retail, wholesale & e-commerce · textiles, clothing, footwear electrical goods, furniture etc....

10.1189.952 9.936

9.4649.313 9.413 9.409 9.358 9.434

80

90

100

110

120

7.000

8.000

9.000

10.000

11.000

2010 2011 2012 2013 2014 2015 2016 2017 2018

Number of retail trade enterprises by size group and turnover value index (2010-2018)

over 249 50-249 10-49 0-9 Turnover value index - base 2010 (right axis)

Enterprise size by number of employees:

Retail, Wholesale &E-commerceSector trends & current challenges

June 2020

Retail, Wholesale and E-commerce have been vastly affected by the Covid-19 pandemic. The lockdown

imposed, along with the social distancing measures, have changed the landscape of how business is done.

This newsletter provides a snapshot of how these sectors have performed over the years, how Cyprus and

the world were impacted by the pandemic crisis and the challenges and opportunities ahead.

KPMG in Cyprus provides thought leadership on a number of the country's key industry sectors. This

newsletter will be followed by subsequent publications with updates, insights and surveys relating to the

retail, wholesale and e-commerce sectors.

Both decline until 2013; thereafter turnover increases but number of enterprises remains relatively stable.

▼12,5%Number of retail

trade stores

▼6,8%Number of retail

trade enterprises

1,31▼1,23 Average number of

stores per enterprise

▲103,72019 turnover value

index (base 2010)

Retail sector trends

Note: Retail trade, except motor vehicles and motorcycles

Source: Statistical Service of Cyprus, KPMG analysis

3.8403.946

4.0633.923 3.907

3.9774.115

4.3024.449

80

90

100

110

120

130

2.500

3.000

3.500

4.000

4.500

5.000

2010 2011 2012 2013 2014 2015 2016 2017 2018

Number of wholesale trade enterprises by size group and turnover value index (2010-2018)

over 249 50-249 10-49 0-9 Turnover value index - base 2010 (right axis)

Enterprise size by number of employees:

Source: Statistical Office of the European Union

EU retail trade volume month-on-month growth (March 2020)

-10,4%

+4,4%

-17,8%

+2,2%

Total retail

Supermarkets

Department stores

Internet

+4,7%

-21,3%

-40,0%

+0,2%

-16,0%

-16,1%

-19,3%

Food

Non-food

Textiles

Health

Computers & books

Electrical goods & furniture

Automotive fuel

By product group:

By sales channel:

▲12,0%Number of wholesale

trade stores

▲15,9%Number of wholesale

trade enterprises

1,13▼1,09 Average number of

stores per enterprise

100,42019 turnover value

index (base 2010)

Note: Wholesale trade, except motor vehicles and motorcycles


Both fluctuate, with turnover reaching 2010 levels and number of enterprises recording an overall increase.

Wholesale sector trends

Impact of Covid-19

Non-necessity goods and related stores were hit hard; food products are increasing.

-1,4%

+23,3%

-26,8%

-59,2%

-31,2%

-17,4%

-24,5%

Total retail trade (except motor vehicles)

Food products

Non-food products (except automotive fuel)

Textiles, clothing, footwear

Electrical goods, furniture etc.

Computers, stationery, jewellery etc.

Automotive fuel

Cyprus retail trade volume growth by product group (March 2019 vs March 2020)

Global reduction trends are more pronounced in Cyprus.


Impact of Covid-19 (cont.)

28 index point reduction in consumer confidence, compared to February 2020

-40

-30

-20

-10

0

10

Jan

Fe

b

Ma

r

Ap

r

Ma

y

Jun

Jul

Au

g

Se

p

Oct

Nov

De

c

Jan

Fe

b

Ma

r

Ap

r

Ma

y

Jun

Jul

Au

g

Se

p

Oct

Nov

Dec

Jan

Fe

b

Ma

r

Ap

r

2018 2019 2020

Consumer confidence indicator

Cyprus EUSource: Statistical Office of the European Union

Global

impact

Cyprus

impact

The pandemic has had a significant impact on the

global retail and wholesale trade, affecting the

respective subsectors at varying degrees.

Indicatively, sales data for March 2020 in the

European Union shows that:

— The food, beverage and tobacco subsector sales

volume recorded significant growth, well above

the normal for the period

— The sales volume of pharmaceutical products,

cosmetics etc. remained relatively constant

— Non-food sales showed a major decline, with the

sales of textiles, clothing and leather products

being affected the greatest.

Due to the closing down of the majority of retail

stores, with the exception of essential stores

(supermarkets, pharmacies etc.):

— Sales in department stores have reduced

significantly

— Online and supermarket sales showed significant

growth, well above the normal for the period.

— Temporary close-down of the majority of retail

trade in department stores, due to the imposed

lockdown. The majority of retailers were not

prepared for such a disruption of their operations

— Some wholesalers were impacted severely due to

the closure of borders and the global reduction in

manufacturing output; while others have been

unable to channel their stock to end consumers

— A significant number of wholesalers and retailers

were forced to enhance their online presence and

search for alternative sales channels (online

sales through own websites/applications or online

marketplaces, telephone sales etc.) in order to

remain partly operational

— The reduced consumer confidence combined with

the altered consumer behaviour may potentially

have an impact on overall consumer spending in

the next months, even following the lift of

restrictive measures.

Trends are reflected in the local consumer confidence index vis-à-vis the EU average.

E-commerce trends

Global

e-commerce

growth

E-commerce has been on the rise over the last

years, contributing a significant share of the total

global retail and wholesale sales turnover.

