Consumer goods retailing hurt again

The challenging economic parameters and the high unemploy­ment rate created problems for consumer goods retailing in 2012 as well. In the process, government spending cuts and tax rises – including the increase of the value added tax in the Netherlands and Spain – siphoned off disposable income. Altogether, these factors lowered consumers’ confidence and caused them to cut back on their spending.

In Western Europe, retailing continued to slow as the year progressed. In nominal terms, retail stagnated. Adjusted for price increases, shoppers bought even fewer consumer goods in 2012 than they did in 2011. In Eastern Europe, the sector’s results in the reporting year finished below those of 2011. Overall, the region was able to produce solid growth, even though these rates were well below those produced during pre-crisis years. The strongest growth continued to be produced by the emerging countries of Asia.

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Development of gross domestic product in key global regions and Germany

Percentage change year-on-year

 

 

 

 

 

 

2011

2012

Source: FERI

Asia

3.9

4.0

World

2.7

2.3

Eastern Europe

3.7

1.8

Germany

3.0

0.7

Western Europe (excl. Germany)

1.1

–0.4

Germany

In 2012, Germany was unable to escape from the grip of Eur­ope’s sovereign debt crisis. Problems were created primarily by adjustments made in the eurozone and the uncertainties arising from them. Overall, however, the German economy was stable during the reporting year.

After producing relatively solid growth in the 1st half of the year, the German economy slowed measurably in the 2nd half. In the 4th quarter of 2012, it even contracted. As a result, economic growth in the reporting year amounted to only 0.7 percent (previous year: 3.0 percent). In the wake of this development, signs of weakness also appeared in the labour market. Consumer confidence remained stable in the 1st half of the year, but then the mood darkened. Disposable income did well, rising more than 2 percent in the reporting year. Private consumption grew by 0.7 percent in real terms – a relatively positive outcome, given that a rise in consumer spending in Germany generally lags behind macroeconomic growth. The German retail sector also produced just under 2 percent growth in nominal terms. Because prices also rose at similar levels, this result simply meant another year of stagnation.

Western Europe

In Western Europe, the downturn that began in 2011 continued throughout the reporting year. It grew even worse in the 2nd half of the year. The sovereign debt crisis remained one of the main problems in 2012. No country in Western Europe was able to avoid being caught up in the slowdown. Nonetheless, the economic gap separating the crisis-battered periphery countries and the more robust core countries persisted. In addition to Germany, only Austria, Sweden and Switzerland reported economic growth – even if the rise was only a small one. In addition to the crisis countries Italy, Portugal and Spain, the economic chill was also felt in Denmark and the Netherlands.

The frail economy, government budget consolidation efforts and the rise in unemployment to record levels hurt consumer confidence in Western Europe. At the same time, consumer prices rose at above-average rates in 2012 as raw material prices for energy and food remained high. In comparison with 2011, however, price increases slowed slightly. Overall, private consumption in Western Europe was weak. In addition to Germany, a rise in consumer demand was seen only in the Scandinavian countries Denmark and Sweden as well as in Austria and Switzerland. In comparison with private consumption, retailing grew at below-average rates for another year. In real terms, retail sales in Western Europe fell by about 1 percent.

Eastern Europe

The economy of Eastern Europe cooled markedly during the reporting year. The weak performance in Western Europe had a strong impact on the countries of Eastern Europe – but to differing degrees. While Russia produced solid growth rates, economic momentum in Turkey and Poland slowed significantly as the reporting year progressed. After Turkey generated more than 8 percent growth in 2011 and Poland achieved over 4 percent growth in the same year, both countries managed to produce a rate of only slightly more than 2 percent in the reporting year. The Bulgarian and Romanian economies each produced growth of less than 1 percent in 2012. The economies of the Czech Republic and Hungary even contracted during the year. This was a direct result of the weakening demand in Western Europe for products and services that grew out of the sovereign debt crisis. Greece continued to experience the most pressing problems: the country’s economy shrank for the 5th consecutive year.

Just like the region’s economies, the momentum produced by the retailing industry varied widely. In particular, Russia, Turkey and Ukraine generated good retailing results. But the growth created in 2012 was below the level achieved in the previous year. The retail sector was weak especially in Bulgaria and the Czech Republic. Retailing continued to contract in Greece.

Asia/Africa

Despite the slowdown in the global economy, weakening demand from industrial countries and a drop in direct investments, the emerging countries of Asia generated the highest growth rates once again during the reporting year. But economic momentum did slow considerably in this region as well. Compared with the industrial nations of the West, however, the economies of Asia’s emerging countries were in good shape overall. The level of debt carried by the public sector and private households was low. In addition, the region’s banking sector is not so closely tied to international financial markets and has been only slightly affected by the sovereign debt crisis in Europe.

Special situations existed in Egypt and Japan during the reporting year: in Egypt, the economy remained subdued in the wake of the country’s political upheaval. As Japan began the year, its economy was fuelled by rebuilding investments being made in the aftermath of the earthquake and reactor disasters in March 2011. In the 2nd half of the year, though, growth slowed measurably.

The economic slowdown in Asian countries also affected demand among private consumers. In 2012, however, Asia generated the highest growth in retailing of all regions where METRO GROUP does business. Once again, the pacesetters were China – with continued double-digit growth in retail – and India.

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Development of gross domestic product in METRO GROUP countries

Percentage change year-on-year

 

 

 

 

 

 

2011

2012

China

9.3

7.8

Kazakhstan

7.5

5.6

Vietnam

5.9

4.9

India

7.0

4.7

Pakistan

3.0

4.2

Russia

4.3

3.4

Moldava

6.4

3.3

Turkey

8.5

2.5

Poland

4.3

2.2

Egypt

1.8

2.2

Slovakia

3.2

2.2

Japan

–0.5

2.0

Sweden

3.7

1.3

Switzerland

1.9

1.0

Germany

3.0

0.7

Ukraine

5.2

0.7

Austria

2.7

0.6

Bulgaria

1.7

0.6

Romania

2.5

0.4

Luxembourg

1.5

0.1

France

1.7

0.1

United Kingdom

0.9

0.0

Belgium

1.8

–0.1

Denmark

1.1

–0.4

Netherlands

1.1

–0.7

Czech Republic

1.9

–1.0

Spain

0.4

–1.4

Hungary

1.6

–1.4

Croatia

–0.0

–1.8

Italy

0.6

–2.0

Serbia

1.6

–2.2

Portugal

–1.6

–2.9

Greece

–7.1

–5.8