Italy’s consumer spending still lagging
Italy is still not out of the dark and budgets are under more strain than ever. Such is verdict given by Coop Italia, Italy’s leading supermarket operator, at its annual consumption report presentation.
Coop Italia’s study states that disposable income in the country has decreased by 10% in the last ten years, whilst unemployment has risen to its highest since 1977, reaching 12% in the first few months of 2013.
Faced with these figures, consumer spending on non-food items is expected to fall by 6.1% in 2014, after dropping 7.2% in 2013.
But these alarming downwards prediction are not unaccompanied. According to the most recent findings from Confcommercio - Italy’s confederation of retail traders - the clothing and footwear industries have seen sales volumes drop 5.9% in the first quarter of 2013 and 2.3% in the second. Confcommercio also noted that disposable income in Italy has returned to 1,033 euros, the same as that recorded 25 years ago.
The Italian chamber of fashion has also observe similar trends in its forecast for 2013 and early 2014. Despite the fact that revenue from exports has risen continuously over the past five quarters, declines in the domestic market have been bearing heavy on overall sales.
“In the second quarter 2013, sales in Italy reached a 13-year low, reporting a drop of 30% since 2000,” said the Italian chamber of fashion in its ‘Fashion Economic Trends’ study which was conducted by Hermes Lab. “If we exclude inflation, internal revenue from the fashion market has been cut in half since 2000.”
“The situation is critical. Even the summer sale season saw a 10% drop in spending compared to the previous year. Prospects are not looking very high for the end of the year either, especially for non-essential items like clothing and shoes. “We are faced with a real crisis, one that is strongly related to unemployment,” says Giorgio Fiori, director of Confcommercio in central Italy.
Since the crisis struck several years ago, Italian retailers have had to adapt. “It is not a complete disaster but the situation is certainly complex. The fact that the average Italian is spending much less these days means that shops that are not located in big cities filled with affluent shoppers or tourists are really suffering,” says Beppe Angiolini, president of the association of Italian buyers.
“For us, the biggest crisis was at the end of the 1990’s and we managed to come through that. Since then, we have reduced the amount of products that we carry, for example we no longer do menswear or lingerie and focus purely on womenswear. We also buy in much smaller quantities,” said a small retailer from Milan.
Italy’s luxury goods consumption, however, is on the rise and due to progress by 2.5% in 2013 according to Altagamma, a foundation that groups together high-end Italian companies.
But as vice president Armando Branchini states: “Our internal market is still not ready to pick up again following several years of austerity. Political leaders have been unable to reduce public debt and therefore have risen tax brackets, which ultimately impacts on consumer spending.”
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