,0
energy 4,6
Financial services 5,2
Transport 5,8
Hotels and restaurants 7,2
Other manufacturing… 12,2
Food 14,8
Housing 19,2
Source: INSEE 39 The French economy is recovering; consumption is following at a slower pace
Real GDP and Final Household Consumption, year-on-year growth rates, %
Real GDP Final Household Consumption 5
3 2,9
1,6 1,5 1 0,8
-1
-3
-3,8 -5 2008Q1 2009Q2 2010Q3 2011Q4 2013Q1 2014Q2 2015Q3 2016Q4 2018Q1
French real GDP has improved in 2017 after modest recovery following the two recessions in 2009 and 2011, but has been slowing down in 2018. Final household consumption has been weaker than real GDP since 2015. Real GDP growth in 2017 was 2.2% and final consumption growth was 1.1%.
40 Unemployment is decreasing, but remains high
Unemployment rate, whole economy, % of labour force, monthly data
11 10,6
10
9 8,8 8,5 8
7 7,2
6
5 2007M01 2008M01 2009M01 2010M01 2011M01 2012M01 2013M01 2014M01 2015M01 2016M01 2017M01 2018M01 2019M01
The overall unemployment rate in France has decreased throughout 2017 (8.8% in Jan. ‘19) but remains above the EU average (6.7%)
41 The grocery retail market shows a diversity of players
Key Players (food sector), 2016, %
E.Leclerc 21,3
Carrefour 20,2
Intermarché 14,8
Groupe Casino 11,6
Système U 10,8
Auchan 10,4
Lidl 5,2
Delhaize 3,3
Aldi 2,1
Others 0,3
The French grocery retail market shows a low degree of concentration, with 6 players holding more than 10% of the market. Leclerc and Carrefour lead with around 20%
Source: FCD / Kantar 42 Large food retailers and convenience stores make three quarters of the grocery market. Non-specialised stores hold 60% in non-food.
Sales by distribution channel, 2016, %
Food sales Non-food sales
Major food retailers 64,3* Non-food specialised stores 58,4
Specialised stores 19,6 Others 20,6
Convenience stores 7,5
Major food retailers 15.7* Out-of-store 5,9
Open air markets 5,3 Others 2,7
*=of which: 36% for hypers and 28.3% for supermarkets *=of which: 10% for hypers and 5.7% for supermarkets
Large food retailers and convenience stores accounts for 72% of the French food market. Hypermarkets and supermarkets make-up 36.5% and 28.3% of the food market respectively. In non-food markets, major food retailers hold a smaller market share (15%).
Source: INSEE 43 Retail confidence remains weak, despite improving economic confidence since 2016
Retail Trade Confidence Indicator and Economic Sentiment Indicator (ESI), monthly data
30 120 Retail Trade Confidence Indicator Economic Sentiment Indicator
20 110
10 100
0 90
-10 80
-20 70
-30 60 janv.-07 janv.-08 janv.-09 janv.-10 janv.-11 janv.-12 janv.-13 janv.-14 janv.-15 janv.-16 janv.-17 janv.-18 janv.-19
Confidence in the retail sector has improved since 2013, but remains very weak. The economic sentiment improved continuously up to end-2017, but then has eased considerably.
Note on the ESI; above 90= positive economic expectations Note on the Retail CI: below 0= negative expectations 44 Retail employs about 2 million people and has proven resilient through the recessions
Number of persons employed in retail, thous. (left scale), and as % of total employment (right scale)
2.200 10
2.100
2.000 9
1.948 1.953 1.952 1.900 1.927 1.927 1.940 1.891 1.800 1.849 8 7,6 1.812 7,6 1.793 7,6 7,5 1.700 7,5 7,5 7,3 7,1 7,2 1.600 7,0 7
1.500
1.400 6
1.300
1.200 5 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
45 Retail investment has been stable reflecting a mature retail market
Investment rate in the retail sector, %*, annual data
Retail Manufacturing
16,2 15,9 15,5 14,8 14,2 14,4 13,4 12,6 12,8 12,2 12,1 12,0 12,1 10,9
2009 2010 2011 2012 2013 2014 2015
* Defined as the ratio of business fixed investment to value added
46 Online sales reached 82 billion euro in 2017 and increased by 14% compared to 2016
E-commerce sales of goods and services, billion euro
82
72
57
45
31
20
12 4
2003 2005 2007 2009 2011 2013 2016 2017
Source: FEVAD 47 Germany
48 Germany: key findings
• Retail turnover in 2017 has reached 513 billion euro, for an annual increase of 4.1% compared to 2016. • The key driver behind this performance is online retail, which is expected to increase by 10% in 2017. The economic environment remains favourable: the German economy is in good shape (real GDP growth in 2017 was 2.2%) and household purchasing power has been increasing in recent years. • Retail confidence has recovered since H1 2013 but remains weak, while economic confidence steadily increased since H2 2013, reflecting a dynamic export-based economy. • E-commerce sales in Germany have been increasing rapidly, reaching 44.2 billion euro in 2016. These are expected to reach 48.7 billion euro in 2017, reaching over 9% of total sales. Digital is increasingly putting pressure on brick and mortar retailers.
49 Retail turnover has exceeded 500 billion euro in 2017 after 6 years of continuous growth
Retail Turnover in absolute values* (€) and year-on-year growth rate, % , 2017= provisional
5 550.000 Retail Turnover, EUR million (right scale) Year-on-year growth rate, % (left scale) 4,4 530.000 4,1 4 510.000 512.800 490.000 492.600 3 478.300 470.000 3,0 2,5 458.100 450.000 450.900 2,0 445.400 2 437.900 430.000 432.300 427.200 1,7 418.900 1,6 410.000
1 1,2 390.000
370.000
0 350.000 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017p
Retail turnover has steadily increased in Germany since 2009. In 2017, reflecting a favourable economic context, retail turnover has reached 513 billion euro.
*Excluding sales of automotive fuels Sources: Eurostat and Handelsverband Deutschland (HDE) 50 Total sales have steadily increased since 2013 with food sales growing more slowly
Retail Sales Developments (Deflated Retail Turnover Index), total retail and food, year-on-year growth rates, %
6
4,7 4
2,8 2
0,6 0 -0,2
-2
-4 Total Retail Food -5,0 -6 2008Q1 2010Q1 2012Q1 2014Q1 2016Q1 2018Q1
Total and food retail sales have steadily increased on an annual basis since 2013. In Q4 2017, total sales increased by 1.9%, slowing down compared to other quarters in 2017 and slowed further in Q3 2018 (0.7%). Food sales have also increased, albeit at a slower pace since early 2015, and grew by 0.6% in Q3 2018.
51 Inflation has remained around 2% since 2017, with food prices showing more volatility
Inflation (Consumer Price Index, %), monthly data
8 7,4 All items Food 6
4 2,6 2 1,7 1,7 1,4 0
-2 -3,4 -4
-6
-8 2007M01 2009M01 2011M01 2013M01 2015M01 2017M01
Inflation in Germany has been weak and below 2% since 2013 but gaining ground since early 2017. Food inflation has been more volatile and reached 3.3% in June ‘18, but quickly eased to 1.4% in November; this could partly explain the recent slowdown in consumers’ food purchases. Note: EU-Harmonised index of consumer prices
52 Growing household disposable income has supported increased retail spending
Gross Disposable Income of Households per capita in PPS, annual data
30.000
27.926 27.818 27.084
26.069 26.199 25.000 25.212
24.271
23.506 23.695 23.284
20.000 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Households’ gross disposable income slightly declined in 2016 but remains high as compared to other EU countries, after years of continuous increase.
53 German households spend 14% of their income on food, which comes second after housing
Breakdown of final household consumption by types of spending, 2016, %
Education 0,7
Communication 2,5
Clothing 3,6
Household equipment 4,0
Health 4,4
Restaurants and hotels 5,7
recreation and culture 6,1
Transport 10,4
Miscellaneous goods and services 13,5
Food+alcohol and tobacco 13,8
Housing 35,3
Source: Destatis 54 Economic growth supportive of household consumption
Real GDP and Final Household Consumption, year-on-year growth rates, %
Real GDP Final Household Consumption 8
6 5,6
4 2,8 2 1,2 1,2 0,4 0
-2
-4
-6
-6,9 -8 2008Q1 2010Q3 2013Q1 2015Q3 2018Q1
Real GDP has increased since Q1 2013, but this trend eased during 2018 and in Q3 has turned to negative quarterly growth of 0.2% (1.2% year-on-year), as a result of international trade disputes. Household consumption has followed a similar trend. In 2017 GDP growth was 2.2% and final consumption growth was 1.8%.
