Credit Suisse today published the annual study 'Retail Outlook 2013' together with the consulting firm Fuhrer & Hotz. Credit Suisse economists forecast only a slight decline in prices in the retail sector, which, driven by stable real demand, will push nominal revenues upward. At roughly 1.5%, growth in retail revenues is likely to match the average of the previous years.
The study estimates that between 5 and 6 billion Swiss francs in purchasing power flowed abroad in 2012 as a result of consumer tourism. Three-quarters of the Swiss population is less than 60 minutes away from a supermarket in another country. However, this year's study, whose focus is on "Shopping and Mobility," shows that despite consumer tourism, local shopping meets a widespread customer need.
After two years of extremes, retail indicators point toward normalization in 2013. The large gap between nominal and real revenues will gradually close as a result of easing price erosion. In 2013, this should play out in stronger growth in nominal retail revenues and in weaker growth in real revenues. Immigration will consolidate at a high level, bringing about stable basic growth in the sector.
While consumer sentiment is expected to remain average in view of the uncertainty over global economic trends, this will not slow retail business any more significantly than it did in 2012. Swiss consumers have become acclimated to an atmosphere of crisis and have learned that little of the negative economic news has an impact on their own wallets.
Tenor in the Sector More Optimistic than One Year Ago
The consulting firm Fuhrer & Hotz surveyed 240 decision-makers in Swiss retail businesses and their supply partners, which once again revealed a slightly more optimistic tenor in the sector than one year ago. Of those surveyed, 62% budgeted for higher revenue in 2013 than in the previous year. Just under half of the respondents expect earnings to rise, which indicates that the price cuts of recent years are putting pressure on margins.
As in the previous year, a majority of retailers and manufacturers fell short of their revenue targets in 2012. Fewer than 50% of retailers anticipate expanding their sales area in 2013.
The euphoria in the market for sales area is waning in the face of the already high retail density. This trend is likely furthered with the increasing shift to online sales. Brick-and-mortar retailers are feeling the pressure to devise suitable strategies for combining on-site business with online channels.
However, cross-channel retailing is still in its infancy in Switzerland. English-speaking countries are leaders in this area. Even Switzerland's neighboring countries have advanced further in cross-channel retailing, according to the results of an international study conducted in cooperation with Fuhrer & Hotz. The key findings of the study are presented in "Retail Outlook 2013."
Consumer Tourism: 3/4 of Swiss Population within Catchment Area of Foreign Supermarkets
The 2012 retail year showed excellent results for watch and jewelry sales. Revenues increased by roughly 15%, driven by the boom in free-spending tourists from China and the Gulf states. Business was slow in clothing and shoe sales, where revenues dropped by 3% mainly as a result of prices. Prices in the retail sector overall saw a fresh decline of more than 2% in 2012.
However, the trend for the year does suggest that the lowest point has been reached. In spite of the minimum exchange rate limit set for the euro, consumer tourism increased drastically in 2012 by an estimated 25%. Credit Suisse economists assume that the purchasing power outflows of 2012 have reached a new high at approximately CHF 5 to 6 billion. More than half of the purchasing power flowed to Germany.
Thanks to rising prices abroad and a stable euro exchange rate, consumer tourism is expected to stabilize on a high level in 2013. 50% of consumer tourists travel more than 30 minutes by car for their purchases abroad, compared to only 18% for purchases in Switzerl