CEE-17 region delivers better growth rates than more developed markets in retail

The Covid-19 pandemic has disrupted both the operation and development of retail real estate markets worldwide, as well as in the CEE-17 countries. The government restrictions imposed on the operation of shops, service outlets, gastronomy, entertainment, and leisure, have led to the dynamic growth of e-commerce sales and to changes in consumer behavior. These have also contributed to a 20-45 percent (depending on the country) decline in footfall figures in shopping centers when we compared data from the middle of 2020.

“We analyzed the IMF’s forecasts of unemployment to assess the state of the labor markets. We looked at 2021 compared to 2019 and 2010 compared to 2008 We skipped the recession year to get a clearer grasp on how things might look like in the first year of the recovery. With a couple of exceptions, the jump in unemployment is set to be much lower this time around; the exceptions are Romania and Belarus, though both had tighter labor markets to begin with than compared to 2008,”.Silviu Pop, Head of Research, Colliers International, explained.

Given that labor markets have been in decent shape and money flowing in the economy, it is no surprise that retail sales have seen a robust V-shaped recovery in a lot of cases. Compare this to the recession following the GFC, when it took retailers quite a few years to get things back on track. Since the consumption of food is much more inelastic to changes in disposable income, we looked at non-food retail sales for 15 out of the 17 countries available in this report to gauge consumer strength (Ukraine and Belarus had no similar methodology available). In six out of these countries (Estonia, Lithuania, Poland, Romania, Serbia, and Slovakia) October 2020 sales of non-food items excluding fuel were higher than before the crisis. Another five countries (Croatia, Czechia, Hungary, Latvia, and Slovenia) displayed a percentage gap that they needed to recover in the low single digits, in the 1-3 percent range, quite impressive given the scale of the drop of sales in the spring period. 

“We are observing a sharp increase in consumer activity in e-commerce which has become a fundamental element of the ongoing transformation of the retail sector, related to the development of technology and changes in consumer behavior. There has also been a significant increase in the percentage of people over the age of 55, who are now shifting from shopping in off-line to on-line stores,” Dominika Jędrak, Director, Research and Consultancy Services, Colliers International, Poland, said.

(WBJ)