European online shopping on the rise

European online shopping on the rise over christmas while overall retail sales remained flat

- Seasonal Retail Sales Growth Weakest in the Eurozone Area -

London, 24 February 2012 – Consumers across Europe increasingly chose to do their Christmas shopping online, while overall retail sales remained flat over the period, according to new research by global property adviser CBRE.

CBRE’s European-wide annual review of retail sales figures, including both online and traditional shop sales, for the month of December reveals that the ongoing eurozone crisis, falling consumer confidence, and the threat of a double dip recession meant that Christmas trading across Europe was once again flat, growing by just 0.1% year-on-year (y-o-y).

Overall retail sales growth (including both online and traditional shop sales) was weakest in the eurozone area, down by 1.6% in December 2011 (y-o-y), reflecting consumer nervousness in the member states. In contrast, retailers enjoyed a successful Christmas period in Russia, with sales increasing by 9.5% (y-o-y) in December and by 16.1% in the last two weeks of the month. An emerging middle class and growing availability of credit increasingly played a role in Russia’s increase. Likewise retailers in Poland had a very good Christmas trading period with overall sales up by 8.6% on the same period in 2010. Retailers in the southern European countries of Italy, Portugal and Spain experienced the worse decline in sales, reflecting the impact of harsh austerity measures, higher tax rates and very low consumer confidence levels.

The United Kingdom (UK) also performed better than expected, with the volume of retail sales increasing by 2.6% y-o-y in December 2011. This was a solid but arguably predictable performance given the snow-affected trading in the run up to Christmas 2010, combined with the mild autumn in 2011 which delayed clothing spending until December, and the early sales and heavy discounting. Nevertheless many other countries experienced similar conditions and did not deliver as robust results.

Following the 2010 Christmas trading period, CBRE reported that a shift in shopping patterns, with was occurring, highlighting the sharp increase in the growth of online sales, compared with solid but slow growth across Europe for total retail sales. Since then, overall retail sales have slowed and subsequently fallen into negative territory, but online sales continue to grow at around 8% for those countries in the European Union (EU-27).

CBRE’s research also identified significant differences by country in terms of the proportion of consumers that use the internet to shop online. Online sales grew fastest in the UK, Sweden, Russia and the Czech Republic. Interestingly, CBRE’s recent ‘Europe’s Online Consumer’ report identified Sweden and the UK as the most mature online markets, in terms of the proportion of consumers that use the internet to shop online, whereas CEE and Russia in particular were the least mature markets. Thus the strongest growth in the online sector is polarised between the most mature and least mature online markets.

In contrast, online sales are currently falling in southern Europe, most notably in Spain and Portugal. In fact, echoing the trend in total retail sales, online sales growth is considerably weaker in the eurozone area, growing by just 2.9% in October 2011 (on a 3-month rolling average) compared with 8.3% EU-27*.

Neville Moss, Head of EMEA Retail Research, commented:

“Shoppers are waiting until later and later to buy their Christmas presents in the expectation that retailers will discount their prices. This has turned into a self-fulfilling prophecy in some European countries, with retailers forced to lower prices in the week or two before Christmas. Strong sales were reported by many retailers during this period, but it was perhaps too little too late, and it remains to be seen what impact this will have on margins throughout Europe for the rest of the year.

“Our research suggests that shoppers are increasingly taking advantage of the advances in mobile technology, ease of delivery, and of course the opportunity to avoid the festive crowds. However, it is no coincidence that those retailers that traded well over the period, such as John Lewis or Next in the UK, have extensive physical store networks as well as sophisticated and long-standing online platforms. While online shopping continues to grow in influence, it is our view that the bricks and mortar experience will remain an integral part of the shopping experience during the Christmas period for the foreseeable future - the challenge for retailers is to combine the customer service provided by the physical store, with the convenience of online, social, and mobile platforms to provide the complete multi-channel shopping experience for consumers.”

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