In 2019 the retail turnover share of private consumption decreased by 1.0 percent in the EU-27 countries. As such, EU consumers spend on average 29.9 percent of their money on brick-and-mortar retail.
Last place in this regard goes to Germany, where consumers devote only 23.7 percent of their funds to brick-and-mortar retail. These findings are from GfK’s just released free study on European retail.
Online trade has emerged as a strong force in many European countries, which is reflected in the declining share of consumer spending on brick-and-mortar retail.
“Brick-and-mortar retail faces new challenges in Europe,” explains GfK retail expert Dr. Johannes Schamel. “A new environmental awareness is emerging among consumers and the issue of sustainability is playing an ever more important role. Brick-and-mortar retailers must respond to this expectation in a way that allows them to secure a competitive advantage over online retail.”
Against this backdrop, GfK’s Geomarketing solution area evaluated key market indicators for 2019 and their impact on European retail. In addition to an assessment of the retail impact of COVID-19, GfK’s retail study also includes a comprehensive analysis of trends in 32 European counties, offering a valuable point of reference for retailers, investors and project developers.
Overview of the study’s most important insights
Purchasing power: Consumers in the EU-27 countries had an average 2019 purchasing power of €16,888, which equates to a nominal increase of 3.4 percent compared to the previous year. Driven in part by strong economic growth, tax reductions and a minimum wage increase, the largest purchasing power increases in the EU occurred in Latvia (+8.5 percent), Lithuania (+7.6 percent) and Estonia (+6.0 percent).
Inflation: Prices rose somewhat faster at the end of last year due to cost increases in services. But taking into account all of 2019, inflation across the EU-27 countries was just 1.4 percent and as such significantly below the 2 percent target of the European Central Bank.
Brick-and-mortar retail turnover: Brick-and-mortar retail in the EU-27 nations achieved a nominal 2019 turnover growth of 2.1 percent, which was slightly above the rate of inflation. The most dynamic markets were once again in Eastern Europe and the Baltics. Romania (+9.5 percent) maintained its high growth rate, which was almost twice that of neighboring Bulgaria (+5.4 percent). Retail in Estonia (+6.6 percent) and Lithuania (+6.5 percent) benefited from long-standing increases in purchasing power.
Retail turnover share of private consumption: Competition posed by online retail along with fundamental changes to consumer habits in favor of greater spending on services resulted in a one percent decline in the EU-27 retail turnover share of private consumption to 29.9 percent. Germans devoted the smallest share (23.7 percent) of their spending to brick-and-mortar retail, which is partly explained by the comparatively strong position of online retail.
FMCG retail: FMCG retail was responsible for 55 percent of the 2019 brick-and-mortar retail turnover in the EU-27 countries. This segment comprises 60.4 percent of the total brick-and-mortar retail turnover in Croatia, which puts it in first place among the countries considered by the study. FMCG retail is also very strong in Romania (59.7 percent), Cyprus (58.5 percent) and Greece (58.3 percent).