55 Unemployment has fallen down to record lows
Unemployment rate, whole economy, % of labour force, monthly data
10
9 9,2
8 7,8
7 7,0
6
5
4
3 3,2
2
1
0 2007M01 2009M01 2011M01 2013M01 2015M01 2017M01 2019M01
Reflecting positive macroeconomic conditions, the overall unemployment rate has decreased since 2009 and reached 3.2% in January 2019.
56 Retail confidence remains however low
Retail Trade Confidence Indicator and Economic Sentiment Indicator (ESI), monthly data
40 150 Retail Trade Confidence Indicator Economic Sentiment Indicator 140 30 130 20 17 120 10 107,4 112,0 110
0 100 -3,7 90 -10 -3 80 -20 70 -30 -32 60
-40 50 janv.-07 janv.-09 janv.-11 janv.-13 janv.-15 janv.-17
Retail confidence has recovered since H1 2013 but remains weak, while economic confidence steadily increased since H2 2013, reflecting a dynamic export-based economy. Note on the ESI; above 90= positive economic expectations Note on the Retail CI: below 0= negative expectations
57 Retail employs around 3.3 million people, representing 8% of total employment
Number of persons employed in retail, thous. (left scale), and as % of total employment (right scale)
3.500 10
3.400
3.300 9 3.319 8,6 8,4 8,5 8,4 3.265 3.266 3.200 8,3 3.237 8,3 8,3 8,2 8,3 3.199 3.207 3.197 3.202 3.214 8,1 3.100 3.149 8
3.000
2.900 7
2.800
2.700 6
2.600
2.500 5 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
58 Investment in retail is fairly low, reflecting a mature market
Investment rate in the retail sector, %*
Retail Manufacturing
13,8 12,7 12,3 12,0 11,7 11,5 11,6 10,7
8,9 8,5 8,1 8,2 7,4 7,5 7,0 7,2
2008 2009 2010 2011 2012 2013 2014 2015
Investment rate in retail has declined down to 7.5% from 8.9% in 2012 but remains higher than before the crisis.
* Defined as the ratio of business fixed investment to value added 59 Total sales area has steadily increased but at a slow pace reflecting a mature market
Surface of sales areas in the retail sector, million square metres
125
123,7 124 123,1 123,1 122,4 122,1 120 121,5 120 120
115
110
105
100 2008 2009 2010 2011 2012 2013 2014 2015 2016
The total surface of retail sales areas in Germany has only slightly increased compared to 2008 (+3%), with the exception of 2012, and has reached 124 million square meters.
Source: HDE 60 E-commerce is dynamic and growing fast
Total e-commerce sales (B2C), billion EUR, 2017 - estimate
60
50 49 44 40 40 36 30 32 28 24 20 20 16 10 13
0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
E-commerce sales in Germany have been increasing rapidly, reaching 44.2 bn € in 2016. These are estimated to have reached 48.9 billion euro in 2017, accounting for over 9% of total sales. This is three times bigger than in 2008 (12.6 billion euro) Source: HDE 61 Fashion and consumer electronics dominate online sales
E-commerce sales by category, %, 2017
Fashion 25,2
Electronic 24,9
Leisure 14,7
Furnishing 9,2
FMCG 7,7
Health 6,3
Others 4,5
Bricolage and gardening 4,1
Jewellery 1,7
Office and stationery 1,7
The highest e-commerce spending in 2017 was on fashion and electronic appliances, with about 25% each. FMCG account for only 8% of online sales, albeit 0.5% higher than in 2016. Source: HDE 62 The share of online food sales food is still small (0.6%). Online sales account for 4.2% of total non-food sales
Total sales and e-commerce sales of food and non-food (billion EUR)
Total food sales of which: online Total non-food sales of which: online 350 180 179 334 173 174 319 160 300 306
140 250 120
200 100
80 150
60 100 40
50 20 1,1 0,8 0,8 14 0 0 12,6 13,3 2015 2016 2017 2015 2016 2017 Source: HDE 63 The top 10 players make two thirds of the German grocery market
Total food expenditure (million euro) and top 10 food players, 2016
Total food expenditure (FMCG) Top 10 food players (2016), accounting for 67.9% of the German grocery market:
• EDEKA 241.217 • Rewe Group • Schwarz Group • Aldi Group • Metro Group 163.690 • Lekkerland • Dm • Rossmann • Bartels-Langness-Group • Norma
Expenditure FMCG FMCG sales of the top ten retailers
Source: IFH 64 Italy
65 Italy: key findings
• Over the last 10 years, retail turnover has followed very closely real GDP developments: after the peak recorded in 2007-2008, in 2009 the retail sector was severely hit by a double-dip recession similar to that recorded by the Italian economy. • In this context, food retail has shown more resilience than non-food, with no significant increase or decrease. In addition to the slow but continued decline of traditional shops since early 2000s, also recently hypermarkets with more than 4,500 sq.m. have shown signs of distress recently. • In 2016, large modern retailers (including cash & carry sector), with about 59,000 stores, accounted for 60% of total retail turnover, and 700,000 small traditional shops 27% (against 42% in 2000). • The grocery retail sector remains very fragmented: within modern retail, Coop Italia – a system of Italian consumers’ co-operatives with over 7.5 million members – was the country’s leading food grocery retailer in 2016, with a market share of 14%. Other major food players were Conad (with a market share of 12%), Selex (9.9%) and Esselunga (9%). • The non-food modern retail segment is more fragmented, with different important players in the various categories (electronics, home furniture, etc). For instance, the leading player in clothing category is OVS-Coin with a 16.2% markets share in the clothing sector but only 4,1% in the whole “non food” segment.
66 Retail turnover reached 283 billion euro and is growing slowly
Retail Turnover in absolute values (€) and year-on-year growth rate, %, 2017= provisional
10 300.000 Retail Turnover, EUR million (right scale) Year-on-year growth rate, % (left scale) 8 290.000 7,5
6 283.087 280.000 279.730 4 274.459 274.161 274.639 270.000 271.982 269.405 3,7 1,9 2 265.556 264.816 1,2 260.000 0,8
0 253.034 -0,3 250.000
-2 -1,4 240.000 -1,7 -4 230.000
-6 220.000
-8 -7,8 210.000
-10 200.000 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017p
After three years of decline due to the economic recessions, Annual retail turnover has recovered in 2015 (by 3.7%). In 2016 and 2017 it has continued to grow, but at a lower pace (1.9% and 1.2%).
Sources: Eurostat and Federdistribuzione *Excluding sales of automotive fuels 67 Total and food retail sales reflect an overall weak economic environment
Retail Sales Developments (Deflated Retail Turnover Index), total retail and food, year-on-year growth rates, %
5 Total Retail Food 4
3 2,7 2
1 1,2
0 -0,5 -1 -1,2 -2 -1,9
-3 -3,3 -4 -4,4 -5 2008Q1 2009Q2 2010Q3 2011Q4 2013Q1 2014Q2 2015Q3 2016Q4 2018Q1
Retail sales recovered since the two recessions of 2008 and 2012, although growth in yearly terms has remained very weak in the last two years. In Q3 2018, total retail sales decreased by 0.5% year-on-year. Food sales have followed the same trend at even more negative rates.
68 Overall inflation and food inflation remain low reflecting modest domestic demand
Inflation (Consumer Price Index, %, monthly data)
9 All items Food
7 6,7
5
3,0 3
1,9 1,2 1 0,8
-1 -1,0
-3
-5 2007M01 2009M01 2011M01 2013M01 2015M01 2017M01
Inflation has been very low since 2012, reflecting weak domestic demand and economic activity, reaching 1.2% in Nov.2018. Food inflation has been volatile throughout 2017 and has eased to 0.8% in Nov. 2018. Note: EU-Harmonised index of consumer prices 69 Household disposable incomes are better but have not recovered to pre-recession levels
Gross Disposable Income of Households per capita in PPS, annual data
22.000
21.868
21.689 21.697 21.500 21.540 21.470 21.411
21.000 20.981 20.917 20.813 20.694 20.500
20.000 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Household disposable incomes significantly decreased following the economic crisis in 2009; they recovered substantially in 2015 but remain lower than pre-recession levels
70 Italian households spend 20% of their income on foods, which comes second after housing
Breakdown of final household consumption by types of spending, 2016, %
Education 0,6
Communication 2,5
Clothing 3,6
Furnishing 4,2
Health 4,5
Restaurants and hotels 5,1
Recreation and culture 5,2
Other goods and services 7,3
Transport 10,7
food and beverages 19,5
Housing 35,8
Source: Istat 71 The overall economy and household consumption are slowly recovering at the same pace
Real GDP and Final Household Consumption, year-on-year growth rates, % 8 Real GDP Final Household Consumption
6
4 2,5 2 0,8 0,8 0,0 0 0,4
-2
-4
-6
-8 -7,2 2008Q1 2010Q1 2012Q1 2014Q1 2016Q1 2018Q1
After the severe economic recessions between 2009 and 2013, GDP and household consumption have recovered, although at a slow pace. Both GDP and household consumption growth have lost further speed during 2018. In 2017, annual GDP growth rate was 1.6% and final consumption growth was 1.5%.
