The Italian retail market performed well in 2009, given the economic conditions.

The Italian retail market performed well in 2009, given the economic conditions.

This week the Warnaco Group acquired 22 Calvin Klein Jeans retail stores and related assets from its largest Italian franchise partner, L'Innominato S.p.A, a part of the Percassi Group. With the help of Euromonitor International, just-style takes a look at the Italian retail market.

2009: a good year in an uncertain economic environment

Retailers continued to face uncertainty as the Italian economy remained weak and the unemployment rate continued to rise. Nevertheless, there was growth in retailing. The decline and/or stability of unit prices combined with the rise in promotional activities and increased penetration of private label helped the industry to boost consumer demand. Within store-based retailing, sales benefited from the strong performance of discounters. In non-store retailing, Internet retailing continued its dynamic rise, confirming itself as the best-performing retailing category.

Retailers redesign their stores and segment their offers

Major retailers such as Feltrinelli, E.Leclerc, OVS Industry and Auchan focused on segmentation, store design and shopping experience to maintain shopper interest and improve retail sales in 2009. In addition, retailers widened their range of private label products, entering new niches as well as improving the quality of their lines. OVS Industry, for example, segmented its offer opening a new stand-alone concept targeted exclusively at children. Auchan launched Aestetica, a "spa corner" located in one of its hypermarkets. Shopping experience and market segmentation were key strategies allowing companies to improve profit margins and ultimately gain market share.

A fragmented competitive landscape

Independent retailers continued to dominate Italy's retailing environment, and the leading retailers sought to increase their positions in retailing through acquisitions. In 2009, the first three retailers were domestic - Coop, CONAD and Selex. Retail chains continued to gain share through new openings and acquisitions. In 2009, for example, Coop acquired four outlets from Carrefour, which is trimming its operations in the south of Italy to focus on other areas of the country where it has greater presence. Non-store retailing continued to gain share in 2009, albeit at a slow pace, mainly thanks to strong growth in the Internet retailing channel. However, non-store retailing accounts for less than 3% of total retailing in Italy.

Online shopping cannibalises sales from other non-store retailing channels

The growing number of Italian households with Internet access and the development of online shopping sites by many retailers helped drive Internet retailing in 2009. Overall, growth in non-store retailing was attributed to the performance of Internet retailing, particularly in terms of clothing and footwear, with consumers using the Internet to seek out bargain purchases. The rise in Internet retailing sales mainly came at the expense of the direct selling channel, which slowed down in 2009 as consumers migrated from catalogues to Internet retailing. Online shopping alternatives were also being developed by homeshopping sellers, which otherwise struggled to retain and grow their customer base.

Sales Grow With Returning Consumer Confidence

As Italians regain confidence over the forecast period, consumer spending is expected to increase resulting in the rise of retail sales. Both grocery and non-grocery retailing are expected to see growth, with discounters and Internet retailing remaining the best-performing channels. Within store-based retailing, the number of new outlets is likely to slow down, with many retailers refurbishing and updating existing premises.

For more on Euromonitor International's report Retailing in Italy, click here