The resilience of UK consumer spending secures top positions for UK retailers in European retail rankings.
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New research from Mintel shows that Marks & Spencer remains Europe’s number one choice for clothing while Tesco consolidates its runner-up position as the second largest grocer in Europe. Kingfisher’s B&Q and Castorama dominate the DIY European industry and are more than twice the size of its German competitor Obi. Health and beauty retailing is one of the fastest growing retail sectors in Europe, and even though it now only operates in the UK, Boots is the largest operator in the sector.
Over the last few decades, the European retail sector has been increasingly subject to the process of concentration and internationalisation. The amount of cross-border activity is growing all the time, and the key players are getting larger. These processes, together with the reduction in barriers to trade and the growth of the Internet are creating a truly dynamic and evolving retail environment. The British retail boom has been built on low interest rates which have led people to feel able to borrow and this has led to a frightening surge in indebtedness and a boom in house prices which has all the characteristics of a bubble about to burst.
Global mass secures top ranking for food retailers
Among the top 20 retailers in Europe, 13 are pure food retailers. The French giant Carrefour has strengthened its lead in this sector still further over the last year, and is now almost twice the size of its closest rivals, Tesco and Intermarché. Tesco has overtaken Intermarché as the second largest grocer in Europe and goes from strength to strength and has proved able to adapt its format to different markets in and beyond Europe.
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By GlobalDataPan-European or even global mass is becoming even more important. The quest for buying power and economies of scale are leading retailers to gain size on both a domestic and international level. Within this process of consolidation, it is also becoming clear that these activities are not without their downsides. Wal-Mart is still struggling to understand the complexities of the German market, while Intermarché’s acquisition of Spar Handels in Germany continues to be loss making.
Future developments are likely to focus on the countries in Eastern Europe and the lesser-developed areas of Southern Europe. “In the future, as the food retail sector becomes even more competitive, the companies able to control their entire store network, such as Carrefour, Tesco and Ahold, will have a considerable competitive advantage over voluntary groups, such as Leclerc and Intermarché” comments Mintel’s Richard Perks.
Will it end in tears?
In 2001 most European economies turned down and growth in retailing slowed. The two extremes were seen in Germany and the UK. If the Germans are ultra cautious, the British are at the opposite pole, spending with an abandon which has taken commentators by surprise. In 2002 the UK was again the exception. The boom continued uninterrupted and the longer that goes on the greater the fear that it will “all end in tears”. Mainstream Europe remains depressed with Germany struggling out of recession. The Euro launch caused problem and made the downturn in Germany worse, but the fact that the currency has started to recover against the dollar has done much to boost confidence.
“The uncertainties at present are enormous. There is the ever-present threat of further attacks on the US or its allies. There are the falls of stock markets around the world. The collapse of major groups, Enron and Worldcom, accounting irregularities at Xerox and the much publicised problems of Vivendi may have relatively little direct impact on consumer but the longer term impact is as yet difficult to assess” comments Richard Perks.
