Future sector trends
The performance of self-service wholesale can be seen against the backdrop of current macroeconomic parameters. We continue to project divergent economic developments across the different economic areas over the next financial year. We expect these divergent trends to also be reflected in the sales figures of self-service wholesale in the individual regions within the METRO Cash & Carry portfolio.
Against the background of an only modest weakening of growth during financial year 2016/17, we project a continuous solid development in German and Western European self-service wholesale. Positive sales impulses in self-service wholesale should primarily stem from the continuous decline in unemployment, the increase in disposable incomes and the resulting demand for high-quality products. Overall, we expect to see a slight increase in sales in Western European self-service wholesale.
We project continued sales growth in local currency in Eastern European self-service wholesale over the next financial year. The Russia/Ukraine conflict will continue to overshadow regional developments. However, high inflation and its negative effects on demand should subside, benefiting food retail. In addition, we project solid sales developments in the Central European countries. In Turkey, growth is likely to slow somewhat as tourism and the restaurant sector, in particular, are challenged by the difficult domestic political situation. All in all, the region continues to offer growth potential for self-service wholesale in spite of the increasing expansion of retail formats. METRO GROUP expects Eastern Europe to remain the world’s growth region number two in self-service wholesale.
With respect to the upcoming financial year, we continue to expect the strongest growth in the Asian self-service wholesale segment. In spite of the slowdown in China, macroeconomic developments continue to offer very good parameters for growing retail sales. Compared with the situation in Western and Eastern Europe, competitive pressure from modern food retail formats on self-service wholesale is relatively limited. Traditional retailers, an important customer group with strong growth potential for self-service wholesale, continue to act as the most critical supply channel for food in the region.
METRO Cash & Carry continues to focus its expansion on the dynamic markets of China and India. At the same time, through our subsidiary Classic Fine Foods, which specialises in delivery services, we can participate in the growth of out-of-home consumption in emerging markets, which is fuelled by the growing prosperity of the local population. In addition, we expect demand for delivery services to increase among our major customers from the hospitality and food service sectors in financial year 2016/17.
Consumer electronics retailing
Consumer electronics retailing in Europe is likely to continue its generally stable development in financial year 2016/17.
In view of the high base level and the relatively low speed of innovation in Germany, we expect to see growth of about 0 per cent.
Trending product categories such as health, sports & beauty, virtual reality goggles and fitness trackers provide strong impetus, but are unlikely to generate substantial volume effects over the short term. In contrast, the networking of home automation, household appliances and consumer electronics – subsumed under the term smart home – has become relevant for the wider public. However, sales figures will also pick up only gradually in this area.
The saturated Western European electronics markets will continue to record moderate growth of about 1 per cent in 2017.
Local markets across Eastern Europe continue to show very heterogeneous developments. Russia has recovered from its recent crises and has caught up significantly in the consumer electronics segment since January. This trend will continue during the current financial year. While Poland and Hungary will continue the past years’ growth trend at slightly lower rates, the Greek market is likely to experience another year of slightly negative growth due to renewed comprehensive reforms and austerity measures. In the Turkish market, the most recent data point to continued double-digit growth in local currency. The long-term impact of the political situation on the willingness to spend and invest as well as overall economic growth remains to be seen.
Food retail business
All in all, the parameters for German retail will remain favourable in financial year 2016/17. As a result, food retail will also continue to grow. In addition, e-commerce sales, in particular, will grow in the low double digits.
At the same time, the inflow of immigrants is leading to higher demand for food. As a result, we also project moderate growth for store-based food retail as a whole. Besides e-food, strong price competition in the fast-moving consumer goods (FMCG) segment as well as the expansion of supermarkets’ and discounters’ selling space and thus assortments on already existing store space will remain a challenge in 2016/17.