Retail

Retail, Wholesale May Need To Invest €600bn To 'Future-Proof' Sector

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The retail and wholesale sector may need to collectively invest around €600 billion in order to transform its operations in terms of sustainability, digitalisation and skills by 2030, a new study by EuroCommerce and McKinsey & Company has found.

This equates to around 1.6% of profit every year for the rest of the decade, and would enable the sector to meet evolving consumer demands, decarbonise, and respond to the growth of e-commerce, EuroCommerce said in a statement.

Transforming The Sector

According to the report, Transforming the EU retail & wholesale sector, EU retailers and wholesalers currently invest half the amount spent by players in other sectors, with skyrocketing energy prices, record inflation, the COVID-19 pandemic, supply chain disruption and war in Ukraine all weighing on operators.

“In the current crisis, the overall challenge for the retail and wholesale sector is to be recognised by policymakers as a sector providing an essential service to all citizens, significant employment and underpinning local communities," said Juan Manuel Morales, EuroCommerce president.

"To continue doing so, retailers and wholesalers of all sizes will need support to achieve the major investments the report has identified.”

Investment Required

The report sets out in detail the value of the investment that retailers and wholesalers would need to make over the coming years:

In sustainability transformation, the investment required is up to €335 billion, which would lessen the impact of energy price volatility, promote and advance sustainability in the sector's value chains, while also positioning it as a 'first-mover' in addressing the climate crisis.

In terms of digital transformation, am investment of up to €230 billion would be required, which would enable the sector to evolve into a fully omnichannel industry as well as boost automation, analytics and IT.

Lastly, with regard to skills and talent, an investment of up to €35 billion would be required to help expand apprenticeship programs and support the evolution of skills and roles that would enable the other two transformations.

“The scale of change is immense," added Christel Delberghe, EuroCommerce director general. "EuroCommerce has identified five key projects and additional policy measures that will be required to support the sector’s transformation.

"We need a strong and ambitious policy framework that will support resilience and the investment needed to achieve this and keep the sector competitive in the future.”

As part of the joint research, McKinsey and EuroCommerce surveyed 24 companies, including some of the largest retailers and wholesalers across the various subsectors in the EU, national trade associations and over 100 SMEs.

© 2022 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: European Supermarket Magazine.

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