Consumer goods retailing still under pressure

The challenging economic situation and the high unemployment rate hurt consumers in 2013, creating problems for consumer goods retailing. Compared with the previous year, the parameters for retail trade deteriorated once again during the period under review. This is because the economic downturn that began in 2011 has had a delayed impact on the job market and disposal incomes. Economic recovery is being felt with a certain time lag in the retail sector.

Germany

In 2013, Germany was also unable to shield itself from the weak economic environment. Economic output declined during the first quarter in particular compared with the previous year’s period. The economy has picked up over the course of the year, growing in the end by nearly 0.5 per cent (12M 2012: 0.7 per cent). Compared with the other eurozone countries, the German economy has continued to develop in a relatively solid manner.

Unemployment has increased only slightly over the previous year’s period. Disposable income has increased on the back of the past years of strong growth, raising consumer confidence levels. As a result, the retail sector has turned in a solid performance, producing nominal growth of nearly 1.5 per cent. On a price-adjusted basis, however, retail sales have remained stagnant during the period under review.

Western Europe

In many countries in Western Europe, the recession continued at the beginning of the period under review. In the second quarter, the eurozone economies expanded again for the first time following six consecutive quarters of contraction. Overall, the economy picked up over the course of the year.

The sovereign debt crisis has remained the largest drag on economic growth. While the crisis impacts all countries in Western Europe, the economic gap separating the crisis-battered periphery countries and the more robust core countries has persisted. Besides, Germany, Austria, Switzerland and the Scandinavian countries have experienced slight growth in 2013. In addition to the crisis countries Italy, Portugal and Spain, the economic chill has also been felt in France and the Netherlands.

This has once again amplified the negative effects on retail trade during the period under review. Following a year of stagnation in 2012, nominal retail sales have continued to decline during the period under review and have remained about 1 per cent below the previous year’s level. Adjusted for inflation, this decline has proved even greater.

Retail performance in individual countries mirrored economic developments. Nominal sales growth has been produced primarily in Belgium, Austria, Sweden and Switzerland. The largest declines have been reported by Spain, Portugal, Italy and the Netherlands. Adjusted for inflation, almost all Western European countries have recorded declining sales.

Eastern Europe

As a result of the recession in Western Europe, Eastern Europe has produced only weak economic growth as well. On an individual level, economic performance in the countries of Eastern Europe has been very mixed. At more than 5 per cent, Kazakhstan has been expected to generate the most growth, followed by Turkey and Moldova with roughly 4 per cent. As a result, the Turkish economy has expanded slightly more than in the previous year, but it has still lagged behind the growth rates seen in recent years. Romania’s economy has produced GDP growth of 2.0 per cent. The Russian economy has generated slightly less growth. Compared with the previous year, Russia’s economy has weakened significantly while the Romanian economy has experienced slight growth following the previous year’s stagnation. The economy of the Czech Republic has contracted once again. The economic downturn has been most severe in Greece: in 2013, the country’s economy has shrunk for the sixth consecutive year.

Just like the region’s economies, the momentum produced by the retailing industry varied widely. In particular, Russia and Turkey have generated nominal retail growth in the lower double digits. But this growth is below the level achieved in the previous year and due in large part to inflation. By contrast, the retail sector has been especially weak in Bulgaria and the Czech Republic. The retail sector in Greece has continued its downward trend.

Asia/Africa

Against the backdrop of the overall global economic slowdown, the emerging countries of Asia once again have generated the highest growth rates during the period under review. Despite the economic downturn, China has produced growth rates of about 7.5 per cent. As in previous years, this has been the highest growth of all countries where METRO GROUP does business. At 5.0 per cent, Vietnam has produced robust growth. By contrast, growth in India has slowed measurably, dropping below 3 per cent. On the other hand, the mature economy of Japan has produced comparatively robust growth of nearly 2 per cent. This growth has been primarily fuelled by a government stimulus plan.

Due to the comparatively robust growth rates, demand among private consumers has also been relatively stable. For these reasons, Asia has generated the highest growth in retailing of all regions where METRO GROUP does business in 2013. Once again, China has proved to be the pacesetter – with continued double-digit growth in retail. India and Vietnam have turned in similar performances. But inflation in both countries has been so high that price-adjusted retail sales have risen only slightly.

Development of gross domestic product in METRO GROUP countries

Percentage change year-on-year

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20121

20132

1

Previous year’s figures may deviate from the Annual Report 2012 in the event final figures were not yet available at the reporting date

2

Forecast

China

7.8

7.5

Kazakhstan

5.1

5.4

Vietnam

5.1

5.0

Moldova

–0.8

4.1

Turkey

2.2

3.9

Pakistan

4.2

3.7

India

3.8

2.7

Serbia

–1.7

2.2

Romania

0.4

2.0

Japan

2.0

1.9

Switzerland

1.0

1.8

Russia

3.4

1.6

Egypt

2.2

1.5

Slovakia

2.0

1.2

Poland

1.9

1.1

Sweden

1.0

0.9

Ukraine

0.2

0.7

Bulgaria

0.8

0.6

Hungary

–1.7

0.5

Germany

0.7

0.5

Austria

0.6

0.4

Luxembourg

0.3

0.3

Denmark

–0.4

0.3

Belgium

–0.3

0.2

France

0.1

0.1

Croatia

–2.0

–0.2

Netherlands

–1.3

–1.2

Czech Republic

–1.0

–1.2

Spain

–1.6

–1.3

Italy

–2.4

–1.8

Portugal

–3.2

–2.0

Greece

–6.4

–3.7