Global retail markets are expected to deliver mixed results in 2020, according to a new report that says sales growth in volume terms will slow compared with 2019, but growth will accelerate in US dollar terms.
Advisory firm The Economist Intelligence Unit (EIU) forecast that sales growth in volume terms will decline to 2.2% next year, compared with 2.5% in 2019, while growth in US dollar terms will increase by 4.8% to reach $20.2 trillion.
This divergence will reflect differing regional trends in demand, pricing and exchange rates, with developing markets outpacing developed ones, said the EIU’s “Industries in 2020” report.
Asia is expected to account for 45% of global retail sales next year, but even in Asia volume sales growth is forecast to decline to 3.3% from 3.8% in 2019.
And while retail sales in Asia will continue to outperform Europe and North America, the region faces multiple challenges, ranging from geopolitical issues, such as the ongoing protests in Hong Kong, and rapidly changing technology.
“It’s a mixed picture for retailing in 2020. Although there will be areas of opportunity, particularly in Asia, there are several threats to the industry,” said Shveta Sharma, consumer goods analyst at the EIU.
“The US-China trade war, Brexit and the protests in Hong Kong will all take a toll, while some retailers will also struggle to keep up with the continued shift online,” she added. “We expect more store closures and job cuts.”
Online retail, driven by social media apps TikTok and Instagram, as well as improved digital payments systems, will continue to undermine the competitiveness of brick-and-mortar stores, the report said. Indeed, beyond geopolitical flashpoints, online shopping is described as the biggest threat to physical retail stores.
Finally, as the US-China trade war rumbles on, the EIU said it expected more tariffs to be introduced next year unless a truce is declared, although a bigger impact on retail sales could come from disputes over intellectual property, particularly in the electronics sector.
Sourced from EIU, Yahoo! News; additional content by WARC staff