72 Unemployment has slightly decreased since 2014, but remains high (i.e. above 10%)
Unemployment rate, whole economy, % of labour force, monthly data
15
14
13 13,0
12
11 10,5 10
9
8
7 6,2 6
5 2007M01 2009M01 2011M01 2013M01 2015M01 2017M01 2019M01
Further to the macroeconomic recovery, the unemployment rate has slowly decreased from the peak of 13% in 2014, but remains fairly high (10.5% in January ‘19).
73 Retail structure has changed significantly with the development of modern retail
Total retail sales by distribution channel, %
11,9 12,6 12,6 12,7 12,8 Market Stalls, e-commerce
Traditional Small Shops 28,5 27,8 27,4 27,1 42,1 Modern retail
58,9 59,6 59,9 60,1 46,1
2000 2013 2014 2015 2016 The market share of modern retail (i.e. Supermarkets, Hypermarkets etc) grew from 46% in 2000 to 60% in 2016. Traditional, small shops in 2016 accounted for a considerable share of total Italian retail market (27%); in 2000, they held a market share of 42%. Source: Federdistribuzione 74 Modern retail is most significant in the groceries’ market
Food sales breakdown by distribution channel, %
9,8 10,1 10,2 10,2 10,2 Market stalls, e-commerce
17,5 16,9 16,7 16,3 27,1 Small traditional shops
11,1 11,4 11,8 12,8 6,2 9 8,7 8,3 7,7 Convenience stores 12
Supermarkets (400-1500 sq.m) 41,2 42,1 42,5 42,8 37,3 Superstores (1,500 to 4,500 sq.m)
7,6 11,1 10,7 10,5 10,2 Hypermarkets (above 4,500 sq.m)
2000 2013 2014 2015 2016
In the grocery retail market, which accounted for 116 billion euro in 2016, modern retail is the prevailing format (73.5%), of which superstores hold 43% of the market. Small shops account for 16%, while superstores (between 1,500 and 4,500 sq.m) hold 43% of the market. Source: Federdistribuzione 75 The Italian market has many players and remains fragmented
Key players (food) and related market shares, 2016, %
Coop Italia 14,2
Conad 12,0
Selex 9,9
Esselunga 9,0
Gruppo Auchan 6,3
Gruppo Carrefour 6,1
Eurospin 5,6
Gruppo Vege 4,0
Lidl Italia 3,1
Gruppo Pam 2,9
The food market presents a plurality of players and a high fragmentation. Coop Italia ranks first with a market share of 14%, followed by Conad (12%). Source: Nielsen 76 Traditional retail still prevails in non- food retailing
Non-Food sales breakdown by distribution channel, %
14 15,4 15,4 15,4 15,8
41,4 40,5 40,0 39,3 Market stalls, e-commerce 57,5 Small traditional shops Large specialised stores Department stores Hyper + Supermarkets 31,0 31,8 32,4 32,6
19,6
5,5 5,8 5,8 6,3 4,7 4,2 6,7 6,4 6,4 6,0 2000 2013 2014 2015 2016 In the non-food retail market, modern retail (hyper+super+department stores) holds a significantly lower market share (45%) than in foods, albeit nearly twice as much that of 2000 (29%). Small traditional shops hold 39% of the market despite a sharp decline compared to 2000 (58%). Large specialised stores hold 33% of the market.
Source: Federdistribuzione 77 Sales area development stable since 2013, after years of growth
Sales area developments, Food modern retail (Hypermarkets + Supermarkets + Discounts), thous. square meters (left scale) and annual change (right scale)
20.000 5 4,2 3,5
18.000 3,2 3 2,8 17.306 17.265 17.035 17.214 17.189 17.237 17.184 16.845 1,6 16.000 16.386 1 1,1 0,3 15.830 -0,1 15.332 14.718 -0,2 -0,3 -0,3 14.000 -1
12.000 -3
10.000 -5 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Total retail sales area in hypermarkets, supermarkets and discounts has stabilised since 2013 after years of continued increase Source: Federdistribuzione 78 Retail investment declined reflecting stagnant sales area developments
Investment rate in the retail sector, %*
20
18 Retail Manufacturing 18,1 17,3 16 17,2 15,7 14 15,0
13,1 12 13,0 12,6 12,4 12,2 12,3 12,4 11,4 10 11,2 9,3 8 9,1
6
4
2
0 2008 2009 2010 2011 2012 2013 2014 2015
Investment retail has slowly decreased in recent years, down to 9.3% of value added from 17.3% in 2008.
* Defined as the ratio of business fixed investment to value added; 79 Retail confidence slightly recovered after years of decline
Retail Trade Confidence Indicator and Economic Sentiment Indicator (ESI), monthly data
40 120 Retail Trade Confidence Indicator Economic Sentiment Indicator 30 110 20 106,5 109,4 100 10 4 2 0 90
-10 80 -20 70 -30 -32
-40 60 janv.-07 janv.-08 janv.-09 janv.-10 janv.-11 janv.-12 janv.-13 janv.-14 janv.-15 janv.-16 janv.-17 janv.-18
Retail confidence has recovered since 2014 but is still weak and has declined in early 2018, while economic confidence has been on a moderate rise for 4 years, anticipating the economic recovery Note on the ESI; above 90= positive economic expectations Note on the Retail CI: below 0= negative expectations
80 Retail employment is around 2 million people and increased in 2016 and 2017
Number of persons employed in retail (left scale), thous., and as % of total employment (right scale)
2.000 10 1.993 1.996 1.991
9,2 1.951 9,0 1.941 1.925 1.900 8,9 9 8,5 8,9 1.891 1.881 8,8 8,7 8,3 1.857 8,3 8,2
1.800 1.823 8
1.700 7
1.600 6
1.500 5 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
81 E-commerce is dynamic, with clothing and electronics key categories
Total e-commerce sales (Italian websites), € million, and total sales’ breakdown by categories, 2016, %
Clothing 13.015 29 Electronics + appliances + IT, Computers 10.178 Others 28 7.322 Furniture
23 Food
7 7 Newspapers + books 6
2015 2016 2017
E-commerce sales in Italy are increasing significantly (by 28% in 2017, and by 39% in 2016). In 2016, clothing represented 29% of e-commerce transactions and electronic goods, including IT, 28%. Source: Politecnico di Milano; 2017= forecast 82 The Netherlands
83 Netherlands: key findings
• The Dutch retail sector has benefited from positive economic developments throughout 2017. Retail developments in 2016 and 2017 were mostly influenced by the growth in e-commerce, which experienced double-digit growth rates, but also by diversifying strategies adopted by large brick-and-mortar retailers. • In 2018 retail is expected to continue recording the positive trend of recent years, albeit slowing down a bit. The growth in e-commerce will gain further speed and this will put traditional bricks and mortars under even bigger pressure. Discounters, price pressure and over capacity also play a key role. • Although growth is lagging in both the food and non-food subsectors in many countries, the causes of the weak performances in the two-subsectors are different. • In non-food, consumer spending has decreased, the shift to online has put pressure on profitability and the offline shopping experience has deteriorated. Key causes are an enduring shift in spending behaviour following the crisis and the shift to online shopping. • In the food sector, turnover has grown but profitability has been under pressure. The downward pressure on prices from discounters, who have seen their market share rise, has resulted from squeezed profitability, and the increasing phenomenon of consumers seeking lower food prices have considerably shrunk profitability for large grocery retailers and put strong downward pressure on food prices. • The rise of e-commerce has had a major impact on non-food retail spending. Online purchases now account for about 11% of non-food retail revenue in the Netherlands. This shift affects all non-food categories, but some are more impacted than others. In general, products characterized by “high certainty” – where consumers know exactly what they are buying – and high value per purchase, such as consumer electronics, are moving towards online faster. 84 Annual retail turnover increased every year since the drop of 2013. Growth in 2017 was 3.7%
Retail Turnover in absolute values (€) and year-on-year growth rate, 2017= provisional
6 110.000 Retail Turnover, EUR million (right scale) Year-on-year growth rate, % (left scale) 4,8 4 105.000 105.283 3,7 2,9 101.527 2 1,6 100.000 1,2 0,7 98.696 0,9 0 96.027 95.000 -0,1 95.400 93.887 94.161 93.341 92.874 92.748 -2 90.000
-2,8 -4 85.000
-6 *Excluding sales of automotive fuels 80.000 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017p
Sources: Eurostat and CBS 85 Total retail sales and food sales experienced diverging developments in the last ten years
Retail Sales Developments (Deflated Retail Turnover Index), total retail and food, year-on-year growth rates, %
6 Total Retail Food
4 3,6 3,3 2 1,6 1,2 1,3
0
-2
-4
-5,2 -6 2008Q1 2010Q1 2012Q1 2014Q1 2016Q1 2018Q1
Total sales have recorded two severe recessions around 2009 and 2013 (which are mirrored by annual turnover figures), whereas food sales proved relatively more resilient. Since Q3 2016, the two trends have reverted: total sales have gained speed (3.6% in Q3 2018) and food sales have slowed down to zero growth in Q4 2017, recovering up to 3% in Q3 ’18. Consumer spending in non-food has been influenced by the recession, and more recently, by the shift to online shopping that has put pressure on profitability.
