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Navigating the New Reality: Retail and consumer

Recommendations for European consumer goods companies to keep up with their consumers

  • Positive outlook for

    retailers and consumer goods companies

  • +5.3 % gross value added

    from non-food companies in 2021

  • Tectonic shift from

    physical stores to multi-channel or online shopping

Growth returns but spending habits have changed for good

After a year in which the industry was shaken to its foundations by the impact of Covid-19, the European retail and consumer goods sector will return to growth in 2021, albeit with varying paces of growth depending on the sub-sector and channel a company operates in.

According to our estimates, the gross value added contribution of non-food retailers to the economy will increase by 5.3% in 2021 and by 7.2% in 2022. In the food sector, which was one of the most resilient in 2020, growth will be more muted, with GVA increasing by 0.3% in 2021 and 0.8% in 2022, compared with a small decrease of 0.3% in 2020.

On the surface, our estimates indicate a positive outlook for retailers and consumer goods companies in the near future. However, as economies emerge from waves of Covid-19 infections and stores reopen after periods of lockdown, the scale and permanence of changes to the way people shop cannot be underestimated. Traditional brick-and-mortar retailers that could not pivot to online sales have been severely damaged, and many retail chains will not reopen, changing the face of city streets.

“We believe companies need to take bold steps to address their key challenges: building resilience in the supply chain, becoming truly shopper-centric, and adapting to a continuously changing working environment.”

Reinhard Vocke, Partner and Retail and Consumer Practice Lead, Strategy&

How to build resilience: Repair, rethink, reconfigure

The success of the retail and consumer goods industry is based on its flexibility and agility. Tough competition, ever-changing consumer demands and constant disruption have put even the biggest players to the test for decades. However, more than a year into the pandemic, and despite vaccinations gaining momentum around the globe, many companies are still struggling to adapt to the new reality and keep up with established e-commerce companies.

However, most have a critical opportunity to start rethinking and reconfiguring future plans in order to build their resilience and adaptability and emerge stronger from the current crisis. Retail and consumer companies should focus on these three strategic goals:

Repair

Ensure resilient supply chains

Rethink

Build a true shopper-first mindset

Reconfigure

Redesign your organization and teams

Methodology

The forecast of the Growth of Gross Value Added of the European Retail and Consumer industry is based on Strategy&'s Covid-19 economic scenarios that incorporate more than 180 sources and predictions (including from global research institutes, universities, investment banks, national governmental and supranational bodies, and ratings agencies), as well as financial data on 40 million corporations globally from more than 35 countries and 16 industries. The scenarios have been updated regularly since March 2020.

The authors would like to thank Yannik Knipprath and Björn Lorenz for their advice and contributions to the study.

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Contact us

Reinhard Vocke

Reinhard Vocke

Partner, Strategy& Germany

Harald Dutzler

Harald Dutzler

Partner, Strategy& Austria

Willibald Kofler

Willibald Kofler

Partner, Strategy& Austria

Esther Liesenberg

Esther Liesenberg

Senior Executive Advisor, Strategy& Germany

Dr. Christian Wulff

Dr. Christian Wulff

Partner, PwC Germany

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