Shopping for Growth

SHOPPING FOR GROWTH

HOW RETAIL AND WHOLESALE CAN BOOST GROWTH AND CREATE JOBS IN EUROPE

MANIFESTO FOR THE NEW PARLIAMENT AND COMMISSION IS

About EuroCommerce SV

EuroCommerce represents KAUPPA the retail, wholesale and VIRKE international trade sectors FI in Europe. Its membership NO includes commerce federations EKL and companies in 31 European SVENSK HANDEL countries. Commerce plays a EE unique role in the European RETAIL IRELAND DANSK ERHVERV SE LTA economy, acting as the link LV between producers and the IE DK BRC LPIA nearly 500 million consumers MKB LT RND across Europe, over 100 million UK times a day. NL PIH See page 10-11 for more facts and figures BGA POHID about retail and wholesale in Europe. COMEOS HDE BE www.eurocommerce.eu SOCR PL DE CLC LU CZ ZOCR SK CDCF WKÖ CGI AT OKSZ FCD VOSZ TZS HU RO SI APED FR AMRCR CCP ANGED PT ASEDAS CEC IT ES CONFCOMMERCIO FEDERDISTRIBUZIONE

ACCI NCHC

GRTU MEMBER ASSOCIATIONS MT CCCI CY

MEMBER COMPANIES AFFILIATED FEDERATIONS

- AEDT - EUEW - AMPD - FECC - CBL - FENA - CEDDEC - HGK - CELCAA - HUP - DSE - IELKA - Ecommerce - Independent Europe Retail Europe - EDRA - SACAR - EFF - Seldia - ETRC - STL - ETV - VSIG

As of December2013. FOREWORD

We are at the dawn of a new European legislature. The next five years will be critical in returning the European economy to growth and job creation. Retail and wholesale can contribute, given the right economic and policy conditions. The sector is the interface between producers and consumers, serving 500 million European consumers every day. Consumers choose between retailers each and every time they shop. So retailers compete daily for a share of billions of annual shopping trips across the EU. Retailing and wholesaling account for 1 in 4 enterprises in Europe, contribute 11% of Europe’s gross added value and provide 1 in 7 jobs. Our sector employs nearly 30 million people. It offers varied careers, whether to young graduates, to older people with limited skills, to those seeking part-time work to combine with caring responsibilities, or to cutting edge technical experts. To deliver growth and create jobs, the sector needs the right policy framework. Barriers remain to flexible trading : a Single Market in goods and services is not yet a full reality ; labour markets in some Member States are inflexible, preventing retail and wholesale from adapting to customers’ needs ; protectionism impedes global trade. The sector is undergoing a major transformation, driven primarily by the rapid expansion of the digital economy. Retail and wholesale are adapting at pace, anticipating customers’ changing needs and prefer- ences. This e-commerce revolution has coincided with continuing recession in many Member States. Consumer spending is down and competition is fierce, putting a premium on innovation and efficiency, while making it harder to earn a return on investment.

Our main proposals for the next five years are for :

> a digital policy that helps retail and consumers in the digital age

> a plan for European retail and wholesale competitiveness and more open markets

> a voluntary approach to fair relations with suppliers and to sustainability

At EuroCommerce we bring together associations representing retail and wholesale in 31 European countries along with small and large companies from across Europe. We represent all retail channels, all types of wholesale, and all commerce business models in the EU. Our broad and diverse membership gives us strength and legitimacy. We welcome the increasing recognition by EU politicians of the important role of commerce as an economic driver. In January 2013 the European Commission published its European Retail Action Plan. It sets out a strategy to improve further the competitiveness of the retail sector and to enhance the sector’s economic, environmental and social performance. This policy ambition now must be firmly embedded in policy-making. The EU institutions should ensure retail and wholesale are at the heart of their thinking. With the right policy and legislative environment, our sector will respond, supporting growth and creating jobs in the European economy.

Baroness Neville-Rolfe, DBE, CMG Christian Verschueren President Director–General

3 WE NEED A POLICY THAT HELPS RETAIL 1 AND CONSUMERS IN THE DIGITAL AGE

The retail and wholesale sector is in the midst of a global digital revolution bringing fundamental changes to the way consumers shop (see box). Many retailers, small and large, are embracing digital technology and multi-channel retailing, combining traditional bricks-and-mortar shops with online services, and offering new delivery solutions, such as click-and-collect. Wholesalers are also adapting to the digital age.