86 Food inflation has recently been higher than overall inflation, almost reaching 4% in late 2017 and H1 2018
Inflation (Consumer Price Index, %), monthly data
8 All items Food 7,0 6
4
2 1,8 1,2 1,0 0
-2 -2,0
-4
-6
-8 2007M01 2009M01 2011M01 2013M01 2015M01 2017M01
Overall inflation has been low since 2014 (1.8% in Nov. 2018). Food prices have dropped under the two recessions of 2009 and 2013 as consumers have been increasingly seeking low-price products. Reflecting high volatility, they have risen sharply in 2017, reaching 3.1% in November ’17 but then falling sharply to 1% in Nov.’18.
Note: EU-Harmonised index of consumer prices 87 Household disposable income has returned to all-time highs in 2015 and 2016
Gross Disposable Income of Households per capita in PPS, annual data
25.000
24.000
23.560 23.592 23.609 23.392 23.000 23.091 22.940 22.947 22.873 22.519 22.000 22.297
21.000
20.000 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Household disposable income has reached high historical levels in 2015 and 2016, having increased since the all-time low of 2010.
88 Food consumption accounted for 11% of household spending in 2016
Breakdown of final household consumption by types of spending, 2016, %
31,8
17,9
13,3 11,0 9,5
6,5 5,3 4,7
Housing water and Other expenses Recreation and Food and soft Transport Various goods and Home furnishing Clothes and shoes energy culture drinks for domestic services articles and consumption household appliances
Source: DNB (Dutch National Bank) 89 Economic growth gained speed in 2017, but has lost ground in 2018
Real GDP and Final Household Consumption, year-on-year growth rates, %
8 Real GDP Final Household Consumption
6 6,1
4 3,1 2,3 2 2,0 1,2 0
-2
-4 -4,5
-6
-8 2008Q1 2010Q1 2012Q1 2014Q1 2016Q1 2018Q1
Economic growth has been positive since Q1 2014 and has gained speed reaching 2.9% in the whole year 2017, but slowed down in 2018. Final household consumption has followed a similar pattern, albeit at slightly lower rates. In 2017, final consumption growth was 1.9%
90 Unemployment has dropped by 4.4% from early 2014 to 2018
Unemployment rate, whole economy, % of labour force, monthly data
10
9
8 7,9
7
6
5 4,5 4 3,6 3
2
1
0 2007M01 2009M01 2011M01 2013M01 2015M01 2017M01 2019M01
Since its peak in February 2014 (7.9%), the overall unemployment rate in the Netherlands has been decreasing remarkably, down to 3.6% in Jan. ‘19. Note: EU-harmonised unemployment rate (Eurostat definition); seasonally-adjusted data 91 Only one food retailer holds a market share above 30%
Key players and related market shares (food), %, 2016
Albert Heijn 35,3
Jumbo 18,4
Lidl 10,3
Aldi 7
Plus 6,2
Others 5,7
Dirk 3,7
Coop 3,1
Emte 2,6
Deen 2,2
Hoogvliet 2,1
Dekamarkt 1,8
Spar 1,6
The Dutch food retail market is dominated by Albert Heijn (with a market share of 35%). Then Jumbo (18%) and Lidl (10%) follow, while a number of other players hold markets shares below 10%. Source: Nielsen 92 Confidence in retail and in the economy improving since early 2014
Retail Trade Confidence Indicator and Economic Sentiment Indicator (ESI), monthly data
25 150 Retail Trade Confidence Indicator Economic Sentiment Indicator 20 140
15 18 15 130
10 120
5 116,0 110 110,5 0 100
-5 90
-10 80
-15 70 -17 65,5 -20 60
-25 50 janv.-07 janv.-09 janv.-11 janv.-13 janv.-15 janv.-17
Confidence in the retail sector and in the economy has been increasing since Q1 2014. Both confidence indicators however in April 2018 were still below the peaks observed before the 2009 crisis.
Note on the ESI; above 90= positive economic expectations Note on the Retail CI: below 0= negative expectations 93 Vacancy rates decreased in 2017 but remain high as a result of previous overinvestment
Retail vacancy rates, %
10,2 9,2 9,2 8,7 7,8 7,3 6,8 5,9 6 5,5
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 There is oversupply of retail stores in the Netherlands. On national average, more than 9% of the retail floor space was vacant in 2017, albeit lower than in 2016.
Sources: Locatus, PBL (Government Environment Office) 94 Employment in retail almost returned to pre-recession levels
Number of persons employed in retail, thous. (left scale) and as % of total employment (right scale)
750 10
8,8 8,8 9 722 8,8 8,8 8,6 720 8,5 718 712 713 712 711 8,7 700 705 8,6 8,5 8,4 700 696 8
7 650
6
600 5 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Employment in retail reached 720,000 people, that is 4% higher than before the historical low of 2010 which was due to the recession 95 Investment in retail did not recover back to 2008 levels due to some overinvestment
Investment rate in the retail sector, %*
Retail Manufacturing
13,6 13,1 13,0 12,8 12,2 12,2 11,8 11,8 11,2 10,3 10,4 10,3 10,3 9,6 9,2 8,7
2008 2009 2010 2011 2012 2013 2014 2015 Investment in the retail sector dropped considerably in 2009 as a result of the economic crisis. The drop was also a correction from “overinvestment”, and has partly recovered since then (11.2% of retail value added in 2015). * Defined as the ratio of business fixed investment to value added 96 E-commerce sales reached 23 billion euro in 2017, 74% more than in 2013
Total e-commerce sales (B2C), million euro, 2017: forecast
23
20
16
14 13
2013 2014 2015 2016 2017
E-commerce sales have reached 23 bn € in 2017, which represents an increase of 74% compared to four years earlier.
Source: E-Commerce Foundation 97 Cross-border purchases (within the EU) in 2016 amounted to 1.1 billion euro
Cross-border purchases, billion euro
1,071
0,859
0,66
2014 2015 2016
More than 80% of the cross-border internet purchases (within the EU) in 2016 was performed by companies located in Germany, the UK, Belgium or Italy. German webshops are leading with over 50% of the value of all purchases. Then the UK follows with 12%, and Belgium and Italy with about 8% each.
Source: CBS 98 Poland
99 Poland: key findings
• Annual retail turnover has constantly increased every year since 2009. In 2017, it increased year-on-year by 7.7% (when retail turnover is expressed in local currency, PLN), further to an increase of 7.4% in 2016. So far, potential uncertainty stemming from political developments (rise of populism, protectionist measures which may hamper free movement of goods etc.) has not translated yet into a significant slowdown in retail sales or in deteriorating retail confidence. Retail developments in 2016 and 2017 were strongly supported by the positive macroeconomic environment. Real GDP growth has accelerated during 2017 resulting in an annual rate of 4.6% (further to 2.9% in 2016), far above the EU average (2.4%). Final household consumption also recorded very positive developments, but at lower rates. Household disposable income has also increased up to record highs in 2016 is expected to continue growing in 2017. • Food inflation in Poland has gained considerable speed recently since the all-time low of Q1 2015 (-4.1%) up to 3.5% in April 2018. Overall inflation has followed a less steep trend, reaching 0.9% in April 2018.The breakdown by distribution channel in the food retail market sees discounters hold the largest share (27%), then convenience stores (18%), Hypermarkets account for 15% and large supermarkets for 8%. • In the food market, there is still rather low market concentration, i.e. a plurality of players, of which Jeronimo Martins group holds the largest market share (30%). Some of the factors that characterized the Polish retail market in the last three years were strong competition and some growing consolidation. This sector is dominated by multinational retail hypermarkets including Tesco, Auchan, Carrefour and discounters Lidl and Jeronimo Martins. Major chains face slim margins due to fierce competition. • In recent years, there has also been a trend in consumer preference toward smaller grocery formats, including convenience stores, small grocery retailers and independents. Smart shopping trend started during economic crisis strongly supported development of discounters, namely brands such as Lidl and Biedronka (Jeronimo Martins group) expanded their chains aggressively, capturing significant part of the market (up to 27% in 2016). 100 Annual retail turnover has increased since 2009, (7.7% in 2017)
Retail Turnover in absolute values (€) and year-on-year growth rate (in PLN values), %, 2017= provisional 10 120.000 Retail Turnover, EUR million (right scale) Year-on-year growth rate, % (left scale)
110.000 111.519 8 7,4 7,7 7,5 100.000 101.026 98.065 6 93.169 90.000 91.310 91.363 … 5,0 87.445 88.006 4 83.946 4,1 80.000 77.787 70.000 2 2,2 1,7 60.000
0 -0,4 50.000
-2 40.000 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017p Annual retail turnover has constantly increased every year since 2009. In 2017, it increased year-on-year by 7.7% when retail turnover is expressed in PLN), and by 5.3% in € values. *Excluding sales of automotive fuels Sources: Eurostat and Statistics Poland 101 Total retail sales have increased since 2013. Food sales have grown at a much lower pace
Retail Sales Developments (Deflated Retail Turnover Index), total retail and food, year-on-year growth rates, %
13 Total Retail Food
10,4
8 6,9 6,9 5,7
3
1,2 -2
-7 -6,6
-12 2008Q1 2009Q2 2010Q3 2011Q4 2013Q1 2014Q2 2015Q3 2016Q4 2018Q1
Total retail sales have increased on a yearly basis since early 2013, up to 6.9% in Q3 2018. Food sales have grown at a lower pace since 2015, being slightly affected by strong price increases, but have jumped to 6% growth in Q3 ’18.
