A lean European Christmas

  • In real terms, total retail sales for the EU 27 countries fell 2.0% year-on-year in December 2012; for the eurozone currency area the performance was even worse with a 3.4% real terms decline year-on-year.

  • December 2012 saw slight improvement in consumer confidence across many European markets but this measure remains negative across most European countries – deeply negative in many cases.

  • Tesco and Carrefour posted negative like-for-likes in Continental Europe at Christmas 2012 while H&M reported global negative LFL growth for December 2012.

Retail sales at Christmas 2012

It was a bleak Christmas for European retailers. The EU-27 total was -2.0% while the eurozone saw weaker demand with -3.4% year-on-year retail sales growth in December.

Year-on-year growth in real terms (ie adjusted for inflation) was strongest in the surging Baltic economies and neighbouring Nordic countries – although Denmark disappointed.

In a European context, the UK’s near-2% year-on-year real-terms retail sales growth for December was a robust performance. Retailers in the bulwark of the eurozone, Germany, recorded an unusually weak Christmas season.

Some countries are yet to report – but Greece will almost certainly post further double-digit declines.

Figure 1: Europe: Year-on-year, real-terms change in all retail sales, November and December 2012
[graphic: image 1]
Volume (real-terms) data adjusted for working days
Source: Eurostat © European Union, 2012-13/Mintel

Looking at Greece briefly, by November 2012 monthly retail sales were just 64% of the 2005 average, once adjusted for inflation. The loss of more than one-third of sector sales in real terms has prompted the divestiture of operations by Carrefour, but Media Markt (Metro Group) and Praktiker – both from Germany – look to be staying put in the hope of driving sector concentration.

Figure 2: Greece: Index of retail sales, real terms, Jan 2007-Nov 2012
[graphic: image 2]
Source: Hellenic Statistical Authority/Mintel

Consumer confidence improves a little

Consumer confidence levels proved to be deeply negative across much of Europe in later 2012 – even in the Baltic economies. Although consumer confidence surveys ask participants to reflect on how they expect their personal circumstances to change over the next year, this measure is not always a reliable guide to future retail sales growth: consumer confidence has remained negative across a number of economies even when retail sectors have posted robust growth.

December 2012 saw slight improvements in confidence across many markets but the extent of prevailing negativity in the confidence data does go some way to explaining the weak Christmas trading seen in many markets.

Figure 3: Europe: Consumer confidence levels, November and December 2012
[graphic: image 3]
Consumer confidence levels are the balance of positive and negative responses from consumers to questions on expected developments in households’ financial situation, the economic situation, unemployment, and savings over the next 12 months
Source: Eurostat © European Union, 2012-13/Mintel

Confidence versus retail sales

Bringing these two sets of data together, the figure below charts the three-month average for real-terms retail sales growth and consumer confidence, based on October to December 2012.

It clearly illustrates the weakness of the Greek, Portuguese and Spanish markets, the strength of Nordic markets, and the relative robustness of the UK.

Figure 4: Europe: Real-terms, year-on-year retail sales growth versus consumer confidence levels, three-months averages*, Oct-Dec 2012
[graphic: image 4]
Codes: AT Austria, BE Belgium, BG Bulgaria, CZ Czech Rep., DE Germany, DK Denmark, EE Estonia, ES Spain, FI Finland, FR France, GR Greece, HU Hungary, IE Ireland, IT Italy, LT Lithuania, LU Luxembourg, LV Latvia, NL Netherlands, PL, Poland, PT Portugal, RO Romania, SE Sweden, SI Slovenia, SK Slovakia, UK United Kingdom

* Retail sales growth is three-month average (Oct-Dec 2012), except for Greece, Netherlands, Hungary, Italy and Czech Rep. – which are two-month averages (Oct-Nov 2012)
Source: Eurostat © European Union, 2012-13/Mintel

Major retailers

There are few retailers that reflect the full span of European retailing – and even fewer that are publicly-owned and so release operational data: major German-owned grocers such as Schwarz Group, for example, are in private ownership.

But the leading publicly-owned European retailers in grocery are Tesco and Carrefour, and in clothing it is H&M. We provide a summary of their Christmas results below.

While Tesco saw a strong Christmas in its domestic market, it proved vulnerable to the economic headwinds on the Continent – as did Carrefour. Even normally-buoyant H&M posted negative like-for-like sales growth for December 2012.

Clothing multinationals Inditex and Esprit have not yet released quarterly results that cover the Christmas period, while Europe’s third-largest clothing retailer (after H&M and Inditex), C&A, is privately owned.

Figure 5: Europe: Major retailers’ year-on-year sales growth, Christmas 2012
Like-for-like Total Notes
Tesco UK 1.7 4.3 Six weeks to 5 Jan 2013, excl. petrol at constant exchange rates
Tesco Other Europe -3.6 -0.4 Six weeks to 5 Jan 2013, excl. petrol at constant exchange rates
Carrefour France -0.8 -0.9 Q4 to end-December 2012, excl. petrol at constant exchange rates
Carrefour Other Europe -3.9 -3.4 Q4 to end-December 2012, excl. petrol at constant exchange rates
H&M -2.0 8.0 Global, December 2012
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