Brussels, 28 May 2024
Good morning and thank you very much for this introduction.
Ladies and gentlemen: it is a pleasure to be with you today for the launch of EuroCommerce’s manifesto for retail and wholesale. Thank you for inviting me.
Today’s world is very different from what we have seen a few years ago. The pace of geopolitical change, the scale of global events and the repercussions, have been astounding.
It is a world which has become more conflicted and fragmented.
More multi-polar, more uncertain and confrontational.
Recently, we have endured disruptions of supply chains affecting every continent, compounded by a spiral of inflation that advanced economies had not seen in decades.
Against a fragile and unpredictable economic backdrop, and still recovering from the shock of consecutive crises, many businesses are struggling. Especially smaller ones.
In Europe’s retail and wholesale sectors, you suffered the harsh effect of these shocks perhaps more than others.
Margins were already tight, but I know that they were hit particularly by high inflation, and consequently its erosion of purchasing power and subsequent impact on consumer price sensitivity.
Your rationale is to provide a wide choice of products and services at affordable prices. But if consumers don’t buy – or choose to buy less – you quickly feel the economic impact.
The European grocery sector is a good example of a pattern repeated across many of the sectors represented here today. In 2022, grocers saw the largest decline in margins in five years, at a time when interest rates and capital costs were rising. So it has been a very tough period.
We must also remember the economic importance of Europe’s retail and wholesale sectors.
They generate 10% of the EU’s GDP. One in three European companies is in retail and wholesale.
This is not to forget that they count as Europe’s largest private-sector employer: one in seven of the working population. Globally, 24 of the 50 largest retail chains come from the EU.
And it’s not just economic, of course. Your social role is paramount as well.
The retail and hospitality sectors are a lynchpin for local communities, making them attractive places to live and work, often offering first-time jobs for young people.
In almost all EU countries, retail and wholesale rank top of the list of providing apprenticeships.
These sectors are a key element of Europe’s social fabric, of our cities and villages. It is especially true of SMEs, which offer proximity to consumers, support local economies, and contribute to the vitality of city centres.
However, despite their status as an economic giant, the retail and wholesale sectors are struggling to stay competitive.
Tough times or not, and whatever the inflation rate, you still need to offer attractive prices to consumers.
This comes at a time when competition from non-EU suppliers, especially China, is fierce.
I am aware that EU companies and national authorities are increasingly concerned about the flood of products which are easily available on certain online platforms, and which do not undergo compliance or safety checks.
The Commission’s services are already looking at this issue. We are determined to tackle this issue head-on.
And, like many of your rivals, you still need to invest in the green and digital transformations.
Digitalisation, for example, has changed how products are manufactured and services offered.
It has changed how we work and consume as well as the relationship between businesses and consumers. Today, more and more retailers aim to provide consumers with a shopping experience combining physical and online stores.
But the trend towards digital is clear. By 2030, 90% of growth in retail and wholesale will be driven by online sales.
With the green transition, retailers are working to improve their environmental performance, reduce emissions and drive a sustainability change across the entire supply chain. This includes guiding consumers towards more sustainable choices.
Given your sectors’ social and economic importance, in March the European Commission presented the Retail Transition Pathway to:
- support retailers in digital, green and skills transitions,
- improve their resilience,
- and boost competitiveness.
Co-created with EU countries, social partners, NGOs and the business community, the Retail Transition Pathway identifies challenges and opportunities for the retail ecosystem as well as stimulating the exchange of best practices across the EU.
For example, it takes the Revitalise Retail initiative a step further, to support small retail and help them to maintain the vitality of urban and rural areas. And it stresses the importance of investing in skills to make the twin transitions a reality, proposing ways to support the reskilling and upskilling of the retail and wholesale workforce.
Turning these initiatives into reality will require the commitment of everyone involved. So I am pleased to see that EuroCommerce and Uni Europa have set up a large-scale partnership for skills in retail under the Pact for Skills.
This initiative should help connect people and spread best practices for reskilling and upskilling of the retail workforce.
Ladies and gentlemen
In addition, of course, we have the single market – the EU’s most valuable asset – to support the green and digital transitions and the long-term resilience of the retail ecosystem.
The single market is all about opportunity, for:
- a consumer to get value for money,
- a company to sell anywhere in Europe,
- and industry to underpin our long-term competitiveness.
It generates real value for people as well as businesses, with the retail sector as a driving force in single market integration.
Retail brings the single market directly to consumers, serving 450 million Europeans every day with a broad variety of products: across borders, in physical shops and online.
However, there are still regulatory and non-regulatory barriers that need to be addressed.
Take territorial supply constraints, or TSCs, which I know are a significant concern for retailers and wholesalers. These non-regulatory barriers make it difficult – or impossible – for retailers or wholesalers to buy some products in one Member State to resell them in others.
They prevent the single market from working properly and act to the detriment of consumers.
Member States discussed the TSC issue in last week’s Competitiveness Council.
Further discussions in the Single Market Enforcement Taskforce could help to identify a way forward.
I am aware that regulation and reporting requirements can sometimes impose a heavy burden.
And we are working to lighten it.
These requirements are important to monitor and enforce legislation. Companies also need a reliable and predictable legal environment, which is also vital for the single market to function properly.
But for many of them – especially SMEs, which account for two-thirds of the retail ecosystem’s employment – compliance can be time-consuming, costly and affect their capacity to grow.
By rationalising reporting requirements resulting from EU laws, the European Commission aims to reduce the administrative burdens by 25% without undermining the related policy objectives.
We have introduced a competitiveness check in all impact assessments for proposed new legislation, and aim to take into account the potential impact across all sectors.
Ladies and gentlemen
I would like to conclude with some words on global trade and supply chains. You know better than anyone how important it is to be able to source globally and maintain a variety of suppliers.
With its open trade policy, the EU is diversifying its supply chains by developing mutually beneficial strategic partnerships with the broadest set of partners, for example in critical raw materials.
It improves our capability to supply vital goods and services.
We are pressing ahead to unlock the benefits of free and fair trade for the EU at all levels. This includes our multilateral work at the World Trade Organization, negotiating and deploying bilateral trade agreements, and new forms of engagement such as digital trade agreements.
For the sectors that you represent, although your services are clearly linked to goods, you also rely heavily on access to data and digital trade.
The EU’s approach in the WTO as well as in trade agreements is to obtain guarantees of non-discrimination and market access for goods and services, along with agreed rules for digital trade.
Here, we are working actively on the bilateral front. We have reached agreement with Japan on cross-border data flows. And we have started negotiations with Singapore and South Korea on digital trade.
This strengthens the capacity of wholesalers and retailers to source a wide variety of goods and services.
It also creates equal and fair conditions where all parts of the supply chain can interact and co-operate more efficiently.
At the WTO, we are moving ahead to conclude e-commerce negotiations before the summer. This would be a remarkable achievement for businesses and consumers, as well as for the global economy. It would have a significant positive impact on the retail sector, especially for micro, small and medium-sized enterprises.
The EU’s worldwide network of bilateral trade arrangements builds on such WTO initiatives by implementing a similar framework for digital trade between specific partners, along with liberalising market access for goods and services.
I will conclude here and look forward to continuing the discussion in the question-and-answer session, reflecting more on the points and principles raised in your manifesto.
Thank you.
Source – EU Commission