102 Food inflation has almost reached 6% in Nov 2017, but then has slowed down considerably.
Inflation (Consumer Price Index, %), monthly data
9 All items Food 8,3
7
5
3 2,7
1,6 1 1,0 0,6
-1
-3 -4,1 -5 2007M01 2009M01 2011M01 2013M01 2015M01 2017M01 Food inflation has reached very high levels (up to 8% in 2007 and 2010, 6% in Dec. 2017), when the economic cycle and domestic consumption were quite strong, but then has eased to 0.6 in Nov. ‘18. As food consumption is inelastic, food price increases did not translate into substantial falls in food retail sales (see 3.7.2)
Note: EU-Harmonised index of consumer prices 103 Household disposable income increased in line with positive macroeconomic developments
Gross Disposable Income of Households per capita in PPS, annual data
14.982 14.274 13.750 13.893 12.976 12.403 11.442 11.005 10.557
2007 2008 2009 2010 2011 2012 2013 2014 2015
Household disposable income has steadily increased every year since 2007. Albeit growing, it remains 30% below the average EU28 level.
104 Household spending on food (24%) is higher than on housing (20%)
Breakdown of final household consumption by types of spending, 2016, %
23,6
19,9
8,6 6,8 5,4 5,4 4,9 4,5 0,7
Food and Housing Transport Recreation and Clothing Health Communication Restaurants and Education beverages culture hotels Poland is the only country among the 10 largest EU retail markets where household spending on food (24%) is higher than on housing (20%). This is consistent with the lower per capita income of the country compared to western EU economies (i.e. the lower the income level, the higher the spending on food) Source: Central Bank of Poland 105 Continued GDP and household consumption growth, up to 4.8% and 4.9% in 2017
Real GDP and Final Household Consumption, year-on-year growth rates, %,
10 Real GDP Final Household Consumption
6,0
5 5,8 5,0 4,5
0 0,1
-5 2008Q1 2010Q1 2012Q1 2014Q1 2016Q1 2018Q1 The Polish economy has recorded continuous growth since the 2013 recession, reaching 4.8% in 2017. Growth in final household consumption has been similar and has contributed to fuel retail spending, albeit slowing during 2018. Annual growth of final consumption in 2017 was 4.8%.
106 The unemployment rate has dropped to the record low of 3.7%
Unemployment rate, whole economy, % of labour force, monthly data
15
11,3 10,6 10
6,6
5
3,7
0 2007M01 2009M01 2011M01 2013M01 2015M01 2017M01 2019M01
Reflecting the macroeconomic momentum, the overall unemployment rate in Poland has been decreasing significantly since Q2 2013, down to 3.7% in Jan. ’19. The Polish labour market is indeed suffering from labour shortage as unfilled vacancies are growing and labour force is shrinking.
Note: EU-harmonised unemployment rate (Eurostat definition); seasonally-adjusted data 107 27% of food retail sales are made via discounters, followed by traditional shops
Food sales by distribution channel, %, 2016
Discounters 26,7
Traditional 18,0
Soft Franchise 17,1
Hypermarkets 15,2
Convenience 8,3
Large Supermarkets 8,2
Proximity Supermarkets 6,5
The largest market share in the Polish food retail landscape is held by discounters (27%). Hypermarkets account for 15% and large supermarkets for 8% , while traditional shops hold a 18% market share
Source: Euromonitor 108 Food retail market has a plurality of players and a low concentration
Key players and related market shares, food sector, 2016, %
Jeronimo Martins Dystrybucja 30,4
Lidl 16,2
Eurocash 13,1
Tesco 8,7
Leviatan 6,9
Auchan 5,9
Carrefour 5,7
Metro Group 5,2
Polomarket 4,0
Zabka 3,8
The food retail market in Poland sees a plurality of players, with Jeronimo Martins holding a market share of 30%, followed by Lidl (16%), Eurocash (13%) and others with market shares below 10% each. Source: Planet Retail 109 Retail confidence has sharply increased and almost peaked at end-2017
Retail Trade Confidence Indicator and Economic Sentiment Indicator (ESI), monthly data
20 150 Retail Trade Confidence Indicator Economic Sentiment Indicator 140 15 12 130 10 120 7 5 115,6 110 103 0 100
90 -5 80 -10 70 -15 -16 60
-20 50 janv.-07 janv.-09 janv.-11 janv.-13 janv.-15 janv.-17 janv.-19
The retail confidence indicator has been on the rise since early 2014, but has eased in H1 2018 (albeit still in positive territory). The ESI has followed a similar pattern, in line with the positive economic picture of the country.
Note on the ESI; above 90= positive economic expectations Note on the Retail CI: below 0= negative expectations 110 Employment has increased in the last 3 years to 1.5 million people but remains below 2008 levels
Number of persons employed in retail, thous., (left scale) and as % of total employment (right scale) 1.500 10 1.476 1.486 1.459 1.467 9,5 9,4 9,3 1.451 1.400 1.431 1.428 1.435 9,4 1.420 9,3 1.400 9,2 9,3 9,1 1.300 9,1 9,1 9
1.200
1.100 8
1.000
900 7
800
700 6
600
500 5 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
111 Investment in retail has decreased but has more room for growth
Investment rate in the retail sector, %*
Retail Manufacturing
26,9
23,6 22,6 22,3 21,4 20,4 19,9 19,9 19,9 20,3 18,5 17,2 16,7 16,3 15,7 15,6
2008 2009 2010 2011 2012 2013 2014 2015
Investment in the retail sector has decreased over the years from the peak of 2009 (21.4%) to 15.6% in 2015, but remains one of the highest in the EU (vs. a EU average of 12%).The retail sector in Poland is less mature than in Western EU economies and therefore has more room for growth and investment than mature markets.
* Defined as the ratio of business fixed investment to value added 112 Total e-commerce sales in Poland have grown by 68% since 2013
Total e-commerce sales, 2013-2017, billion euro
8
6,7 6 6,0
5,3
4,7 4 4,0
2
0 2013 2014 2015 2016 2017
Source: E-commerce Foundation 113 Spain
114 Spain: key findings
• Retail sales in 2017 have continued to catch up with the peaks of 2007, in line with the continued macroeconomic recovery of the country. Most dynamic retail subsectors in 2016 and 2017, according to Eurostat NACE2 categories, were the sales via e-commerce and sales in non specialised stores with food predominating (i.e. supermarkets).
• Retail developments over the last two years were mostly influenced by the increase in employment, real wage income and consumer credit, as the economic recovery fueled the sales of non-food products. On the other hand, continued population decline and the considerable growth of consumption outside home resulted in a more modest growth in food sales.
• In annual terms, in 2017 retail turnover grew by 2.5% in value, excluding fuel sales. In short, the overall macroeconomic picture has continued to be supportive of retail spending, but in 2018 retail confidence may be affected by a number of factors and key market developments, as follows:
Household consumption moderated in 2017 and is expected to do so also in 2018;
The one-off supportive factors that stimulated spending until 2016 are now over (tax breaks, falls in energy prices), which hampered demand;
Lower dynamism of employment, wage moderation and higher prices, which hinders the improvement of purchasing power;
Low growth of financial wealth of households;
Lower growth of new consumer credits. 115 Spain: key findings
• The Spanish retail markets presents a low degree of concentration measured by the weight of the top 10 companies. • The structure of the retail market is characterised by a plurality of players, greater commercial density and smaller business size, which translate into low levels of productivity per employee and commercial surface and investment capacity. In additions, regulatory restrictions towards the opening of large establishments. • Between 2008 and 2015, the commercial surface of medium-sized establishments grew by 25% while the large ones grew by 2%.