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Customer-centred developments include

> more sophisticated and personalised communications with consumers through different channels ;

> changing store footprints in towns and cities, driven by consumer choice and new forms of commerce ;

> new online and multi-channel formats disrupting the retail market and capturing market share, including manufacturers’ own online outlets and flagship stores ;

> retail companies seeking to become vertically integrated, controlling the whole value chain ;

> new and different skills requirements and job functions ;

> consumers needing new and safe payment solutions to pay online and across borders.

Retailers and wholesalers are adapting to meet changing customer The digital revolution empowers consumers as never before. They expectations, investing in technology, operations and talent to have increased access to price and product information, making deliver multiple channels and their seamless integration. They it much easier to find the best deal. Consumers increasingly are changing their business models and offerings. ‘Digital native’ expect to buy what they want, how they want and when they entrepreneurs are launching new retail businesses everywhere. want it. Consumer confidence in the full range of channels is This digital transformation poses a challenge to traditional paramount. The sector serves 500 million consumers every shopping areas which need to reinvent themselves to compete. day, providing helpful information and consumer protection. Struggling town centres affect the social fabric of communities Multi-channel retailing changes the interaction between consumer so traditional forms of commerce need help in adapting to this and retailer as the ways in which consumers choose products, digital revolution. Legislation and policy should be developed in pay for them, return goods and seek redress alter. Consumer ways that are fair to all forms of retail and wholesale. policy and regulation also need to evolve to match these changes.

4 The challenge for policy-makers is to keep pace with the shifting landscape of commerce, adapting the legal, regulatory and policy framework. Policies to unleash the potential of commerce in the digital age should include :

A single digital portal 2 for retail and wholesale… A level playing field in policy 1 and legislation for all forms and channels of commerce… … would help traders seeking to establish cross border e-commerce businesses or to adapt to this new landscape. An online one-stop-shop providing user-friend- … policies should be developed to reflect changes in ly information on legislative requirements in every consumer demand, removing unjustified and unfair Member State (e.g. VAT regimes, product requirements competitive advantages to particular retail channels and establishment rules) could also showcase best (‘channel-neutrality’). This applies particularly in areas practice case studies of traditional retailers or such as taxation, employment law and environmental wholesalers reinventing themselves and city centres obligations. adapting to the new competitive landscape.

Swift adoption and implementation Consumer policy and legislation 4 3 of the Regulation on interchange fit for the digital age and bank fees and Payment Services enhancing consumer trust in new Directive… forms of commerce...

… should cap card fees to the benefit of consumers and … including the swift implementation of the Consumer make online payments more competitive. Rights Directive, proportionate regulation on data protection, and modern and efficient ways of providing consumer information.

5 Completing the Digital Single Market...

… ensuring world class ICT infrastructure throughout Europe, … educating all EU citizens, so that they are digitally savvy ; including broadband and mobile networks, to support this is crucial for getting jobs and for living a convenient multi-channel operations. life in the digital age.

See our policy guidance paper on e-commerce and multichannel retail for more details.

IN 2013, EUROPEAN E-COMMERCE WILL REACH A TURNOVER OF €350 BILLION

350 € 350 bn Europe € 338 bn Asia Pacific + 20% / year* € 318 bn N. America 300 *CAGR 2009-2013 Source : EMOTA 250 + 15% / year 200 € 185 bn + 42% / year 150 € 167 bn

100 € 84 bn 50

2009 2013 (est.) 5 WE NEED A PLAN FOR EUROPEAN RETAIL AND WHOLESALE COMPETITIVENESS – 2 TO REMOVE BARRIERS TO GROWTH AND JOBS CREATION

As Europe’s largest private sector employer, closely linked to 500 million consumers, retail and wholesale have the potential to drive Europe out of the deepest economic crisis we have faced in over 80 years. Strong but fair competition in retailing is the best guarantee to keep prices down and preserve consumer purchasing power.

By working with their suppliers, providing routes to market, retailers and wholesalers ensure the best deal for consumers and business customers. Every day retailers compete to deliver customers a wide choice of products at the keenest price.

