EU retail sector to recover after the pandemic shock
After a year in which the industry was shaken to its foundations by the impact of Covid-19, the European retail and consumer goods sector will return to growth in 2021, albeit with varying paces of growth depending on the sub-sector and channel a company operates in.
According to PwC estimates, the gross value-added contribution of non-food retailers to the economy will increase by 5.3% in 2021 and by 7.2% in 2022. In the food sector, which was one of the most resilient in 2020, growth will be more muted, with GVA increasing by 0.3% in 2021 and 0.8% in 2022, compared with a small decrease of 0.3% in 2020.
"On the surface, our estimates indicate a positive outlook for retailers and consumer goods companies in the near future. However, as economies emerge from waves of Covid-19 infections and stores reopen after periods of lockdown, the scale and permanence of changes to the way people shop cannot be underestimated. Traditional brick-and-mortar retailers that could not pivot to online sales have been severely damaged, and many retail chains will not reopen, changing the face of city streets," says "Navigating the New Reality: Retail and Consumer" report.
Four key trends will reshape the sector, according to the analysis. Covid-19 has accelerated changes in consumer spending that were already underway before the crisis, but it has also created new trends and slowed or even stopped others in their tracks. The four most powerful forces now shaping the industry are:
- Digital-first consumer behavior;
- Sustainability and the growing importance of ESG;
- New ways of working.
"We believe companies need to take bold steps to address their key challenges: building resilience in the supply chain, becoming truly shopper-centric and adapting to a continuously changing working environment," said Reinhard Vocke, Partner and Retail and Consumer Practice Lead.
Resilience in the sector can be built through flexibility and agility. Tough competition, ever-changing consumer demands and constant disruption have put even the biggest players to the test for decades. However, more than a year into the pandemic, and despite vaccinations gaining momentum around the globe, many companies are still struggling to adapt to the new reality and keep up with established e-commerce companies.
However, most have a critical opportunity to start rethinking and reconfiguring future plans in order to build their resilience and adaptability and emerge stronger from the current crisis. Retail and consumer companies should focus on these three strategic goals:
- Repair. Ensure resilient supply chains;
- Rethink. Build a true shopper-first mindset;
- Reconfigure. Redesign your organization and teams.
The latest report from Kantar shows that primary MFP sales in the UK retail is covering 43.2% of ...