Feature | Studies & Reports | Ticker

GRAI treading water – pandemic (still) stops recovery in retail markets

Global Retail Attractiveness Index remains weak in Europe. Poland, Germany and Ireland are new top trio in index. UK the only market to see an increase.

The pandemic continued to grip the European retail markets in the first quarter of 2021. The Global Retail Attractiveness Index (GRAI) for the 15 key markets, which is compiled jointly by Union Investment and GfK, fell by a further nine points compared to the previous year (Q1 2020). At 99 points, the index reading is now below average, largely due to “mood variables”. Having dropped sharply in the second quarter of 2020 to 89 points, the index then recovered comparatively quickly to hit 100 points. The subsequent stagnation reflects the fact that consumer and retailer confidence took a sustained hit during the lockdowns. At 89 and 82 points respectively, both consumer and retailer sentiment plummeted by 20 points year-on-year. The index was supported in the first quarter by the labour market (122 points; minus four points) and retail sales (109 points; plus seven points). 

Almost all European countries saw a decline in the retail index in Q1. Only the United Kingdom experienced a slight improvement on the first quarter of 2020 (100 points; plus two points). The top country is currently Poland with 107 points, closely followed by Germany and Ireland, each on 106 points. Finland ranks in fourth place, with 105 points. France also made an above-average contribution to the EU-15 index, coming in at 101 points. Austria was the worst performer in the first quarter, on 85 points. Marginally ahead are Spain and Sweden, with 86 and 87 points respectively. The biggest falls were recorded by the Czech Republic and Portugal, which were down 22 and 20 points, respectively.

As in Europe, the index is underperforming in both overseas regions. The gap between the EU-15 index and the index in North America (94 points; minus six points) shrank to five points, while Asia-Pacific continues to lag further behind the EU-15 index (86 points; minus six points). In North America and Asia-Pacific, retail sales and business retail confidence are still making a positive contribution to the retail index. By contrast, consumer confidence and the labour market are weighing on the index in both regions. Particularly notable in North America are the slumps in consumer confidence (minus 27 points) and in the labour market (minus 42 points). Australia (97 points; plus seven points) is currently the frontrunner among the overseas countries in the survey, followed by the US (95 points; minus five points), Korea (92 points; plus two points) and Canada (82 points; minus 13 points). Performance is weakest in the Japanese retail market at present, where sharp losses of twelve points pushed the index down to just 81. 


Key Facts

After the Retail Index slumped to 89 points in the second quarter of 2020, it recovered quickly to 100 points. 

In the first quarter of 2021, the Retail Index for Europe stagnated at 99 points. Compared to the previous year (Q1/20), it loses 9 points.

Sentiment variables are primarily responsible for this poor performance they are currently at 89 and 82 points respectively, losing 20 points each over the year. In contrast, both the labor market (122 points, -4) and retail sales (109 points, +7) supported the Retail Index in Europe in the first quarter.

The labor market is clearly a lagging indicator. In the event of a prolonged recession, unemployment figures could increase again more strongly and weigh on the Retail Index.

Poland currently leads with 107 points, followed by Germany and Ireland with 106 points each. Finland is currently in fourth place with 105 points. France makes an above-average contribution with 101 points.

At the bottom of the list is Austria with 85 points, followed by Spain and Sweden with 86 and 87 points respectively.

Almost all European countries have to accept losses. Only the UK was able to improve slightly (+2). Finland remains unchanged.

The losers are the Czech Republic and Portugal with a drop of 22 and 20 points respectively, followed by Spain (-19), Austria (-17), and the Netherlands (-16). 



Methodology
Union Investment’s Global Retail Attractiveness Index (GRAI) measures the attractiveness of retail markets across a total of 20 countries in Europe, North America and the Asia-Pacific region. An index value of 100 points represents average performance. The EU-15 index combines the indexes for the following EU countries, weighted according to their respective population size: Denmark, Finland, Germany, France, Italy, Spain, Sweden, the United Kingdom, Austria, the Netherlands, Belgium, Ireland, Portugal, Poland and the Czech Republic. The North America index comprises the US and Canada, while the Asia-Pacific index covers Japan, South Korea and Australia.
Compiled every six months by market research company GfK, the Global Retail Attractiveness Index consists of two sentiment indicators and two data-based indicators. All four factors are weighted equally in the index, at 25 per cent each. The index reflects consumer confidence as well as business retail confidence. As quantitative input factors, the GRAI incorporates changes in the unemployment rate and retail sales performance (rolling 12 months). After standardisation and transformation, each input factor has an average value of 100 points and a possible value range of 0 to 200 points. The index is based on the latest data from GfK, the European Commission, the OECD, Trading Economics, Eurostat and the respective national statistical offices. The changes indicated refer to the corresponding prior-year period (Q1 2020).

Sign up for our ACROSS Newsletter. Subscribe to ACROSS Magazine.

Ticker MORE

Scallier gets building permit for retail park in Vaslui, Romania

The Polish company Scallier has obtained the building permit for a new retail park with a leasable area of 9,975 sq m (GLA). The facility is located in Vaslui, a city in eastern Romania, and scheduled to be put into service in 2022.

Authentically Narrated History Appeals to All Senses @ Fondaco dei Tedeschi Venice

In the Italian lagoon city, a stone’s throw from the Rialto Bridge and right on the Grand Canal, DFS – a pioneer in luxury travel retail (founded in Hong Kong in 1960) and now part of the LVMH Group – has set up shop. The curated selection of around 750 brands includes fashion, accessories, beauty, and jewelry, as well as food, wine, and gift items. Most of the products are made by local artists. The assortment of “La Corte al Fondaco”, a kind of high-end marketplace, changes regularly and is a great opportunity to pick up small gifts before leaving the building.

Galimmo Group appoints Eric Ravoire as General Manager

The Galimmo Real Estate Group announces the appointment of Eric Ravoire as Managing Director as of February 28, 2022. He will succeed Maël Aoustin who has decided to leave the Group to take up new professional challenges.

Colosseum Mall welcomes Douglas to its expansion project

Colosseum Mall announces the entry of Douglas to its tenant portfolio in its expansion project, which is going to be completed and inaugurated in S1 2022.

IPH Group expects further growth after a sucessful year 2021

Despite the challenging market environment IPH Group continues to grow. Leasing volume and new mandates significantly expanded again in 2021.

Mylly Shopping Center in Finland receives SHORE certification

The shopping center was awarded with the GOLD-level Excellent SHORE certification, which ensures a safe shopping experience for its staff, tenants, and visitors.