Retailers in eurozone braced for tough Christmas, claim researchers

Conlumino: Europe teetering on recession

Conlumino: Europe teetering on recession

Christmas 2011 is set to be especially tough for retailers in countries across Europe with sales forecast to grow by just 0.8% in the eurozone, according to retail research agency Conlumino.

Conlumino predicts France and Germany will top the league table with solid retail growth; Spain will see further sales declines in December; while Italy will manage to post positive growth in December, but only just.

With many countries in Europe teetering on the edge of recession, retailers across the Continent are bracing themselves for a muted Christmas as constrained consumers cut back on non-essential spending, claim researchers.

Simon Chinn, lead consultant at Conlumino, said: “Recent troubles in the eurozone have resulted in a continued slide in consumer confidence over the past few months and this has set the scene for a somewhat gloomy retail Christmas. It’s inevitable although people will continue to celebrate, they will do so with one eye kept firmly on their spending.”

Chinn: slide in consumer confidence

Chinn: slide in consumer confidence

Conlumino forecasts across the eurozone as a whole, retail spend will rise by just 0.8% this December compared to a year ago. While that appears to be positive, the vast majority of the growth is being driven by the currency bloc’s largest economies – Germany and France – which between them account for almost half of the zone’s retail spending, it said.

“If France and Germany were taken out of the equation, the eurozone would be witnessing a severe retail contraction this Christmas, driven down by the austerity-stricken nations of Italy, Spain, Greece, Portugal and Ireland,” said Chinn.

Though the situations in Germany and France are less severe than other eurozone states, Conlumino said the prospects for retailers in those countries are far from rosy as consumers spend more cautiously in anticipation of a weaker economic outlook in the year ahead. 

Conlumino forecasts retail spend in Germany will rise by 2.4% in December, on a par with average retail growth for most of this year. Retail spend in France is forecast to be around 2.1% in December, a significant dip from the 4.2% growth witnessed in the first half of 2011, said Conlumino.

Meanwhile, researchers claim economic and political uncertainty in Italy will weaken retail spending in December to just 0.7%; with spend in Spain forecast to decline 0.9%.

“Despite already being high, unemployment continues to rise sharply in Spain, and with other austerity measures restricting disposable incomes, we expect the country to have the worst growth of the big European economies this Christmas. This will bring to an end a most unfortunate year for the Spanish retail sector which has seen negative sales volumes every month and total spend slip by 1.9% since January,” said Chinn.

While Christmas 2011 looks tough for both consumers and retailers in the eurozone, the outlook for the year ahead is even more daunting, according to Chinn.

“Next year will be even more challenging for European retail. Virtually all of the negative headwinds that have blown in during the second half of 2011 will persist, and could worsen, for at least the first half of 2012. With no clear cut solution to the eurozone crisis in sight, the outlook for retailers and consumers alike does not look promising.”