As Europe continues to battle through an economic crisis, it’s safe to say that all businesses and members of society are feeling the impact. From high levels of inflation affecting everyday costs to facing a future of growing uncertainty, no-one has managed to go the past year unscathed.
However, the retail industry is one of those to have been dealt a particularly raw hand during such turbulent financial times.
To start with, the Covid-19 pandemic saw e-commerce boom across Europe, with revenue rising by a significant 20% in 2020 according to and a further 13% in 2021
That left the retail industry racing to keep up with astronomical surges in demand and piled a lot of pressure on global logistics. So when supply chain issues brought about by pandemic restrictions, manufacturing delays, port congestions, natural disasters and more occurred, retailers and manufacturers were left struggling.
Consumer spending shift
When pandemic restrictions eased and the world started to open up, suddenly consumers were shifting their spending habits to the travel and leisure industries as part of newfound freedom.
And now we find ourselves faced with record levels of inflation (10.9% in September 2022, as per Statista), consumers are once again changing their behavior by investing in discretionary, more essential products rather than non-discretionary items such as furniture and home appliances.
Online, high-end furniture retailer Made.com, for example, achieved sales figures of £315m in 2020 and £110m in the first quarter of 2021, but now the company is on the brink of collapse as demand falls drastically (BBC).
Within discretionary retail, consumers are continuing to spend on the likes of apparel but are switching to cheaper brands in order to keep disposable income as high as possible in the face of economic uncertainty.
Online clothing retailer Boohoo reported a massive 58% drop in core earnings in the first half of 2022 according to Reuters. Revenue was also down 10% thanks to dwindling consumer demand, a significant increase in product returns and increased delivery times for products sold to overseas markets.