Economic Environment

2. DEVELOPMENT BY SECTOR

Food Retail Sector

Industry trend: revenue
Change in %Retail
2018
nominal
Retail
2017
nominal
Food retail
2018
nominal
Food retail
2017
nominal
Germany2.75.11.213.71
Austria2.63.42.53.4
Czech Republic5.98.23.56.5
Italy0.82.40.31.9
Hungary9.37.77.05.7
Romania11.312.210.59.3
Slovakia6.48.44.17.0
Russia22.61.11.70.4
Bulgaria7.54.610.24.7
Lithuania9.75.4
Ukraine27.07.3
Croatia5.76.43.12.3
  • Sources: Eurostat; 1 GfK; 2 Retail Update Russia (Biweekly News Report – Published by PMR) Last update: January 2019 – Figures for Ukraine up to 5/2018

Figures for revenue development in the German food retail sector declined year on year in analyses prepared by GfK (nominal: +1.2 per cent; FMCGs excl. non-food) and by Nielsen/TradeDimension (nominal: +2.5 per cent). In this context, the Retail Germany business segment performed excellently, with revenue growth at 9.9 per cent (adjusted for changes in the scope of consolidation: 5.5 per cent). Eurostat data generally confirmed the development in the German food retail sector, although we consider that data to be less meaningful than the data provided by GfK due to the collection methods used.

In 2018, the retail trade in Austria posted a revenue increase of 2.6 per cent in nominal terms (0.5 per cent in real terms). The food retail sector posted a revenue increase of 2.5 per cent in nominal terms (0.8 per cent in real terms). In nominal terms, growth thus slowed as against the prior year. It also represented a year-on-year decline in real terms.

Retail sales in Italy increased by 0.8 per cent in nominal terms in 2018 (decline of 0.4 per cent in real terms). Households recorded real losses in purchasing power as inflation exceeded wage increases. Revenue in the food retail sector increased in nominal terms by 0.3 per cent (0.9 per cent decrease in real terms).

The food retail sector in the Eastern European countries in which the REWE Group is represented developed positively. In 2018, Romania and Bulgaria recorded the highest increase in nominal revenue growth in the food retail sector, at 10.5 per cent and 10.2 per cent, respectively. Compared to the previous year, the development in Hungary was positive in 2018: year-on-year increases were recorded in both the retail and food retail sectors. Consumption in these countries was boosted in part by rising wages and the positive situation on the labour market. In Russia, the increase revenue in the retail sector (2.6 percent in nominal terms) and the food retail sector (1.7 per cent in nominal terms) was moderate, but nevertheless an improvement on the previous year.

Travel and Tourism

The market for tour operators saw 6.9 per cent revenue growth in 2018 to 36.0 billion euros, further building on the growth in the previous year. Cruise represented the primary growth segment, recording an increase in revenue of 7.8 per cent. The rise in revenue recorded by traditional air travel agencies was due primarily to non-European Mediterranean destinations (+51.0 per cent). Accordingly, the destinations that had been mired in crisis over the past three years (Turkey, Tunisia and Egypt) saw customers return. The growth trend in Greece also continued, amounting to +20.1 per cent. The other European Mediterranean destinations recorded stagnating growth of just 0.9 per cent, with Spain even seeing a decline. In 2018, the market for tour operators in the Mediterranean destinations was significantly weighed down by airline insolvencies (Niki, Small Planet, and Primera) as well as the repercussions of the Air Berlin insolvency. In view of the appreciation of the euro against the dollar, long-haul travel remained stable (+/- 0 per cent). Individual long-haul destinations such as the Caribbean and North America recorded significant declines in revenue of 18.7 per cent and 11.6 per cent, respectively. By contrast, destinations in the Far East (+8.7 per cent), Indian Ocean (+6.4 per cent) and in southern Africa (+10.2 per cent) posted gains. Land-based destinations recorded modest growth of 0.8 per cent. On account of the hot summer in Germany, the expected last-minute bookings did not materialise. Germans instead chose to organise their holiday trips in Germany and to its neighbouring countries themselves.

In 2018, the stationary travel agency market also increased revenue by in total 2.9 per cent to 19.0 billion euros, while online travel sales recorded significant growth of 25.5 per cent. In addition, revenue recorded by product portals (+16.3 per cent) and online direct sales of tourism service providers (+9.3 per cent) rose significantly and are increasingly competing with their own sales channels via tour operators and travel agencies. The specialised business travel organisations recorded a slight decrease of 0.5 per cent to 7.8 billion euros. Overall, the travel agency market in Germany recorded a 2.0 per cent increase to 26.9 billion euros.

DIY Stores

According to information published by the German Association of DIY and Gardening Stores in Cologne (BHB - Handelsverband Heimwerken, Bauen und Garten e. V.), the DIY retail sector posted revenue growth of 1.6 per cent to 18.75 billion euros in 2018. Based on adjusted sales area, revenue increased slightly by 1.3 per cent. While revenue decreased in the first quarter (-7.1 per cent compared to prior-year quarter) due in particular to the poor weather in March and the fewer number of sales days, the 8.3 per cent increase in revenue in the second quarter contributed significantly to the positive performance: at 6.0 billion euros, the months of April, May and June were the strongest in terms of revenue in the first nine months. After a healthy third quarter, which further reinforced the positive trend with an increase in revenue of 0.3 per cent, the fourth quarter – due in particular to a strong October – contributed to the year's positive development.