Although the worst of the crisis seems to be behind us, difficult conditions still char-acterize the retail situation in many countries. GfK GeoMarketing retail expert Olaf Petersen interprets the key data for European retail in 2009 and offers prognoses for 2010 turnover development.

Like the job market, the retail branch is typically more of a follower rather than a driver of economic development. Our data, facts and prognoses provide perspective and insight on Europe's multifaceted and dynamic retail situation.

Retail turnover
The retail turnover of the EU 29**, including Croatia, Russia and Turkey, corresponds to €2,764 billion. This figure has declined in 2009 for almost all European countries. Exceptions include Belgium (+0.3%), Austria (+2.1%) and Switzerland (+6.0%), al-though in the latter case the high level of growth is essentially a result of the exchange rate.

In terms of market size, Germany, France and the UK lead the ranking with around €400 billion. Russia, Italy and Spain command a retail volume of over €200 billion, while Turkey and the Netherlands generate €100 billion. The remaining 24 countries under review have a combined retail turn-over of €689 billion.

Consumer spending
Despite the equalizing tendencies apparent in recent years, expenditure patterns among private households in Europe continue to vary significantly. Particularly striking in this regard is the example of France and Germany: With its around 60 million inhabitants, France generates around the same amount of retail turnover as neighboring Germany's over 80 million consumers.

Private consumer expenditures comprise the smallest share of retail turn-over, with values below 30% in Italy, Germany and Greece. Austria, Switzerland and Slovakia lie just above this mark at 31%. At the other end of the spectrum is Russia, which has the highest retail quota at 61%. In the middle are Bulgaria, Estonia, Hungary, Croatia and Slovenia at 45%.

The determining factors for Europe's noticeable variations in consumer behavior are primarily the differing levels of economic development and wealth as well as pronounced differences in shopping cultures and lifestyles.

Anticipated retail turnover for 2009/2010
A noticeable improvement in retail activity can be expected in 2010 in comparison to the previous year. However, the immediately preceding crisis period of 2009 significantly qualifies this improvement. GfK GeoMarketing expects an increase in nominal retail turnover for 14 European countries in 2010. Relatively positive developments are forecasted for Turkey and Russia, the two countries with the highest nominal turnover growth, al-though this growth will be offset by a significant currency devaluation. The other countries for which an increase is expected will only do so by a nominal growth rate of 2%.

Stagnation is anticipated for six countries, among which are the large markets of France and Italy.

Declines in turnover are expected for 11 countries, including Germany (-2.4%), the United Kingdom (-1.3%) and Spain (-1.5%). At the bottom of the forecasted 2010 turnover ranking are the two Baltic states of Lithuania and Latvia. The -2.5% change in turnover predicted for Greece carries the qualification that at the time the prognosis was made, the concrete measures regarding how the country would cope with the euro crisis were not yet foreseeable.

Sales area provision
The per capita sales area provision is an essential criterium when comparing national retail structures within Europe. The 2009 status in this regard reveals substantial differences despite the single European market and unification process.

The countries with the highest sales area provision are in Central Europe, although Austria and the Netherlands occupy the top of the ranking with around 1.6 m² per inhabitant. At the other end of the spectrum are Russia, Bulgaria and Turkey with a sales area provision below 0.6 m² per inhabitant.

We emphasize, however, that there are considerable variations in the sales area provision in centralized versus peripheral regions of individual countries. There is even an over-capacity in many retail-oriented metropolitan areas in Central and Eastern Europe.

Sales area productivity
The marked degree to which retail remains a "local business" is very apparent with regard to the average sales area productivity – i.e., turnover per m² of sales area. Here Luxembourg is again top of the ranking in 2009 with €7,000 per m² of sales area, followed by Norway and Ireland. At the bottom of the ranking are Romania, Poland, Lithuania and Hungary with approximately €2,000.

Notable here is that sales area productivity in Central and Eastern European countries - with the exception of Slovenia - is lower than in the rest of Europe. There is also sizeable variation in sales area productivity among the large EU states, ranging from €6,100 in France to €4,800 in the United Kingdom, €4,200 in Italy and €3,400 in Germany.

About the study
The calculations of turnover and purchasing power are carried out in euros based on the average 2009 exchange rate for the related currency (as reported by the ECB). Information and data status correspond to March 2010 (meaning that the EU Commission's "Inter-im Forecast February 2010" was taken into account). The study was commissioned by the European Shopping Centre Trust (ESCT) and presented in April at the ICSC European Conference in Prague. The study is available upon request from GfK GeoMarketing as a 12-page, English-language compendium.

Author

Olaf Petersen, Management Board, GfK GeoMarketing
o.petersen(at)gfk-geomarketing.com
www.gfk-geomarketing.com/consultancy

Contact

Alexandra Deutsch
a.deutsch(at)gfk-geomarketing.com,
+49 (0)7251 9295170