116 Retail turnover reached 215 billion euro in 2017
Retail Turnover in absolute values* (€) and year-on-year growth rate, %, 2017= provisional
7 250.000 Retail Turnover, EUR million (right scale) Year-on-year growth rate (left scale) 6,2 240.000 5 5,2 230.000
3 220.000 2,5 216.995 215.122 210.000 1 0,3 209.886 204.215 204.858 -0,3 200.000 -1 198.281 197.580 193.400 190.000 188.365 187.833 -3 -2,5 180.000 -2,6 -3,2 170.000 -5 160.000 -5,9 -7 150.000 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017p Annual retail turnover increased for the third consecutive year in 2017 (by 2.5%), albeit less than in 2016 (6.2%), in line with the economic recovery of the country *Excluding sales of automotive fuels Sources: Eurostat and ANGED 117 Total sales and food sales have recovered since 2013, but lost momentum during 2017
Retail Sales Developments (Deflated Retail Turnover Index), total retail and food, year-on-year growth rates, %
15 Total Retail Food
10
5
0 -0,6 -2,1 -1,5 -3,5 -5
-10 -11,7
-15 2008Q1 2009Q2 2010Q3 2011Q4 2013Q1 2014Q2 2015Q3 2016Q4 2018Q1 Total retail sales and food sales have been recovering from the severe year-on-year drops recorded in 2010, in line with the improved macroeconomic situation. However, growth rates have been slowing down due to lower expectations on the retail side and the end of some one-off factors which supported retail spending in 2015 and 2016, particularly for the food sector.
118 Inflation fluctuated around 2% in 2017 and 2018
Inflation (Consumer Price Index, %), monthly data
8 7,4 All items Food
6
4,6 4
2 2,3 1,2 0
-2 -2,3
-4
-6
-8 2007M01 2008M03 2009M05 2010M07 2011M09 2012M11 2014M01 2015M03 2016M05 2017M07 2018M09
Inflation was volatile, reaching 3% in February 2017, then declining to 1.2% in Nov. ‘18. Food inflation has been higher than overall prices during 2016 but has remained around 2% (1.4% in Nov. ‘18).
Note: EU-Harmonised index of consumer prices 119 Household disposable income has constantly increased since 2012
Gross Disposable Income of Households per capita in PPS, annual data
18.986 19.164 18.531 18.351 18.327 18.166 17.757 17.797 17.562 17.579
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
120 Spanish households spent 15% of their income on food in 2016
Breakdown of final household consumption by types of spending, 2016, %
30,6
14,6
11,6 9,9
5,7 5,1 3,4 3,1 1,4
Housing Food and Transport Restaurants and Recreation and Clothing Health Communication Education beverages hotels culture
Source: INE 121 The Spanish economy has recovered from two severe recessions
Real GDP and Final Household Consumption, year-on-year growth rates, %
7 Real GDP Final Household Consumption
5
3 2,8 2,5 2,1 1,3 1
-1
-3 -3,5
-5 -5,1 -4,9
-7 2008Q1 2009Q2 2010Q3 2011Q4 2013Q1 2014Q2 2015Q3 2016Q4 2018Q1
The Spanish economy underwent two severe recessions in 2009 and 2012, which were followed by stable recovery both in GDP and household consumption. Annual real GDP growth in 2017 was 3.1% and final consumption growth was 2.5%. 122 The unemployment rate has declined since its 2013 peak, but remains the second highest in the EU, 15%
Unemployment rate, whole economy, % of labour force, monthly data
28 26,2
23
18
14,1 13
8,3 8
3 2007M01 2009M01 2011M01 2013M01 2015M01 2017M01 2019M01
The unemployment rate has decreased from the peak of H1 2013 (26%) to 14.1% in Jan.‘19, but remains well above the 8% rate of early 2007, before the start of the economic recession
Note: EU-harmonised unemployment rate (Eurostat definition); seasonally-adjusted data 123 Mercadona is the biggest food retailer, with a plurality of other players
Key players (food) and related sales, million euro, 2016
Mercadona 19.802
Carrefour 8.049
Dia 5.967
Grupo Eroski 4.983
Auchan 4.641
Lidl 3.335
El Corte Ingles 2.960
Consum 2.344
Ahorramas 1.559
Makro 1.229
The Spanish food retail market has a plurality of players and a low degree of concentration. Mercadona is the biggest market player with sales amounting to 19.8 billion €. Source: ANGED 124 El Corte Ingles - largest non-food retailer, with sales up to 15.5 billion euro in 2016
Key players (non-food), and related sales, million euro, 2016
El Corte Ingles 15.505
Inditex Espaňa 3.963
Media markt 1.975
Leroy Merlin 1.931
Decathlon 1.640
Ikea 1.385
Primark 1.369
Duty Free 1.140
Cortefiel Espaňa 759
H&M Espaňa 718
Mango Espaňa 475
Source: Retail Data and ANGED 125 Economic and retail confidence are on the rise
Retail Trade Confidence Indicator and Economic Sentiment Indicator (ESI), monthly data
40 120 Retail Trade Confidence Indicator Economic Sentiment Indicator
111,5 110 105,9 109,0 20 100
10,9 0 90
-12 80 -20 70
-35 -40 60 janv.-07 janv.-09 janv.-11 janv.-13 janv.-15 janv.-17 Both retail and economic confidence indicators have been on the rise since H2 2013, in line with positive macroeconomic developments. Retail confidence has peaked in January 2016 and has stabilised since then around high levels
Note on the ESI; above 90= positive economic expectations Note on the Retail CI: below 0= negative expectations 126 E-commerce sales reached 24 billion euro in 2017
E-commerce sales, billion euro
24
21
16 15 12
2013 2014 2015 2016 2017
E-commerce sales have increased by 92% from 2013 to 2017.
Source: E-Commerce Foundation 127 Employment in retail has increased in 2017 to 1.9 million people
Number of persons employed in retail, thous. (left scale), and as % of total employment (right scale)
2.000 12 1.994
1.880 1.876 1.888 1.878 1.886 1.852 1.849 1.839 1.856 10,3 10,8 10,8 10,6 10,7 10,0 9,9 10,3 10,1 10 9,8
1.500
8
1.000 6 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
128 Investment in the retail sector decreased considerably since 2008
Investment rate in the retail sector, %*
Retail Manufacturing 18,2
16,5 15,3 14,3 14,0 14,0 13,6 13,5 13,8
11,6 10,7 9,7 9,0 8,2 8,4 7,8
2008 2009 2010 2011 2012 2013 2014 2015
Investment rate in the retail sector in Spain has decreased compared to 2008 levels (7.8% of value added in 2015 vs. 14.3%).
* Defined as the ratio of business fixed investment to value added 129 Sweden
130 Sweden: key findings
• In 2017 total retail turnover grew by 2.4% (in SEK terms; by 0.6% in € terms), further to a growth of 6.2% and 5.2% in 2015 and 2016 respectively. The positive macroeconomic picture of the country (2.7% GDP growth and 2.4% final consumption growth in 2017, constantly decreasing unemployment rate), have fueled retail spending. • Retail developments in 2017 were mostly influenced by the growing e-commerce channel and increased international competition. • Most dynamic retail subsectors in 2017 were optics, furniture and books/paper. Most growing subsectors in e-commerce were toys, building/construction retail and food sales. • In 2018, retail turnover is expected to grow by 3% in SEK terms. • The structure of the retail market is undergoing significant shift towards e-commerce and already sees a decrease in brick-and-mortar shops. • The number of operating stores is decreasing and the clothing/fashion subsector is notably under pressure. • Total e-commerce sales in Sweden have increased remarkably over the last ten years as they have reached 6.1 billion euro in 2017.
