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European consumption limps through 2012

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today Mar 1, 2013
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After a chaotic 2011, Eurelia has now released its 2012 consumer summary — a sluggish year for 90 of its member retailers in eight European countries. Despite some hopeful signs, Portugal and Spain ended the year in a deep consumer crisis.

While Spain managed to stay relatively immune in 2011, Spain in 2012 was severely affected by the contraction of wages, increases in savings and especially a higher VAT tax. The decline was even felt in the north of the country, a region relatively unaffected until now. The result was a sharp decline in the number of visitors to shopping centers for the year to point that retailers noticed an impact of new openings on the numbers of existing stores, forcing them to question their national operations. This year Spanish retailers intend to maintain the same pace of openings as last year together with restructuring and renegotiations of rents. Still, there is not much hope for a better 2013.

Portugal was also hit hard, although a second half-year portends better times ahead for retailers there. January 2013 results indicated an upturn, including a stabilization in the drop of visitors to shopping center. Nevertheless, Portuguese retailers ended the year with a decline of 6.5% in business activity compared to 2011, Euralia’s worst results to date.

Poland and Italy finished at the top of the list, showing stable results for 2012. Poland could have had a good year if it had not suffered a sharp contraction in spending in the last quarter. For retailers, 2013 looks to be a gloomy year for consumer purchases, one in which unemployment will increase for a population already in debt.

In Italy, the steady results did not stop some specialists from calling it the “worst year since the war” for the country. And despite a good end of the year, Italy started 2013 in fear of a “Spanish scenario” that could impact household consumption.

France and Belgium both showed a decline of approximately 1%. After an encouraging first quarter, France saw its sales decline over the following months. Specialized stores were not able to return to activity levels from before the crisis in 2009. In spite of a good November and December in Belgium, the country has not been able to offset the slump. But the stability observed in this “slow-motion” market could foreshadow a more pronounced slowdown for 2013.

Suffering a decline of 2%, Germany was able to maintain its good performance of the first half year during a more difficult second half, especially in recent months. Such results are part of a general decline in consumption levels. Then there is Switzerland, a striking contrast. Its second half-year was up compared to the first six months, possibly buoyed by the introduction of fixed exchange rates to restrict a drain of business to France. But this slight improvement after 2011 was not enough for Switzerland to return to its 2010 levels.

The European Federation of retailers includes Fosco, Oro Vivo, Intersport, Sephora, FNAC, General d'Optique, Kiwoko, Cinesa, Claire's, Etam lingerie, Ale-Hop and Jysk.

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