— Indicatively, the share of enterprises which

received e-commerce orders in the EU has

increased from 15% in 2011 to 20% in 2019,

accounting for 18% of total turnover

— Although growing from 8% in 2011 to 14% in

2019, the share of enterprises which received e-

commerce orders in Cyprus is significantly lower

than the EU average and accounts for 5% of total

turnover

— As at 2019, the share of Cypriot enterprises using

automated online ordering systems (Electronic

Data Interchange - EDI) is significantly lower than

the EU average of 6%, at only 2%

— During 2019, 39% of Cypriots made at least one

online purchase. However, contrary to the

average EU consumer behaviour, Cypriots

mainly use sellers abroad for their online orders

over national sellers.

0%

10%

20%

30%

40%

50%

EU

Ire

lan

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De

nm

ark

Sw

ed

en

Be

lgiu

m

Czech

ia

Fin

land

Ne

the

rlan

ds

Lith

uan

ia

UK

Slo

ve

nia

Ma

lta

Au

str

ia

Cro

atia

Esto

nia

Sp

ain

Ge

rma

ny

Fra

nce

Po

rtug

al

Po

lan

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Hu

nga

ry

Slo

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kia

Italy

Cypru

s

Latv

ia

Luxe

mb

ourg

Ro

ma

nia

Bu

lga

ria

Gre

ece

Share of enterprises having received orders via computer mediated networks (2019)

EDI Both Web sales Breakdown not available

39%

63%

17%

55%

37%

29%

0%

20%

40%

60%

80%

Cyprus EU Cyprus EU Cyprus EU

Total From national sellers From sellers abroad

Share of individuals who made online purchases during the year by type of seller (2019)


Note: All enterprises, excluding financial sector (10 persons employed or more)

Cyprus is among the least e-commerce based economies in the EU.

E-commerce utilisation by Cypriot consumers is low, primarily using online sellers abroad.

E-commerce trends & impact of Covid-19

Covid-19

impact

The pandemic has had a major impact on global e-

commerce, although with asymmetric effects,

depending on the products offered.

— Global e-commerce showed significant overall

growth

— Global online sales of a number of products

peaked during the period. This includes among

others:

- Consumer packaged goods (mainly food)

- Household care products

- Health and beauty products

- Baby care products

- Pet care products

— Sales of a number of other products, including

apparel and luxury goods, showed significant

reduction

— Multiple global online retailers were forced to

implement a number of operational adjustments

in order to cope with the increased demand.

These include, among others, redeployment of

staff, new hires and implementation of customer

priority systems

— In order to remain partly operational, some

enterprises in Cyprus followed the global trend

and developed their:

- Online presence through websites and apps

- Online sales through their own websites/

applications or online marketplaces

- Delivery services through their own resources

or external service providers

— Based on multiple studies, the pandemic will

result in an overall accelerated adoption of e-

commerce.

52% 56%49%

32%

17%9%

77% 81%74%

64%

49%

32%

0%

20%

40%

60%

80%

100%

16-24 25-34 35-44 45-54 55-64 65-74

Age group

Share of individuals who made online purchases during the year by age group (2019)

Cyprus EU

120

130

140

150

160

170

Jan

Fe

b

Ma

r

Ap

r

Ma

y

Jun

Jul

Au

g

Se

p

Oct

Nov

Dec

Jan

Fe

b

Ma

r

Ap

r

Ma

y

Jun

Jul

Au

g

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p

Oct

Nov

De

c

Jan

Fe

b

Ma

r

2018 2019 2020

Volume index of retail sales in the EU via mail or internet (base 2015)


Note: Seasonally and calendar adjusted

E-commerce is much more popular among younger populations but still lower compared to the EU average.

Electronic sales are on an upward trend across the EU.

Challenges & opportunities

Challenges &

opportunities

Challenges

Opportunities

– Demand shock in non-food subsectors, due to lower

disposable income

– Supply shock, due to global export restrictions

– Impact on business and operating models from rapid changes

in the industry

– Unpreparedness of enterprises for their online transition

– Increased compliance requirements from healthy & safety

regulations

– Impact on consumer behaviour and expectations

– Financial viability of stakeholders

– Product pricing challenges, due to changes in consumer

behaviour and disposable income.

– Business model optimisation

– Opportunities for vertical and horizontal mergers, takeovers

and strategic alliances

– Partnership and joint venture opportunities with international

and local entities facilitating alternative sales channels

– Enhanced customer data capturing and analysis capabilities

from the use of digital channels

– Potential cost savings, through the adoption of technology and

alternative sales channels

– Product pricing optimisation

– Potential opportunities for Cyprus as a global alternative sales

channel hub, due to its location and business environment.

Based on the current business environment, the following challenges and opportunities can be

identified:

KPMG services

Christophoros Anayiotos

Board Member

T: +357 22 209 292

E: [email protected]

Antonis Shiammoutis

Board Member

T: +357 22 209 115


Main ContactsRennos Ioannides

Board Member

T: +357 22 209 292


Maria Zavrou

Board Member

T: +357 22 209 117


The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

©2020 KPMG Limited, a Cyprus limited liability company and a member firm of the KPMG network of independent member firms affi liated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved

The KPMG name and logo are registered trademarks of KPMG International.

5

4

3

21

8

7

6

Digital

transformation

Post Covid-19

functional

assessment and

improvement;

supply chain

resilience

Mergers and

Acquisitions

assistance

Pricing, marketing,

customer

experience &

loyalty model

transformation

Business

scenario

analysis, model

transformation

and asset

strategies

Real estate and

business

valuations

Debt restructuring, loan

covenant evaluation,

lender negotiation and

due diligence

Workforce

strategy and

recruitment

Renos Ioannides

Board Member

T: +357 22 209 292


Antonis Bargilly

Board Member

T: +357 22 209 292


kpmg.com.cy

retail, wholesale & e-commerce · textiles, clothing, footwear electrical goods, furniture etc....

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