Global retail markets will deliver mixed results in 2020, says a new report from The Economist Intelligence Unit. In volume terms, sales growth will slow compared with 2019, but in US dollar terms growth will accelerate.
According to details in the report, global retail sales will accelerate in US dollar terms, rising by 4.8% to reach US$20.2tn. However, in volume terms, growth will slow to 2.2%, compared with 2.5% in 2019. Asia will lead the way, but will also see a slowdown.
The US and China trade war will remain among the biggest concerns for the sector, along with the growth in online competition.
This divergence will reflect differing regional trends in demand, pricing and exchange rates, with developing markets outpacing developed ones. The fastest regional growth will be in Asia, which will account for nearly 45% of global retail sales next year. Even here volume growth will be slower than in 2019, reflecting subdued demand in China.
Shveta Sharma, Consumer Goods Analyst at The Economist Intelligence Unit, says: “It’s a mixed picture for retailing in 2020. Although there will be areas of opportunity, particularly in Asia, there are several threats to the industry. The US-China trade war, Brexit and the protests in Hong Kong will all take a toll, while some retailers will also struggle to keep up with the continued shift online. We expect more store closures and job cuts.”
Online retail will continue to undermine the competitiveness of brick and mortar stores in 2020. Growth will be driven by social media apps such as TikTok and Instagram, as well as better digital payment systems. Retailers and consumer goods producers will need to adapt quickly to changing local conditions, shifting suppliers and closing stores as demand patterns change.
However, the EU is leading a backlash, scrutinising the marketing tactics of online players as well as their efforts to avoid taxes. The scale of job cuts will also prompt more scrutiny in the US, in the run-up to November’s presidential election.