High costs and reluctant consumers are putting pressure on the European retail sector. France and Spain show slight growth, Germany and Italy lag behind. The picture in the Benelux is also mixed.
Aggressive discounts
While European consumer confidence is rising, high savings rates (20 % in Germany) and inflation are dampening spending. While France and Spain show slight growth around 1.5 % for this year, Germany and Italy remain behind. After construction, retail is the runner-up sector in terms of most bankruptcies, according to the recently released sector analysis by credit insurer Allianz Trade.
“Profitability in the sector is under pressure globally due to high inventories, high operating costs and consumers being cautious. Many retailers have been forced to offer aggressive discounts to reduce inventories and free up working capital. Price competition is particularly fierce in essential categories such as food and personal care”, Allianz Trade’s Johan Geeroms explains.
