InternetRetailing has built on the work of its UK Top500 ranking, in conjunction with our partner Emarsys, expanding the research across the European Economic Area. Emma Herrod reports on the findings.
Trade across European borders offers huge rewards for the traders that overcome the unique challenges this continent presents. Brexit aside, challenges such as developing logistics strategies that are relevant in the varied markets of the European Economic Area (plus Switzerland) through to managing differing expectations around payment, currencies and, indeed, shopping behaviours, are, and will continue to be, a huge task for the pan-European retailers that InternetRetailing assessed in the InternetRetailing Europe Top500 (IREU Top500) ranking of the continent’s leading traders.
The challenges are clear from the figures. This is an area of 32 countries, 26 official EEA languages and 13 currencies. The Euro is the leading currency in this region, adopted in 17 countries. Although a digital single market is starting to emerge across the area, the IREU Top500 illustrates that performance is uneven across individual markets.
Turnover from ecommerce across Europe grew to €455.3bn (£359.2bn) in 2015, and will reach €50bn (£402.3bn) in 2016, according to the European B2C Ecommerce Report from Ecommerce Europe. It analysed 48 European countries, including the 28 that are members of the European Union, and estimated that 296m online consumers from these markets spent an average of €1,540 (£1,173) over the internet last year.
The IREU Top500 research shows that, as a group, leading European retailers are often starting to foster cross-border trade, but have by no means completed the task. The average IREU Top500 trader sells not in 13 currencies but in two, and in three languages, rather than the 26 that are possible in the region. Indeed, many of those listed do not sell in other markets at all but enjoy a large enough footprint in one territory to win a place in this index. Some are well ahead of this, selling in many markets and languages. Spanish fashion brand Zara, for example, sells in 28 EEA countries, serving customers in 23 languages, while footwear retailer Deichmann sells in 19 countries and in 18 languages. But the average remains, for the moment, at a relatively low level.
FOOTPRINT & DIMENSIONS
Building on research that’s been ongoing for more than two years, InternetRetailing set out to research and analyse the larger European market. The resulting IREU Top500 looks in-depth at 32 countries – the members of the European Economic Area plus Switzerland. We’ve examined the leading ecommerce and cross-channel retailers and how they trade in order to identify the characteristics of the traders that stand out in this wide and competitive pan-European market.
We started by identifying the Top500 European retailers, measuring first their Footprint for sheer heft in the market, before going onto assess them against six Performance Dimensions. Through this analysis of the leading European retailers, researchers aimed to understand how successful multichannel retailers go about competing with local indigenous traders through the use of country-specific strategies that take account of the language, culture and legalities of retail in each market.
First, footprint data, in terms of online and offline revenue, web engagement and the store estate of retailers’ businesses gave the preliminary rank based on size and market impact from the customer’s perspective. In-house research identified each retailer’s physical presence and financial performance across the region. Where that information was not available, our algorithms inferred data based on researched metrics. This analysis was moderated and weighted in the following Dimensions:
1. The Customer: websites were tested for speed, as well as for the more subjective ease of navigation and search relevance, which were considered likely to contribute to customer satisfaction. Researchers charted whether retailers personalised customer communications channels or left them the same in different countries.
2. Operations and Logistics: measuring the service promise for deliveries, returns and collections.
3. Merchandising: considered whether retailers enabled customers to find the product quickly, and then understand it through relevant images, information and third-party review and ratings. Analysis of stock newness was integrated to capture the full picture of merchandising activities.
4. Brand Engagement: assessed how retailers connected brands with the customer, through social media and direct marketing engagement and through search visibility.
Apple , BonPrix , Decathlon , H&M , Next , Zara
|The Body Shop
|Asos, Auchan, Bershka, Coop, Debenhams, Dorothy Perkins, eBay, Fnac, Halfords, Homebase, House of Fraser, Kiabi, Leroy Merlin, Mango, Massimo Dutti, Mothercare, New Look, PC World, Pimkie
5. Mobile and Crosschannel: considered how mobile websites were optimised and the use of mobile apps. Crosschannel links were analysed through the availability of product collection and drop-off returns.
6. Strategy and Innovation: the extent to which the retailer is adapting for growth, international commerce and embracing innovative approaches.
The resulting understanding goes beyond which retailer has the highest turnover, ecommerce revenues or web traffic to learn which best-practice approaches are most commonly and widely used in this highly-diverse market, and which are still emerging as etail becomes ever-more sophisticated.
We go on to examine the seeds of radical change, extending our scope beyond traditional retailing to consider the international aspects of trading both within and across European borders; how brands, now themselves pan-European, are selling; and how marketplaces and retail groups are evolving in this new world of retail. These findings of what works in the European market will, we believe, in turn help others to build and hone their own performance through a measure that we define as RetailCraft – a striving for excellence at scale that, in responding to customers’ needs, makes ecommerce and crosschannel retailing both more focused and more profitable.
To view the full list of the IREU Top500 and the in-depth analysis of which retailers excel in the six Performance Dimensions read here.