Quick take: 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. Today, Salesforce released the European Retailers Chart a Path to Profitable Growth report, which 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.
Lori Steele, President and CRO, Salesforce EMEA
Below are additional findings from the research.
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.
More information:
- Read the full European Retailers Chart a Path to Profitable Growth report here.
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, specialty retail, outdoor and sporting goods, and home and garden), fast-moving consumer goods, or 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 sell either purely in physical stores or purely online.
