Resilient European retailers adapt to disruptive times, Scope Ratings

European bricks and mortar retailers are better placed to withstand an e-commerce whirlwind than their US counterparts, according to a report by Scope Ratings.

It says that the prevalence in Europe’s retail sector of conservatively financed, privately held and family-controlled companies has made for a more robust, if less dynamic scene than in the US. “Traditional retailers in Europe are likely to prove more resilient than many think, despite growing online competition and the need to invest in existing stores, better logistics and new technology,” says Scope analyst Philippe Wass.

Another positive is their dominance of local markets. In the case of food retailing in France, Germany, the Netherlands and the UK, the top five largest players have close to a 75% share of each market. Nationally fragmented rules and regulations, among them geo-blocking, data protection laws, hygiene and other product requirements, have also protected bricks and mortar retailers across Europe from e-commerce rivals. Consumer enthusiasm for online shopping differs within Europe too, from double-digit penetration rates in France, Germany and the UK to much lower acceptance in Italy and Spain.

“Bricks and mortar retailers in Europe, with the notable exception of the UK, have the luxury of greater financial flexibility and more time to adapt to shifting consumer habits and competition from homegrown and international e-commerce rivals,” says Scope analyst Adrien Guerin, although he adds that some segments look more exposed to further digital disruption than others.

Download the full report here.

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