– GRAI up twelve points year-on-year in the first quarter of 2022
– War in Ukraine causes sentiment among consumers and retailers resulting in a slump from March onwards
– Czech Republic, Poland, and Germany form the new top trio on the index
– South Korea and Canada with the strongest overseas performance
GRAI continues searching for its course. The war in Ukraine has massively slowed down the recovery of European retail markets, which was felt everywhere after the end of the lockdowns, from March onwards. However, due to the strong interim recovery in January and February, the Global Attractiveness Retail Index secured its comparatively good level in the first quarter of 2022.
The slight decline in the first quarter brings the Retail Index down slightly to 111 points (previously 113 points). Compared with the corresponding period of the previous year; however, the index calculated by Union Investment and GfK is significantly up by twelve points.
“The good news is that, compared with the previous year, the trend is upward in all 15 European countries covered by the index, without exception,” says Olaf Janßen, Head of Real Estate Research at Union Investment. “It can be assumed that a much more heterogeneous picture will emerge in the European retail landscape and in the Retail Index in the second quarter, when inflation, supply bottlenecks, and further consequences of the war in Ukraine have a stronger impact on sentiment among retailers and consumers.”
Stronger growth in Spain, Poland, and France
The year-on-year gains in Spain with an increase of 22 points, and in the UK, Portugal and France, with plus 14 points, are particularly significant. As far as the level of the Retail Index is concerned, the Czech Republic and Poland now form the top duo with 121 points each, followed by Germany (120 points), and Portugal (116 points). Sweden is bringing up the rear with 95 points at the end of the first quarter of 2022.
“The significant year-on-year improvement in retail sentiment is primarily responsible for the interim high of the GRAI in Europe,” says Olaf Janßen. Retail sentiment increased by 26 points over the course of the year to currently 107 points. Despite the corona pandemic, retail sales (123 points), up 11 points over the course of the year, and the healthy labor market (127 points, +5) also made strong contributions to the positive development of the index. Significantly weaker impetus came from the consumer sentiment, which had already deteriorated compared with the start of the year, but nevertheless increased slightly year-on-year (92 points, +3).
EU-15 index continues to outperform indices in America and Asia.
As in Europe, the Retail Index also improved year-on-year in the two overseas regions. Despite the war in Ukraine, the EU-15 index (111 points) continues to outperform the indices in North America (103) and Asia Pacific (98). In North America, the GRAI is eight points up year-on-year in the first quarter, and eleven points in Asia-Pacific. In Asia-Pacific, performance is still slightly below average despite its gains.
Just like in Europe, the relatively good level in North America is based on strong gains from retail sales and on the labor market. However, retailer and consumer sentiment indicators have already weakened significantly. The leader among the monitored overseas countries is currently South Korea with 109 points and an increase of 17 points, followed by Canada (105 points, +25), and the USA (102 points, +6). The weakest development was once again seen in the Japanese retail market. Despite an increase of eleven points, a score of 93 remains the lowest of all 20 values included in the GRAI.
Author: Union Investment Real Estate GmbH
