Menü
Improvement in consumers‘ buying power in 2024
Consumers, due to a combination of lower inflation, higher wages, and a recovering housing market, have more disposable income this year on average. Consumer confidence at the beginning of 2024 is significantly better than a year earlier, although it remains relatively low. The expectation is that consumers will spend more in the shopping streets this year, although it will still not be very lavish. It is expected that especially more clothes, furniture, and personal care products will be purchased.
Staff shortage obstacle to growth
A major challenge for retailers is the shortage of personnel. Over 40% of all retailers are facing staff shortages. In addition to increased work pressure, the shortage of personnel is an obstacle to growth for many stores as opening hours are reduced or branches are temporarily closed.
One of the causes of the staff shortage is that the retail sector can hardly compete with other sectors, such as hospitality and healthcare, in terms of labor conditions.
Nearly one in four retailers indicates that the transition of staff to other sectors is by far the biggest hindrance.
More retailers negative about economic climate in early 2024
At the beginning of the first quarter of 2024, more retailers held a negative view of the economic climate in the next three months. On balance, more than 8 percent of business owners expected a deterioration. In the third quarter, this was still over 4 percent on balance. Retailers were thus slightly more pessimistic than average. Overall, 7 percent of all entrepreneurs in the Netherlands hold a negative view of the economic climate for the next three months.
Clothing and personal care products significantly more expensive
Last year, the non-food segment also achieved a 3% increase in turnover, despite selling fewer items. Similar to 2023, the growth in 2024 was entirely driven by higher prices. Particularly, clothing and personal care products saw a significant price increase of 8% on average. The prices of electronic products increased by a much lower rate of 2%. Across all sectors, the number of items sold decreased last year, with the largest decline observed in electronics stores and the do-it-yourself segment.
Slight increase of turnover in fashion in 2024
After a strong recovery in the fashion industry in 2021 and particularly in 2022, the growth in turnover significantly dropped in 2023 to 4% for clothing stores, and for shoe stores it was even only 1.5%. The increase in turnover in both clothing and shoe stores was entirely due to higher prices, as there was a decrease in volume by 3% and for shoe sales by 2% last year. For this year, we anticipate a 3% growth in turnover for clothing stores and again a 1.5% growth for shoe stores. With improved consumers‘ buying power, it is expected that consumers will buy more clothing and shoes this year.
Mid-range fashion especially struggling
In 2023, several major clothing companies went bankrupt, including Score Chasin’, Scotch & Soda, and sports retailers Perry Sport and Aktiesport. Currently, multiple chains are facing problems, with Ted Baker and Esprit undergoing restructuring. Due to reduced purchasing power, consumers primarily bought less and often cheaper clothing last year. Especially mid-range fashion chains are affected by the shift towards cheaper fast fashion brands such as Primark and H&M. But also, low-cost Chinese online retailers Shein and Temu are capturing market share. It is therefore expected that more clothing companies, especially in the mid-range segment, will disappear from the high street in the long term.
More demand for second-hand clothing
Consumers are not only buying cheaper clothing more often, but second-hand clothing is also becoming increasingly popular. This can be done through online marketplaces like Vinted and Marktplaats as well as in physical thrift or vintage stores. In particular, larger fashion companies are increasingly focusing on the second-hand market, aiming to extend the lifespan of clothing, thereby somewhat reducing the ecological footprint. This is partly driven by an intrinsic sustainability policy, but certainly also in anticipation of (upcoming) stricter regulations. The Netherlands aims to achieve a circular economy by 2050.
Double-digit growth rates in e-commerce are history
After exceptional growth during the COVID-19 pandemic, e-commerce returned to calmer waters in 2023 with a turnover increase of 4.5%. With the disappearance of lockdowns in early 2022, some online purchases shifted back to physical stores. Therefore, double-digit growth rates are a thing of the past. This year, e-commerce turnover is expected to grow by approximately 3.5%. In the coming years, there will be a further shift from physical to online sales channels. This is not only because consumers continue to appreciate the convenience of online shopping, but also because retailers increasingly adopt a multichannel strategy, often offering a smaller range of products in-store compared to online.
2024 a better year for home & living
The outlook for the home furnishings segment is moderately positive, with an expected revenue growth of 3% for home furnishing stores and 2.5% for hardware stores. After consumers took a pause last year in making large purchases, it is anticipated that they will buy more furniture this year. Hardware stores are also expected to see improved business this year. With an expected increase in home sales, the DIY segment’s retail sales are projected to rise. However, this increase is limited due to a significant decline in the number of newly built homes being delivered at the same time.
Copyright © 2021 | Imprint | Terms and Conditions | Disclaimer | Privacy | Cookies