131 Retail turnover reached 73 billion euro in 2017 for a growth of 0.6% (2.4% in SEK terms)
Retail Turnover in absolute values*(€) and year-on-year growth rate (in SEK), %, 2017= provisional 10 100.000 Retail Turnover, EUR million (right scale) Year-on-year growth rate (left scale)
8 80.000
72.941 73.403 69.173 70.224 67.306 67.987 6 63.992 60.000 58.884 6,2 5,2 56.291 51.774
4 40.000
2,9 3,4 2,4 2 2,1 20.000 2,2 1,6 1,4
0 - 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017p
Annual retail turnover has continued to increase since 2012, albeit slowing down in 2016 and 2017. *Excluding sales of automotive fuels Sources: Eurostat and Svenskhandel 132 Total sales are increasing. They are growing faster than food sales
Retail Sales (Deflated Retail Turnover Index), total retail and food, year-on-year growth rates, %
8 Total Retail Food 7,3
6
4 3,9 3,2
2 1,4 1,1 0,0 0
-2 -2,2
-4 2008Q1 2009Q2 2010Q3 2011Q4 2013Q1 2014Q2 2015Q3 2016Q4 2018Q1
Retail sales in Sweden have constantly increased on a yearly basis over the last 5 years, reflecting the solid economic recovery of the country, but have sharply slowed down since 2015 (1.1% in Q3 2018). Growth in food sales has been more modest (it reached 1.4% in Q3 2018) 133 Inflation around very low rates
Inflation (Consumer Price Index, %), monthly data
10 All items Food 8,4 8
6
4
2,3 2,4 2 2,1 1,6
0 -0,3 -0,3
-2 2007M01 2009M01 2011M01 2013M01 2015M01 2017M01
Inflation has been rising from the negative values seen around 2014, reaching 2.1% in Nov. 2018. Food inflation rose faster, then eased to 2.4% in Nov. 2018. Higher food prices also help explain the slowdown in food sales Note: EU-Harmonised index of consumer prices 134 Household disposable income has remained around high levels since 2012
Gross Disposable Income of Households per capita in PPS, annual data
25.000
24.350 24.315
23.471 23.632 23.109
22.385 21.814 21.449 21.588 21.216
20.000
15.000 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
135 Swedish households spent 12% on food, only the fourth largest spending category
Breakdown of final household consumption by types of spending, 2016, %
26,3
20,7
16,9
11,7
7,8
5,5 4,7 3,6 2,2 0,6
Housing Recreation and Transport Food Domestic Furnishing Clothing Restaurants Health Other services culture services
Source: Bank of Sweden 136 GDP and final consumption have recovered from the 2009 and 2011 drops
Real GDP and Final Household Consumption, year-on-year growth rates, %
10 Real GDP Final Household Consumption 8 7,9
6 4,3 4 2,6 2 1,7 0,9 0 0,3
-2
-4
-6 -6,3
-8
-10 2008Q1 2010Q1 2012Q1 2014Q1 2016Q1 2018Q1 Further to two recessions (2009 and 2011), the economic recovery Sweden has been steady, albeit slowing in 2017 (GDP growth was 2.1% vs. 2.7% in 2016). Final household consumption has followed the same trend. 2017 annual growth was 2.2%.
137 Unemployment keeps on decreasing
Unemployment rate, whole economy, % of labour force, monthly data
10 9,3
6,6
6,0 5,6 5
0 2007M01 2009M01 2011M01 2013M01 2015M01 2017M01 2019M01
Unemployment has been decreasing slowly but constantly since the April 2010 peak (9.3%, as a result of the 2009 recession) down to 6% in January 2019. Note: EU-harmonised unemployment rate (Eurostat definition); seasonally-adjusted data 138 The food sector is dominated by ICA, with a market share of 51%
Key players and related market shares, food, %, 2016
ICA 50,8
Coop 19
Axfood 16,4
Bergendahls 7,7
Lidl 3,9
Netto 2,2
The retail food sector is dominated by ICA (51%), followed by two players who hold market shares above 10%: Coop (19%) and Axfood (16%).
Source: HUI Research 139 Economic and retail confidence around positive levels
Retail Trade Confidence Indicator and Economic Sentiment Indicator (ESI), monthly data
50 48 120 117,6 112,2 110,2 110 30 31 100 10 13,1
90
-10 80 -21 -30 70 -38 Retail Trade Confidence Indicator Economic Sentiment Indicator
-50 60 janv.-07 janv.-09 janv.-11 janv.-13 janv.-15 janv.-17 Confidence in the retail sector has gone up since June 2013, but has been losing ground since February 2016. The ESI, on the contrary, has been on the rise since September 2016, consistent with positive macroeconomic developments. Note on the ESI; above 90= positive economic expectations Note on the Retail CI: below 0= negative expectations 140 Total employment in retail has increased since 2013 up to 270,000 people in 2017
Number of persons employed in retail, thous. (left scale), and as % of total employment (right scale)
280 8
270 269 270 267 266 266 266 260 264 260
255 255 250
6,1 6,1 240 6 5,9 5,9 5,7 5,6 5,7 5,6 230 5,6 5,6
220
210
200 4 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
141 Investment rate in the retail sector in 2015 was 3.6% lower than in 2008
Investment rate in the retail sector, %*
Retail Manufacturing 14,7
13,4 13,6 12,7 12,6 12,2 11,7 11,9
10,7
9,7 9,6 9,2 8,7 8,7 7,9 8,1
2008 2009 2010 2011 2012 2013 2014 2015
* Defined as the ratio of business fixed investment to value added 142 E-commerce sales were worth 6.1 billion euro in 2016 and 7 billion euro in 2017
Total e-commerce sales, million euro, 2017= forecast
8.000
7.026
6.000 6.115
5.356
4.715 4.000 4.277
3.630 3.068 2.621 2.000 2.122 2.081 1.913 1.545 970 537 745 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 F Total e-commerce sales in Sweden have increased remarkably over the last ten years as they have reached 6.1 billion euro in 2017 and is projected to reach 7 billion euro in 2017. Source: Postnord/HUI Research 143 United Kingdom
144 United Kingdom: key findings
• Retailing in the UK is highly competitive. Online shopping and the technologies that have come in its wake are transforming the way business is done; allowing new entrants to the market, shifting power into the hands of the consumers and disrupting traditional business models. Fierce competition and attempts to maintain market shares had pushed prices down since the end of 2012 up to the end of 2016. The Pound Sterling (GBP) depreciation brought about by Brexit has meant that since December 2016 prices have been on an upward trajectory. • However, despite price declines, year-on-year total sales growth rates have been much lower every month since the end of 2014, reflecting moderate consumer spending. Since the Brexit referendum, consumers have been under more pressure since inflation has outpaced wage growth. Increasing costs pressures add to the challenging environment. Over the last 10 years to 2017 UK minimum wage increased by 35%. Also, the 12% of the GBP depreciation means higher import costs which have either to be passed through to the consumer or have to be absorbed by retailers themselves. Retailers have, in fact, been absorbing costs increases by accepting lower margins since 2015. Each year since 2015, yearly profit margins have declined, on average, by about 2 percentage points relative to the 2008 to 2014 period. • In addition, strategy and planning have undergone a complete transformation in last recent years. Customers’ expectations have changed: sales are expected to be found at any time, Black Friday has become a significant event in the UK retail landscape, technology has enabled online sales and allowed consumers real time price checking of competitors. In today’s environment patterns and predictability are becoming a thing of the past. 145 Retail turnover increased in 2016 and 2017 in GBP, but dropped in € (GBP devaluation)
Retail Turnover in absolute values* (€) and year-on-year growth rate (in GBP), 2017= provisional
Retail Turnover, EUR million (right scale) Year-on-year growth rate (left scale) 5 500.000 497.402 4,5 450.000 440.760 443.770 4 3,9 433.487 400.000 410.547 403.485 3,7 376.219 365.987 374.113 350.000 339.313 3 3,4 300.000 2,9 250.000 2,5 2 200.000 1,6 150.000
1 100.000 0,9 0,7 50.000
0 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017p
Annual retail turnover in the UK in 2016, expressed in GBP show a small yearly increase of 0.7%. In € values it dropped by 10.8% compared to 2015. It should be noted however that this drop in € values is purely due to sharp GBP devaluation during 2016. In 2017, retail turnover figures increased in GBP values by 4.5%, but when expressed in € have dropped by 2.3% year-on-year. *Excluding sales of automotive fuels Sources: Eurostat and ONS 146 Both total and food retail sales are slowing down
Retail Sales (Deflated Retail Turnover Index), total retail and food, year-on-year growth rates, %
8 Total Retail Food
6,0
4 3,4 2,2
1,3 0,9 0
-4 -4,6
-8 2008Q1 2010Q1 2012Q1 2014Q1 2016Q1 2018Q1
Despite uncertainty stemming from the Brexit referendum, retail sales were not severely impacted until Q4 2016. However, since then increasing inflationary pressures have resulted in a constant slowdown in growth rates (particularly for food). In Q3 2018, however, growth in both total and food sales gained ground (3.4% and 1.3% respectively.) 147 Food inflation surged during 2017, then eased. Overall inflation above 2%
Inflation (Consumer Price Index, %), monthly data
15 All items Food
10
5
0
-5
-10
-15 2007M01 2009M01 2011M01 2013M01 2015M01 2017M01
Food inflation has surged (from negative levels) throughout 2017 as a result of the sharp GBP devaluation (up to 4.1% in Nov.17), but has slowed down during 2018, down to 1.3% in November. Overall inflation has been more stable, and has reached 2.1% in Nov. ‘18. Note: EU-Harmonised index of consumer prices 148 Household disposable income recovered from the record low in 2009 and peaked in 2015
Gross Disposable Income of Households per capita in PPS, annual data
25.000
23.272
22.297 22.086 21.769 21.699 21.441 21.466 21.331 20.964 20.000
15.000 2007 2008 2009 2010 2011 2012 2013 2014 2015 Gross household disposable income expressed in PPS has increased to a record high in 2015. Note: 2016 data is not yet available 149 Household spending on food was the fourth largest spending category (12%) in 2017
Breakdown of final household consumption by types of spending, 2017, %
16,5
15,2 15,1
12,0
10,4
8,7 8,2
5,2
3,6 2,5 1,5 1,2
Transport Recreation and Housing , fuel Food and non- Restaurants Miscellaneous Household Clothing and Communication Alcoholic Health Education culture and power alcoholic drinks and hotels goods and goods and footwear drinks, tobacco services services and narcotics
Source: ONS 150 GDP and final consumption growth have slowed down
Real GDP and Final Household Consumption, year-on-year growth rates, %
6 Real GDP Final Household Consumption
4 3,3 2,5 2 1,8 1,5
0
-2
-4 Real GDP growth has been positive since 2010, but has been slowing down since H2 2016 (1.5% year-on-year in Q3 2018)
-6 -5,9 2008Q1Annual real GDP growth2010Q1 was 1.7% in 2017,2012Q1 slowing from 1.8%2014Q1 in 2016, and final consumption2016Q1 growth was2018Q1 1.8%.