Retailing is strongly rooted in the local community. More than 99% of the 5.5 million retail businesses in Europe are small and medium-sized enterprises. Almost 30 million Europeans work in retail or wholesale, and the sector is one of the few steadily creating employment across Europe. In addition, the sector supports millions of jobs with local suppliers and producers, but rigid employment legislation in some Member States still prevents business from hiring for growth.

A vibrant and open Single Market 500m is the best way to create jobs consumers

Commerce also contributes significantly to social inclusion by bringing opportunities to those with limited qualifications who often find it difficult to find employment. The sector invests heavily each year in training programmes to develop employees’ skills and competences.

The political will to tear down the remaining barriers to the European Single Market, rather than additional public expenditure, is needed to stimulate economic growth in Europe, promoting innovation and improving Europe’s global competitiveness.

We are long-standing proponents of a truly Single Market in products and services, for the benefit of consumers and long-term economic health. A vibrant and open Single Market is the best way to create jobs and move Europe out of crisis. There are still too many limitations on the free movement of goods and services throughout Europe. Some Member States are even erecting new barriers or discriminatory measures, limiting the capacity of businesses from elsewhere in Europe to establish in a given country or to grow their operations. This is a fundamental breach of the principles of the Single Market.

It is essential that the Single Market is developed in areas where it does not yet function properly. A firmer enforcement policy is needed to address the threat of protectionism in some Member States.

In a globalised economy, open markets and a predictable trade policy are pivotal in furthering Europe’s competitiveness and job creation. It is essential that we further dismantle market access barriers, freeing up the trade in goods and services in both directions. Key measures to enhance predictability, legal certainty and transparency, together with the removal of red tape and technical barriers, are essential to increase our competitive strength.

The EU needs a stable multilateral framework for liberalised world trade to reach peak economic fitness. This should be complemented by effective bilateral and plurilateral trade agreements, providing additional opportunities for trade, job creation and growth.

6 To boost competitiveness and develop new opportunities, we need both the EU and Member States to apply an impact test for commerce when considering measures, especially on employment, the Single Market, and international trade :

A ‘think-of-commerce reflex’ in policy-making when 1 considering new legislation or changes to existing legislation…

… this ‘think-of-commerce’ should echo the ‘retail reflex’ included by the Commission in their European Retail Action Plan ; it should include a proper assessment of the impacts – deliberate and unintended – of policies on different distribution channels and formats of commerce.

Encourage Member States to reform Strengthened enforcement 2 3 their labour markets towards of the Single Market more flexibility and continuous principles and existing skills development… legislation

… so that retail and wholesale can create jobs and offer … for example the Services Directive, and no career development. tolerance of ‘gold-plating’ at national level.

Removal of territorial 4 supply constraints Harmonisation or mutual 5 that hinder the free recognition of technical movement of goods. standards and requirements for product information, authorisation, and testing.

International trade agreements 6 should be advanced… Mitigate the adverse 7 impact of antidumping … wherever possible - multilateral, plurilateral and bilateral, measures (trade promoting open trade in products AND services, removing defence instruments)... regulatory burden, easing customs procedures.

… making them more predictable and trans- parent for EU importers.

Securing easier overseas establishment 8 for EU retailers and wholesalers

… so that European business can benefit from opportunities in the growing markets in Asia, Latin America and Africa.

See our policy papers on single market, on trade defence instruments, on trade agreements.

