The coronavirus pandemic is causing major problems throughout Europe, with the biggest impact befalling retail. The euro to U.S. dollar conversion price is being particularly affected due to a weaker performance of the retail sector, together with manufacturing, within the Eurozone. According to a report from Invezz.com, the European economy could shrink by 7.5 percent over the course of 2020. The report shows that already this year, the European economy has fallen by 3.8 percent in relation to quarter 1.
While many sectors are being impacted severely (the European commission estimates that the EU’s hotels and restaurants will lose half their income this year), the primary reason for this economic downturn is a sharp drop in retail sales.
Despite the downturn, a number of European businesses are responding the challenges by shifting more of their operations online. For those who are doing so, this has led to an acceleration in terms of digital transformation initiatives, including the greater use of software, data, and digital networks. However, for those companies who are unable to go down this route a digital corporate divide is opening up, as noted by the Harvard Business Review.
In terms of retail specifically, mainland Europe has lagged behind North America and the U.K. with regard to online shopping. The current situation has seen an upward drive in digital purchases, which leads The Financial Times to ask ‘will the coronavirus be the catalyst that finally spurs the Italians, Spaniards and French into the era of online shopping?’
Data gathered relating to March 2020 suggests that this is the case. One major area of growth is with food, as with Illycaffè, the Italian family-owned coffee maker, which has reported a near doubling of online sales in key markets. A second food relates example comes from Hotel Chocolat, which has utilized its digital platform to propel forwards an online chocolate delivery service.
Another area that is weathering the storm are sellers of electrical items. For example, the electrical goods retailer Dixons Carphone has said that online sales had recouped almost two-thirds of the sales lost from its stores.
Many retailers, especially smaller enterprises, are being supported by EuroCommerce, which is is the principal European organisation representing the retail and wholesale sector, in terms of advice and support to go digital.
