Sectoral analysis by the Bank Austria Economics Department:
Austrian retail industry supported economic development in 2009
- Based on about EUR 50 bn, sales in the sector increased by 1.2 per cent
- Growth in sector not expected to accelerate considerably in 2010
- Long-term outlook moderate due to demographic development and changed living conditions
- Retail industry creates many new (part-time) jobs
In 2009, the year of the crisis, the domestic retail industry was able to increase its sales by 1.2 per cent nominally, thereby making a positive contribution to the economic development, as revealed by the latest sector analysis carried out by the Bank Austria Economics Department. While consumer demand clearly slowed down during the recession, the industry did not record considerable losses. For example, consumers did not buy less food due to the economic downturn, but demand focused increasingly on cheaper products such as own brands, for example. In general, the retail industry was able to cope with the crisis of 2009 and reached sales of EUR 50 bn. Food retailers, clock and jewellery retailers, sports equipment retailers, pharmacies and pharmaceutical retailers recorded above-average results.
In the upcoming economic upswing, the sector will no longer play a role in boosting the economy, which would require stronger demand. "Consumption will continue to be a stabilising factor this year," Bank Austria economist Günter Wolf says, "Consumers will balance out their behaviour and redirect a part of their spending for consumer durables, which was used for the acquisition of cars in 2009, to the retail industry." However, increasing insecurity on the labour market, low pay rises and higher inflation will curb consumer spending. Against the background of these conditions, experts do not expect a considerable acceleration of growth in the retail industry, which will remain clearly below the overall economic results with 1 to 2 per cent nominally.
"The long-term outlook for the retail industry, which has always belonged to the sectors of the Austrian economy recording slower growth, remains moderate," according to sector analyst Günter Wolf. For example, value added in the retail industry on average increased by 3 per cent nominally per year during the last ten years, as compared to average growth of 4.1 per cent in all sectors. The reasons for this development are the demographic development, varying consumer preferences caused by increased living standards as well as changed living and working conditions. Furthermore, retail goods have become and are becoming cheaper as compared to other categories due to high competition and price pressure, while their consumption is not increasing at a higher rate. Prices for food and clothing increased by 0.8 per cent and 1.3 per cent per year, respectively, during the last ten years, while prices for services increased by 2.1 per cent.
Despite below-average growth, the retail industry continues to be an important employer, for more than 8 per cent of Austrian employees, 272,000 people, in 2008. However, new jobs are almost exclusively part-time jobs: Since the middle of the 1990s, 70,000 jobs have been created in the sector. In the same period, the number of full-time jobs has declined by about 20,000 and the number of part-time jobs has increased by about 90,000. At the moment, nearly 50 per cent of employees in the retail industry appear to be working part-time. Finally, the high share of part-time jobs is one of the reasons why incomes in the sector are more than a third lower than the average income of the overall economy. Another reason are the low standard wages. In 2007, the average gross yearly income per employee in the retail industry amounted to EUR 17,000, as compared to EUR 27,000 in the overall economy.
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