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European economy gaining momentum

21 May '15
3 min read

A study by German market intelligence firm GfK has found the situation for retail in crisis countries in Europe has improved. GfK has carried out a comprehensive analysis of the retail scene in 32 European countries. The study examined purchasing power, the retail share of the population's total expenditures, inflation, sales area productivity, changes in retail due to e-commerce, as well as a turnover prognosis for 2015, GfK said in a statement.

A total of approximately 7.75 trillion euro was available to consumers in the EU-28 countries in 2014 for spending and saving. This corresponds to a per-capita purchasing power of 15,360 euro which is a nominal increase of approximately 2.5 per cent compared to 2013.

The study found that growth in online trade is placing increasing pressure on stationary retail throughout Europe. GfK has forecast only moderate nominal stationary retail growth of just 0.5 per cent in 2015 across the EU-28 countries.

The retail share of private consumption fell again in 2014 among the EU-28 countries to 30.9 per cent (2013: 31.2 per cent; 2012: 31.4 per cent). This development was influenced by two key factors with conflicting effects: first, the fall of oil prices in mid-2014, which resulted in decreasing costs for energy and fuel; and second, the long-standing trend toward ever higher spending on accommodation, health and recreation. These expenses translate to less money available for retail consumption and ultimately supersede the short-term effect of falling oil prices.

Consumer prices climbed only moderately in 2014 (+0.6 per cent), and an inflation rate of just 0.2 per cent is forecast1d for 2015. For 2015, the European Commission even expects deflationary tendencies in some countries, with the greatest effects predicted in Spain and Switzerland at -1.0 percent apiece. The highest rates of inflation will again be in Turkey (+6.3 per cent) and Russia (+6.0 per cent). Due to the low inflation, real-value turnover for stationary retail is anticipated to remain stable in 2015.

The GfK reports said in many countries, sales area productivity has begun to increase again after delays to many projects occasioned by the financial crisis.

GfK observed that sales area productivity is increasingly under pressure in Northern and Southern Europe, particularly in Germany, France and Great Britain. A major reason for this is the redirection of turnover to internet retail among many product lines. Although e-commerce has significant momentum in eastern Europe, the effects are not yet having a strong impact, because the absolute volumes being transacted over the internet are comparatively small. (SH)

Fibre2fashion News Desk – India

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