Salesforce (credit image/Pexels/Nataliya Vaitkevich)A new report released by Salesforce has highlighted the current challenges faced by brands and retailers across Europe. The European Retailers Chart a Path to Profitable Growth report suggests retailers have not known such an extended period of uncertainty since the financial crisis of 2008–2009. Furthermore, 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 report provides insight to the challenges and investment priorities of senior retail executives.

Some key findings include:

  • A positive future outlook – 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. A third of retailers are looking to hire more in-store sales staff and invest in in-store mobile POS technology to improve the customer experience.

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. At the same time, taking measures to support future growth,” said Lori Steele, President and CRO, Salesforce EMEA.

A tough outlook – for now

Additional findings from the research

  • Less than half of European retailers say that their revenue growth outlook is positive in 2023. 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.
  • Spirits appear the least buoyant in the UK, Belgium and Norway, where only a third have positive expectations. In the UK, that could be influenced by an inflation rate that remains stubbornly high, at or above 10%, in the first half of 2023.
  • 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. These services are expected to augment their core products. Health, logistics, paid loyalty, and financing are the most common types of services envisaged.
(Image credit/LinkedIn/Rob Garf)
Rob Garf, VP and GM, Retail at Salesforce

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,” Garf added.

Investing for the future

  • Notwithstanding current market uncertainty, European retail businesses are taking measures to support future growth. Enterprises are 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.
  • To meet their strategic objectives over the next 18 months, retailers are investing in training and upskilling employees. This was cited by 39% of respondents. “This is likely to include training in emerging technology areas such as generative AI, which could transform the way that retailers operate,” says Garf.

Research Methodology

The analysis in this report is based on a survey of 480 executives of retail businesses in Europe conducted in February and March 2023. The survey was carried out by FT Longitude, a Financial Times company, for Salesforce. Based in 14 countries, the respondents hold senior roles in their organisations. 10% are C-suite executives, 45% are direct reports to the C-suite, and the remainder report into the latter.

Most of their businesses have annual revenues between €25 million and €999 million, with just under a third earning €1 billion or more. Nine types of retail businesses are represented. General merchandise and apparel lines (apparel and footwear, department stores, consumer electronics, speciality retail, outdoor and sporting goods, and home and garden). Fast-moving consumer goods (FMCG), consisting of groceries and supermarkets, and health and beauty and luxury goods.

The majority of respondents’ businesses, 71%, sell their products across multiple channels; the remainder sells either purely in physical stores or purely online.

Enterprise Times: What this means for business

This is an interesting report that will make difficult reading for brands and retailers. 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 the first quarter of 2023 compared with declines in previous quarters.

Retail across Europe, like many other industries, have felt the winds of change blowing across the globe. The war in Ukraine, the hike in energy prices, global supply chain disruptions and waning consumer confidence. While retailers have braced themselves for the slowdown, they are also preparing for an inevitable recovery. As a result, successful retailers of the next decade will increase their share of wallet with new revenue streams.

Furthermore, they must make good promises on sustainability. In addition, they must harness technology — notably Artificial Intelligence and Data — to transform the way they operate. All these activities must ensure customers are at the centre of everything they do.


Please enter your comment!
Please enter your name here