December 16, 2011

European Specialty Retail 2011

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A gloomy economic climate has sent European retail sales down 2.3 percent from last year. The silver lining? e-commerce. In the big three markets -- the U.K., Germany, and France -- B2C e-commerce sales are projected to grow at a compound annual growth rate of 12.2 percent, exploding from $93.5 billion in 2011 to an estimated $148.3 billion by 2015 . More consumers in the UK and Germany made a purchase online in 2011 than in e-commerce's birthplace, the U.S.

However, digital provides a bigger opportunity than just generating online sales. More than 65 percent of European consumers in major Western European markets use their smart phone while in the store and two-thirds of EU consumers indicate they conduct research online before making an offline purchase.

In our first-ever Index measuring the digital efforts of European specialty retailers, a bifurcation appears to be emerging. Genius retailers including online-only players Asos and Net-a-Porter, and retail juggernauts H&M and Sephora, are developing robust multi-platform e-commerce experiences, aggressively building engaged communities on social media and signaling innovation through experimentation on emerging platforms.

Digital competence varies by country of origin. In the U.K., where 12 percent of all retail is registered online, retailers boast average IQ's of 113 while their counterparts in France and Italy average just 85 and 76, respectively, threatening their success in an increasingly global and digital marketplace.

Our thesis at L2 is that digital competence is inextricably linked to shareholder value. L2's European Specialty Retail Report attempts to quantify the digital competence of 55 European specialty retailers. The ranking reflects brands' efforts across the big five markets in Western Europe and the U.S.

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