Switzerland: Retail trade holding up but likely to slow down

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SwissRetail trade held up well but is forecast to slow down

The sector’s growth in 2020 was much higher than in 2019. But next year this trend should decline, according to experts.

The growth in 2020 should be mainly credited to companies operating in the food sector.

The growth in 2020 should be mainly credited to companies operating in the food sector.

KEYSTONE

Retail should close the year with revenue growth well above 2019. But this positive trend should lose strength in 2021, once the coronavirus pandemic is more contained and purchases in neighboring countries are fully resumed.

“We must not forget that in 2020 the borders were closed for several weeks in a row in the spring. Particularly during the first wave, the Swiss did their shopping mainly at home, but with uncertainties about the level of employment, price will be an important factor”, points out Karine Szegedi, head of the consumer sector in Switzerland at Deloitte.

8 billion goods abroad

In 2019, the Swiss bought goods worth 8 billion francs in stores across the border, according to calculations by economists at Credit Suisse.

From January to September, Swiss retail sales grew by 6.6% in a year, thanks to the segment of basic necessities and the jump in online shopping, according to the barometer of the research institute Gfk. In 2019, over the same period, the increase was only 0.1%.

This growth should be credited in particular to companies active in the food sector (+10.3% against +0.1% in 2019) while the non-food segment almost stagnated (-0.1% against -0.5% in 2019) , details Gfk. Even companies active in the apparel sector, hit hard by the two months of spring closures, recovered, returning in September to positive territory.

internet purchase

In light of the semi-containment measures imposed this spring and the second wave of Covid-19, many consumers have turned to online shopping. “Some companies reached the online sales goals they had set for the next 3 to 5 years within a few months,” explains Ms. Szegedi. According to her, most customers should continue consuming online after the health crisis, habits that will be established over time if the experience has been positive.

The expert, however, expects to see e-commerce growth slow down next year: “the strong acceleration this summer should not be repeated, since the pandemic is better controlled”. Deloitte also points out that it is difficult to accurately quantify the contribution of online sales to overall retail. “Historically, it was between 5 and 10%, but the numbers increased to 50% this summer”, said the manager.

employment uncertainties

In addition to shopping tourism, consumers’ fear of losing their jobs due to the economic fallout from the health crisis could also weigh on retail development next year.

In a recent study conducted by Deloitte in 13 countries, 29% of respondents were afraid of losing their jobs due to the crisis, 20% spent more than they earned and 40% were worried about their savings.

Consumers will continue to buy basic necessities but expect to save money on clothes, restaurants and especially travel.

The State Secretariat for the Economy (Seco) anticipates an average unemployment rate of 3.2% in 2020 and 3.3% in 2021, if the epidemiological situation gradually improves from next spring, thanks above all to the large-scale distribution of vaccines against Covid-19 .

“In terms of employment, we are not very optimistic about stores in city centers and malls. In recent years, we’ve seen a general drop in traffic and we’ve lost retail jobs. With the advance of e-commerce, more jobs were created to manage the physical flows of goods sent, mainly at Correios or at Digitec, for example”, illustrates Ms. Szegedi.

second hand fashion

Trends that emerged well before the health crisis are also expected to strengthen in the coming months, such as the popularity of pop-up and second-hand stores and the importance of omnichannel.

“The flexibility of pop-up stores is a great advantage for retailers in these uncertain times to adapt quickly to paradigm shifts”, explains the statutory auditor, member of the management of Deloitte Switzerland.

In addition, the appeal of second-hand items should also gain ground, as responsible purchasing and ecological impact issues have gained importance among consumers during the pandemic.

Previously offered mainly at flea markets, second-hand goods also found their way into Jelmoli and Manor department stores this year.

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