7 WE NEED SUPPORT FOR VOLUNTARY 3 APPROACHES TO FAIR TRADING PRACTICES AND SUSTAINABILITY

The European retail and wholesale sector links producers and con- Some supply chains are stable, simple, and local – carrots from sumers every day. A fair relationship between all business-to-busi- a local farm at a local greengrocer. Others are dynamic, com- ness partners in the supply chain is crucial for a stable supply of plex, and global – fashion items with fibre and fabric production, goods and services. Preserving flexibility and open competition dyeing, styling and manufacturing by many different businesses, in the supply chain drives innovation and improvement, benefit- wholesaled and then sold through a number of retailers and ting consumers and ensuring the long-term health of suppliers channels. Guaranteeing product quality and safety, and tracing and retailers. Any regulatory intervention has the potential to products and their components is then equally complex. More decrease these efficiencies. This is why EuroCommerce was a importantly, it has to be a shared responsibility between all founding member of the Supply Chain Initiative, a voluntary actors in each value chain. approach to ensure fair business-to-business relations across Retailers and wholesalers are working with manufacturers and the food supply chain. This EU-wide initiative has established producers to improve the environmental sustainability of the harmonised core principles of fair dealing, underpinned by value chain, demonstrating how well functioning supply chains can decentralised mechanisms for conflict resolution, deliberately innovate and deliver greater benefits to society while extending kept close to the disputing parties. Most major retailers and choice to consumers. Retailers have worked both on reducing the manufacturers have signalled their intention to sign up to the environmental footprint and increasing the resource efficiency of initiative. In the short-term it will provide an efficient framework their own operations, and with suppliers to address impacts in to handle disputes. In the longer term it will yield a culture change manufacturing and production. Under the Retail Environmental in trading relations across the value chain. Action Programme they have committed to initiatives aimed

at reducing energy consumption, food and other waste, CO2 emissions and the carbon footprint of products.

The Supply Chain Initiative should be supported 1 and given time to succeed...

… so that fair trading practices in the food supply chain can be reinforced within a dynamic and innovative market. This is best assured by a voluntary system, which also accommodates the differing legal systems of Member States.

Intensified dialogue within supply Sustainability initiatives 2 chains should clarify the respective 3 should remain voluntary and proportionate responsibilities and have positive cost impacts… of retailers and wholesalers in product safety, quality and traceability...... voluntary initiatives driven by economic operators but with public scrutiny deliver real benefits ; they should ... this is a shared responsibility between all actors in focus on greenhouse gas emission reduction, resource the value chain ; retailers and wholesalers are playing efficiency, and the sustainability of food production. their part in being responsible for product quality and safety; however, with tens of thousands of different products and often only limited information, there are limits to what retailers can materially do.

Go to our website for more details on the Supply Chain Initiative and on the Retail Environmental Action Plan.

8 Last but not least : make the retail and wholesale value chain come to life for you by investing time in understanding its sophistication…

… since the sector is essential to the health of the European economy and every local community. It is easy to take retail for granted as shops are part of the back drop of daily life. Yet there is much more to retail than meets the eye – talk to a store manager, visit a store and see its operations and the people who make them happen, meet retail executives and hear about the strategic and operational challenges they face.

… Wholesale is the hidden engine that provides services and know-how on products, improving supply chain efficiency. See behind the scenes to hear how the sector supports job creation across the wider economy. THIS IS RETAIL & WHOLESALE IN EUROPE

5.5m ENTERPRISES

in 4 enterprises* is in 1 retail or wholesale

LARGE < 1% COMPANIES (> 250 people) 3.7m in RETAIL 1.8m in WHOLESALE

> 99% SMEs (< 250 people)

This is

more than in 1.5X construction

more than in 2X manufacturing

more than in 3X hotels & restaurants

EUROPEAN RETAILERS EU RETAILERS ARE GLOBAL LEADERS ARE MORE INTERNATIONAL THAN AMERICAN (Top 10 retailers worldwide, 2011) (% of sales outside their home market, global top 250 retailers)

1 > Walmart 7 > Schwarz Group 2 > Carrefour (Lidl and Kaufland) 3 > Tesco 8 > Aldi 4 > Metro 9 > Walgreen 5 > Kroger 10 > Home Depot 25% 38% 6 > Costco US retailers European retailers

*non-financial business economy Sources : Eurostat, Deloitte.

10 29m JOBS

in 7 jobs is in 1 retail or wholesale

LARGE 1/3 COMPANIES (> 250 people) 18.6m in RETAIL 10.4m in WHOLESALE

2/3 SMEs (< 250 people)

This is

than in more farming

more than in 4X ICT industry

more than in 6X food industry

more than in 12X automotive industry

more than in 25X chemical industry

GROSS VALUE ADDED BY RETAIL & WHOLESALE ADDING VALUE TO MANY OTHER SECTORS

2/3 1/3 finance agriculture RETAIL & WHOLESALE SMEs € 1tn LARGE (< 250 people) COMPANIES (> 250 people) real estate manufacturing

ICT transport

11 EuroCommerce Avenue des Nerviens 85, B-1040 Brussels T +32 2 737 05 98 F +32 2 230 00 78 www.eurocommerce.eu

January 2014