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Retailers working hard to help consumers in a time of high inflation

With the latest Eurostat survey[1] showing inflation in the eurozone reaching 8.1% and likely to rise in the coming months, consumers are being hit by higher prices and higher energy costs while retailers face higher operating costs and rising prices for the products they buy in. Commenting on a new economic study by INSEAD[2] giving further evidence on how buying cooperation can bring about price reductions for consumers, EuroCommerce Director General Christel Delberghe said:

“Retailers have been doing all they can to cushion consumers from the impact of increases in commodity, energy and other product prices, but with narrow margins of typically 1-3%, they can only do so much to absorb price increases imposed by their suppliers. Numerous studies have shown the value of retail alliances in offering high-quality products at affordable prices, and improving customer choice while not restricting competition. A study released today by INSEAD reinforces earlier studies’ findings that international retail alliances lead to a significant reduction in consumer prices. Being a member of an alliance operating in a properly functioning competitive market enables retailers to pass on the benefits to their customers. In the case of the study, this meant consumers paying 12% less for a wide range of everyday products”.

[2] INSEAD - International Retail Buying Groups: A Force for the Good? The case of AgeCore/EDEKA

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Retail alliances – working to get the best deal for Europe’s consumers

With the Commission today holding a workshop on joint purchasing and pursuing its review of horizontal competition rules, EuroCommerce Director-General Christian Verschueren said:

We are asking that the Commission review recognises even more strongly the pro-competitive effects of alliances. Alliances, which exist in all sectors of the economy, combine the sourcing of their members facing stronger, more concentrated suppliers. Retail alliances help, on behalf of Europe’s consumers, partially to rebalance the power of multinational brand manufacturers, whose products make up a large proportion of most consumers’ shopping baskets and customers expect to see on retailers’ shelves. This gives these global manufacturers considerable leverage in negotiating the prices and conditions under which they sell to European retailers, who operate in only a limited number of markets. Alliances also help to mitigate large manufacturers’ fragmentation of the single market and other practices aimed at increasing their already significant margins”.

Retail alliances ensure consumer benefits in terms of prices, choice and innovation, in a concentrated supplier market of large global suppliers. Numerous studies demonstrate that alliances’ activities, which typically involve negotiation of sourcing conditions and services, or the actual purchase of products, lead to a 5-7% reduction in consumer prices. The Commission has over the years explicitly underlined this positive impact of alliances, with Commissioner Breton pointing to this in the context of vaccines, and Executive Vice-President Vestager pointing to their pro-competitive role on numerous occasions.

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Ecommerce growth set to continue in 2020

Ecommerce Europe and EuroCommerce today jointly launched the European Ecommerce Regional Report 2020. Growth in ecommerce sales reached €636 billion in 2019, up by 14.2% from the previous year. European ecommerce turnover is forecast to grow at around 12.7% and to hit €717 billion in 2020. The full impact of the COVID-19 pandemic on the sector will, however, only show next year.

This report comes out at a time of uncertainty all over the world. The COVID-19 outbreak, and the restrictions it has led to, have had a major impact on business and consumer confidence. While physical shops have maintained supplies of essentials, ecommerce has played a crucial role in maintaining economic activity in Europe. Retailers of all sizes have accelerated their digital transformation, further developing existing and new omnichannel commerce solutions.

Luca Cassetti, Secretary General of Ecommerce Europe, commented: “We are very proud of the resilience our sector has shown these last months and are delighted to see that the ecommerce industry has been successfully contributing to keeping the Single Market open. While the COVID-19 pandemic has revealed the strength of the digital commerce sector, it has also exposed the challenges online merchants still come across. Given the increasing cross-border nature of ecommerce, European businesses have struggled to implement new solutions across the Union due to regulatory fragmentation and diverging national approaches towards the crisis. In light of the current acceleration of the digital and green policy agendas, we need to step up our ambitions for building a stronger European Union with a truly harmonized Single Market.”

Christian Verschueren, Director-General of EuroCommerce, commented: “The COVID-19 pandemic has accelerated the pace of digital change in retail and wholesale. This trend will continue, and to gather further speed. People are now used to buying online, and will continue to do so. Our members are responding to this, but with difficult months - and probably years - ahead, we need urgent help nationally and at EU level to boost resilience and accelerate our sector’s digital transformation.”

To obtain the full version of the report, please visit this website.

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A European Action Plan for Retail

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High-level conference on the European retail sector - 19 JUN 2019

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