Economic Environment

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2. DEVELOPMENT BY SECTOR

Food Retail Sector

Industry trend: revenue
Change in %Retail 2017 nominalRetail 2016 nominalFood retail 2017 nominalFood retail 2016 nominal
Germany 5.11.63.711.91
Austria3.41.13.42.0
Czech Republic8.23.56.52.3
Italy2.4-0.11.90.5
Hungary7.73.95.73.6
Russia21.12.30.42.4
Romania12.210.79.312.5
Slovakia8.40.87.02.1
Bulgaria4.62.34.710.9
Ukraine27.314.8
Croatia6.4-0.12.3-4.6
  • Sources: Eurostat; 1 GfK; 2 Retail Update Russia (Biweekly News Report - Published by PMR) Last update: January 2018

Figures for revenue development in the German food retail sector were virtually identical in analyses prepared by GfK (nominal: 3.7 per cent; FMCGs excl. non-food) and by Nielsen/TradeDimension (nominal: 3.8 per cent). In this context, Retail Germany performed excellently, with growth at 11.9 per cent (adjusted for changes in the scope of consolidation: 4.1 per cent). Eurostat data confirmed the positive trend in the German food retail sector, although we consider that these data to be less meaningful than the data provided by GfK due to the collection methods used. 

In 2017, the retail trade in Austria posted a revenue increase of 3.4 per cent in nominal terms (1.2 per cent in real terms). At 3.4 per cent in nominal terms (0.9 per cent in real terms), growth in the food retail sector was stronger than in the previous year.

Retail sales in Italy increased by 2.4 per cent in nominal terms in 2017 (0.9 per cent in real terms). The increase in private consumer spending was not as pronounced as in the previous year. Revenue in the food retail sector increased in nominal terms by 1.9 per cent (0.1 per cent decrease in real terms).

The food retail sector in most of the Eastern European countries in which the REWE Group is represented developed positively. In 2017, the highest rate of growth in nominal terms was recorded in Romania at 9.3 per cent (6.9 per cent in real terms). Consumption was positively influenced in the individual countries, among other things through increases in minimum wages (e.g., in Hungary) and good employment figures (almost full employment in the Czech Republic and Hungary). By contrast, the food retail sector in Croatia was weak with a decline in revenue of 0.6 per cent in real terms (nominal growth: 2.3 per cent). The nominal increase in retail revenue in Russia was moderate at 1.1 per cent, which was lower than in the previous year. The food retail sector recorded negative development in the first half of the year in particular, which was due to a decline in disposable real income, among other factors.

Travel and Tourism

The entire market for tour operators saw 8.0 per cent revenue growth in 2017 to 33.7 billion euros, significantly compensating for the previous year's decrease. The main growth drivers were cruises, which recorded revenue increases of 16.8 per cent, and specialists for destination areas, theme holidays and travel modes, which grew by 9.7 per cent. Germany's ten largest air travel agencies generated a total increase in revenue of 5.1 per cent. Demand for flights to Turkey was down for the third year in a row, declining by 31.1 per cent, while the other non-European Mediterranean destinations in crisis continued to recover at a low level. Other destinations in the western Mediterranean hit their capacity limits and fell into the red at the end of the season (Spain -1.8 per cent; Italy -4.1 per cent), while Greece (+29.4) and smaller Balkan countries experienced a boom as alternative destinations. Air Berlin's insolvency worsened the capacity bottlenecks at individual flight destinations at the end of the season, although this had no further significant impact on the positive performance. The decline in long-haul travel (-1.9 per cent) resulted primarily from rising prices due to the weak euro and several hurricanes in the Caribbean. The trend towards booking overland travel directly with providers online persisted, meaning that tour operators recorded a further loss in market share and a 6.8 per cent drop in revenue. At the end of 2017/beginning of 2018, early bookings surged, particularly with flights to all Mediterranean destinations. 

The entire market for tour operators saw 4.7 per cent revenue growth overall in 2017 to 26.4 billion euros, also compensating for the previous year's decrease. Stationary travel agencies benefited from strong growth by tour operators who function as their main destination providers, generating a 5.0 per cent increase in revenue. The specialised business travel organisations also saw a 4.0 per cent increase in revenue thanks to the positive order situation of their business travel customers. Online travel sales also experienced significant growth. The revenue lost as a result of the insolvency of the market leader during the previous year was recuperated mainly by new competitors, meaning that the revenue generated by online travel agents rose by 15.1 per cent. In addition, revenue recorded by the hotel and flight product portals (+7.9 per cent) and online direct sales of tourism service providers (+13.5 per cent) rose significantly and once again competed strongly against their own sales channels via tour operators and travel agencies.

Specialist 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 1.1 per cent to 18.5 billion euros in 2017. Based on adjusted sales area, revenue increased slightly by 0.7 per cent. At 5.6 billion euros, the months of March, April and May were the strongest in terms of revenue. Overall, the performance of the first and fourth quarters made a significant contribution to the positive trend. By contrast, the sector experienced a slight decline in the second and third quarters: The weather in April, which saw late frosts and snowfall, and the summer months, with extremely high temperatures on the one hand and an above-average number of rainy days and high precipitation on the other, led to declining revenue and weighed down the positive development.