151 Unemployment has dropped since the peak of late 2011
Unemployment rate, whole economy, % of labour force, monthly data
10
8,4 8
6 5,5 5,1
4 4,0
2
0 2007M01 2008M03 2009M05 2010M07 2011M09 2012M11 2014M01 2015M03 2016M05 2017M07 2018M09
The unemployment rate in the UK has been decreasing substantially from its record high in November 2011 (8.4%) down to 4% in November 2018.The labour market picture remains positive despite lowered GDP growth projections for 2018. Note: EU-harmonised unemployment rate (Eurostat definition); seasonally-adjusted data 152 Retail confidence is negative, while economic confidence is positive
60 150 Retail Trade Confidence Indicator Economic Sentiment Indicator
40 130 26,7 12,7 20 103,7 110 107,9 0 1,5 90 -20
70 -40 -47,1
-60 50 janv.-07 janv.-09 janv.-11 janv.-13 janv.-15 janv.-17 janv.-19
Economic confidence has increased moderately since the Brexit referendum, remaining around high levels. Retail confidence, on the contrary, has been in a negative territory since 2016.
Note on the ESI: above 90= positive economic expectations Note on the Retail CI: below 0= negative expectations 153 Retail store closures still outnumber openings, but are going down
Openings and closures of multiple retailer units
5.000 Closures Openings 4.388 4.000 3.623 3.361 3.366 2.864 3.003 3.000 2.634 2.656 3.157 2.564 2.670 2.597 2.342 2.000 2.197 2.153 1.809
1.000
0 H1 2010 H1 2011 H1 2012 H1 2013 H1 2014 H1 2015 H1 2016 H1 2017
The number of retail store closures has come to a record low in H1 2017, despite subdued retail confidence. Closures still outnumber openings, but with a narrow margin. This trend seems to be the result of structural changes linked to online shopping and new shopping channels and technologies are deeply transforming the business model; allowing new entrants to the market, shifting power into the hands of the consumers and disrupting traditional bricks-and-mortar stores.
Source: Local Data Company (LDC)/PwC 154 Employment in retail was 2.8 million in 2017, the highest since 2009
Number of persons employed in retail (left scale), thous., and as % of total employment (right scale)
3.000 15
2.951
2.839 2.800 2.820 13 2.779 2.738 2.739 2.749 2.712 2.716 2.723
2.600 11 10,2 9,6 9,6 9,7 9,6 9,5 9,3 9,1 9,3 9,2 2.400 9
2.200 7
2.000 5 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
155 The UK food retail market has a low degree of concentration. Tesco leads with 28%
Key players (food retail) and related market shares, 2016
Tesco 28,2
Sainsbury's 16,3
Asda 15
Morrisons 10,6
Others 6,9
Aldi 6,9
Coop 6
Lidl 5,1
Waitrose 5
The UK food retail market features 4 players whose market share is above 10%: Tesco (28%), Sainsbury’s (16%), Asda (15%), Morrisons (11%), plus a plurality of smaller players.
Source: Kantar UK insights
156 Investment rate in the retail sector has always been higher than in manufacturing
Investment rate in the retail sector, %* Retail Manufacturing
17,0 17,2 16,3 16,2 15,5 15,1 14,9 14,1 13,2 12,3
10,1 9,6 9,3 9,7 9,4 8,3
2008 2009 2010 2011 2012 2013 2014 2015
Contrary to all other major EU countries, investment rate in the retail sector in the UK has always been higher than in manufacturing, reflecting the relatively higher weight of the retail trade sector and the lower weight of manufacturing in the UK out of total GDP. The investment rate in 2015 was 15.5%, slightly lower than 17% in 2008.
* Defined as the ratio of business fixed investment to value added 157 E-commerce retail sales reached 42 billion euro in 2016
Total e-commerce sales, million euro
42 40
35
31 28
24
17 15 15
2008 2009 2010 2011 2012 2013 2014 2015 2016
According to the ONS, e-commerce retail sales in the UK in 2016 reached 42 billion euro, and have increased since 2008 at remarkable rates.
Source: Office of National Statistics 158 Methodological note/1
• This report has been prepared by Alessandro Sciamarelli, Christel Delberghe and Stefania Moise, with valuable support from Jean-Jacques van den Heede (former Nielsen partner), as well as from the Members of the EuroCommerce Economists’Network . • For sake of consistency/cross-country comparisons, the source for all the figures reported in all Sections is Eurostat (Structural Business Statistics; Short-term Business Statistics; National Accounts), unless otherwise indicated. • All annual retail turnover figures exclude sales of automotive fuels. • Retail turnover annual figures for 2016 and 2017 at the time of writing were not available for the following retail sub-sectors: retail sales in non-specialised stores with food and tobacco predominating; retail sales via mail order houses or via internet. • All absolute values for retail turnover and value added, including non-euro area countries (PL, SE, UK) are reported in €. • When reporting retail turnover figures calculated in national currencies for non-euro area countries (PL, SE, SK), we have used annual average exchange rates provided by the ECB statistical data warehouse
159 Methodological note/2
Notes on Retail sectors’ classification: 1 In all charts in Sections 1, “Other retail” includes all the following NACE (Eurostat) sub-sectors:
G4773 Dispensing chemist in specialised stores. This class includes:- retail sale of pharmaceuticals
G4774 Retail sale of medical and orthopaedic goods in specialised stores
G4775 Retail sale of cosmetic and toilet articles in specialised stores. This class includes:- retail sale of perfumery, cosmetic and toilet articles
G4776 Retail sale of flowers, plants, seeds, fertilisers, pet animals and pet food in specialised stores
G4777 Retail sale of watches and jewellery in specialised stores
G4778 Other retail sale of new goods in specialised stores. This class includes:- retail sale of photographic, optical and precision equipment- activities of opticians- retail sale of souvenirs, craftwork and religious articles- activities of commercial art galleries- retail sale of household fuel oil, bottled gas, coal and fuel wood- retail sale of weapons and ammunition- retail sale of stamps and coins- retail trade services of commercial art galleries- retail sale of non-food products n.e.c.
G4779 Retail sale of second-hand goods in stores. This class includes:- retail sale of second-hand books- retail sale of other second-hand goods- retail sale of antiques- activities of auctioning houses (retail)This class excludes:- retail sale of second-hand motor vehicles, see 45.1- activities of Internet auctions and other non-store auctions (retail), see 47.91, 47.99- activities of pawn shops, see 64.92
G478 Retail sale via stalls and markets G4799 Other retail sale not in stores, stalls or markets
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Please note that the NACE retail sub-sector G4711 “Retail sales in non-specialised stores with food, beverages or tobacco predominating” includes the following:
“Retail sale of a large variety of goods of which, however, food products, beverages or tobacco should be predominant: activities of general stores that have, apart from their main sales of food products, beverages or tobacco, several other lines of merchandise such as wearing apparel, furniture, appliances, hardware, cosmetics etc.”
Definition of e-commerce: Data on e-commerce available in this report refer to the OECD definition: “An e commerce transaction is defined as “the sale or purchase of goods or services, conducted over computer networks by methods specifically designed for the purpose of receiving or placing of orders.” It is important to note, under this definition, that “the goods or services are ordered by those methods, but the payment and the ultimate delivery of the goods or services do not have to be conducted online.”
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