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78% of European retail leaders are positive on growth prospects

78% of European retail leaders are positive on growth prospects

Salesforce, in collaboration with FT Longitude, surveyed almost 500 senior retail executives from 14 countries across Europe to understand the decisions that they have made, or will be making, to adapt to subdued market growth while preparing for an upturn.

European retailers have not known such an extended period of uncertainty since the financial crisis of 2008–2009. And they have a difficult year ahead, marked by high costs and consumer demand constrained by inflation.

While retailers have braced themselves for the slowdown, they are also preparing for an eventual recovery. The European Retailers Chart a Path to Profitable Growth report, provides a deep understanding of the challenges and investment priorities of senior retail executives.

Some key findings include:

  • A large proportion of surveyed retailers expect conditions to improve in 2024.
  • Businesses are adapting to uncertainty with training, portfolio adjustment, and the introduction of new services.
  • Preparations for renewed growth are underway and improving store operations is a key focus.

Overall, the research finds that while improving efficiency is a priority, businesses are also laying the groundwork for future expansion.

“We learned that retailers had to reinforce their foundations to navigate this period of uncertainty, while taking measures to support future growth,” said Lori Steele, President and CRO, Salesforce EMEA.

“Successful retailers of the next decade will increase share of wallet with new revenue streams, double down on sustainability, and leverage technology — notably Artificial Intelligence and Data — to transform the way they operate and put the customer at the centre of everything they do.”

A tough outlook – for now

Less than half of European retailers say that their revenue growth outlook is positive in 2023, with high energy and financing costs cited as the toughest operational challenges that they will face over the next year.

However they are more upbeat about 2024. In fact, 78% describe their sales outlook as positive next year.

Meanwhile, sustainability is no longer a nice-to-have. Under growing pressure from stakeholders, including regulators, European retailers are taking action to improve their sustainability credentials.

Businesses adapt to uncertainty

European retailers plan to navigate this period of uncertainty by reinforcing their foundations. Portfolio adjustment is one focus, with multi-channel businesses intending to expand into new product, service, and business lines.

For incremental revenue, most surveyed retailers plan to be offering complementary services within the next 18 months that augment their core products. Health, logistics, paid loyalty, and financing are the most common types of services envisaged.

“Greater share of wallet is one reason for introducing these types of services,” said Rob Garf, GM for Retail at Salesforce. “But it’s also about strengthening customer loyalty and trust.”

Investing for the future 

Notwithstanding current market uncertainty, European retail businesses are taking measures to support future growth by investing to boost their technology capabilities in their marketing, customer service, and supply chain operations.

Investments in AI, data, and CRM are prominent in their marketing and supply chain plans.

Additionally, improving store operations is a major focus and investment is directed towards efficiency.

According to the Salesforce Shopping Index, retail sales in Europe in Q1 2023 were 4% lower than a year ago.

A positive note, however, is that the rate of decline in Europe slowed in Q1 2023 compared with declines in previous quarters.


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