For the past ten years, shops and physical retail spaces in Austria have been in decline, according to a recent study.
Market researchers RegioData report that this trend has accelerated over the last two years, particularly impacting sectors such as footwear, electronics, furniture, and clothing.
“Companies are expanding less, some are reducing their retail spaces, and the recent surge in insolvencies in the retail sector is also leading to more store closures,” RegioData stated. “The often-communicated new openings are matched by a similarly high number of closures.” The outlook remains cautious.
The researchers note, “The last year with an increase in retail space was over a decade ago. Since 2014, the average decline in retail space has been about 1.5 percent per year.” However, the sales area in the grocery sector has remained stable for the past three years.
Furthermore, consumer spending in brick-and-mortar retail is largely stagnant, while spending in the gastronomy sector has nearly doubled.
RegioData believes that the primary reason for the accelerated decline in retail space is not high inflation but rather changing consumer behaviour. “The trend towards online shopping and the shift in spending towards gastronomy, holidays, and leisure activities play a central role. Over the past ten years, retail space has shrunk by about 18 percent, while the online share has increased by a similar amount,” they argue.
A look at the winners and losers in brick-and-mortar retail reveals that non-food discounters such as Action, Tedi, Kik, and NKD have seen the largest growth rates, with an increase of 237%. The electronics retail sector experienced the most significant decline, with a drop of 30%. In the footwear sector, it was 20%. “With declines of 7 to 8%, the loss in clothing, furniture, and sports goods retail is moderate,” the researchers add.
Retail sectors such as toys, watches and jewellery, leather goods, accessories, tableware, household items, and gifts were not assessed in detail, but it can be assumed that sales area losses in these categories exceed 40%.
Currently, there are no signs that the decline in retail space will slow down or be halted. “Based on the revenue and profit development in individual sectors and the anticipated future consumer behaviour, annual space reductions of about 2.5 to 3% can be expected in the coming years,” according to a pessimistic outlook.
Just last week, the Credit Protection Association KSV1870 highlighted a significant increase in bankruptcies, particularly affecting the retail sector. So far this year, 853 companies in the retail industry have gone bankrupt, followed by construction with 814 and gastronomy with 596. The downturn is also reflected in rising unemployment figures. In September, there was an 11.9% increase in job seekers in retail.
