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Inflation is at a record high throughout Europe. How should retailers respond?

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European retail resilience

In the news

•

Retail gloom amid festive season. As European consumers contend with double-digit inflation and soaring costs of living, the region’s retailers are gloomy on the holiday shopping season. According to a survey that included 400 European merchants, roughly half said that they were dissatisfied with Black Friday sales, and only one-fifth of respondents were feeling optimistic about year-end sales. Retail sales in Germany for November and December are expected to be 4% lower than the same period in the previous year, a German retail association reports. [CNBC]

•

Slowing sales. In Europe, monthly retail sales have slowed more than at any other time during the year. European retail trade dropped 1.8% in October, the largest decline since December 2021, according to EU data. At a 4.6% decrease, Austria suffered the sharpest drop in retail turnover, with sales also slowing significantly in France and Germany. Europe will likely be in recession this winter, although it may be milder than at first anticipated, many economists say. A moderate fall season has helped to limit energy usage and increase gas storage. [FT]

Consumer confidence in Europe has plummeted, falling to levels even lower than those in the first months of the COVID-19 pandemic.

On McKinsey.com

•

Painful prices. Everywhere in Europe, inflation is at record-breaking highs. With food and gas prices soaring, many Europeans are reducing or drawing down on savings. Fifty-five percent of consumers in Europe say they’ve cut their savings in recent months, and one-third say they’ve dipped into savings to cover living expenses, our latest European Consumer Pulse Survey shows. Retailers under pressure will need to quickly adjust for high inflation while preparing themselves for long-term resiliency, reveal McKinsey senior partner Franck Laizet and coauthors.

•

Resilient retailers. To learn why some retailers are much likelier to emerge stronger from a crisis, McKinsey analyzed the performance of the 80 largest European retailers during and after the 2008 financial crisis. Resilient retailers (those in the top quartile of TSR) were likelier to adopt a through-cycle mindset, willing to invest in longer-term growth and market share despite the economic downturn. See three critical areas European retailers can focus on as they position themselves for outsize growth following a downturn.

Three areas for growth

— Edited by Belinda Yu, editor, Atlanta

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by "McKinsey On Point" <publishing@email.mckinsey.com> - 12:22 - 9 Dec 2022

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Inflation is at a record high throughout Europe. How should retailers respond?

European retail resilience

In the news

Consumer confidence in Europe has plummeted, falling to levels even lower than those in the first months of the COVID-19 pandemic.

On McKinsey.com

Archives

in

info@learn.odoo.com

The state of AI in 2022—and a half decade in review

The State of Fashion 2023: Bright spots and darker patterns

Inflation is at a record high throughout Europe. How should retailers respond?

﻿European retail resilience

In the news

Consumer confidence in Europe has plummeted, falling to levels even lower than those in the first months of the COVID-19 pandemic.﻿

On McKinsey.com

European retail resilience

Consumer confidence in Europe has plummeted, falling to levels even lower than those in the first months of the COVID-19 pandemic.