For the time being, the retail sector will continue to struggle with the after-effects of the crisis, which has been putting the brakes on consumer spending and related sales volumes in the past few years.
We expect 2014 to be a year of transition, during which the effects of the crisis – especially plummeting volumes – will diminish and leave room for growth. Some areas of the sector, such as the fashion and DIY chains, will probably be capitalising on the economic upswing sooner than others. These are the conclusions of ABN AMRO’s 2014 sector update Visie op Retail, which was published today.
Sales and volume trends are stabilising
The fashion industry has historically been quick to capitalise on shifting consumer spending. And in 2014 as well, ABN AMRO is expecting this sector to pick up as the year progresses. Overall sales will likely stabilise, and the decline in volumes will slow down. Meanwhile, sales volumes at do-it-yourself businesses will be boosted by the increasing number of transactions on the housing market. In this sector as well, ABN AMRO is expecting volume trends to stabilise on balance in 2014, ending seven consecutive years of decline.
The Dutch go online for DIY items
On top of bringing down volumes, the crisis has revealed a number of structural changes in retail. For one, the rise of online retail has been impactful for the entire sector. The share in sales of online purchases soared across the sector. While offline sales declined in 2013, online sales gained 12 per cent – and with that, the online share in total retail purchases now amounts to 6.9%. ABN AMRO observes huge differences within the sector and expects them to persist. Traditionally, consumer electronics takes the lead when it comes to online sales, with as much as 20 per cent of sales generated by online purchases. In the fashion industry, that percentage is currently 8.5%. A booming segment in this respect is do-it-yourself items. In 2013 sales volumes of do-it-yourself businesses dropped by 9.3 per cent, marking the seventh consecutive year of decline. Online purchases however, especially home and garden items, rose by 13 per cent.
Consumers want to be able to buy 24/7
Retailers who mainly focus on the online channel, have the best odds of success in niche markets, according to ABN AMRO. There, they can establish themselves as specialists and also improve their findability. For example, many online department stores are creating separate websites for individual categories within their product range. The growing ranks of mobile shoppers contributes to higher online sales within retail. Tablets and – increasingly – smartphones allow consumers to compare and shop anywhere and anytime. "This provides opportunities for online retailers regarding presentation, inspiration, navigation and interaction," ABN AMRO’s Sector Banker Retail Chris Meyer explains. "Consumers these days often start their quest for a product online. Besides, they don’t think in terms of separate channels anymore – they want to be able to purchase at any moment they choose, regardless of the channel. Whether that’s online or offline is just a matter of detail."