Sales fell in Italy and Germany and rose marginally in France:
- In line with the trend shown throughout much of 2008, Italy suffered the fastest rate of decline in retail sales of the three countries covered. The rate of decline picked up on August but remained substantially below the record levels seen earlier in the year. The index slipped from the nine-month high of 44.8 in August, to 42.8.
- Sales fell in Germany. The rate of decline eased slightly compared with August, Q3 as a whole experienced the steepest fall over any quarter yet recorded by the survey. The monthly sales index registered 44.6 in September, up from 44.1 in August.
- Retailers in France reported a rise in sales for the third consecutive month. The rate of increase slowed to near-stagnation as consumers reined in spending amid rising household costs and growing concerns over the economy. The index fell from 53.7 to 50.5.
The drop in euro-zone retail business in September left sales values well below those of a year ago, with the year-on-year rate of decline rising to the second-sharpest seen over the past two-and-a-half years. Italy continued to see a particularly steep year-on-year rate of contraction. The annual rate of sales loss in Germany was robust. France saw a marginal rise in sales from a year earlier.
Sales by sector - record fall in autos & fuel sales
The downturn in year-on-year sales was led by autos & fuel retailers, who saw the largest annual decline yet recorded by the survey. Sales of clothing & footwear and pharmaceuticals also fell sharply on a year ago. A more modest fall was seen for household goods leaving food & drink as the only sector to see a rise in sales revenues on a year ago, which largely reflected higher food prices.
Sales against plans - targets continue to be missed, led by big-ticket items
Sales in the euro-zone retail sector continued to run short of expectations in September. The sales against targets index slipped from 41.2 to 40.1, pointing to a shortfall of greater magnitude than in August.
Retailers commonly blamed weaker than expected sales on a drop in consumer confidence as a result of the wider financial crisis. Most affected were sales of big-ticket items such as autos and household goods. All three countries posted substantial shortfalls in sales against targets, led by Italy.
Expected sales next month - promotions to help beat targets
Retailers expect sales to beat previously set targets in October, pinned largely on aggressive sales promotions. Retailers also suggested that the recent fall in oil prices from previous peaks would help boost consumers' purchasing power, and that confidence would recover from recent lows seen at the height of the global financial crisis. The expectations index jumped from 48.0 to 56.1 - its highest reading for four months.
Optimism was highest in the clothing & footwear and food & drink sectors. Expectations improved in all three countries. French retailers were the most confident of beating targets, their Italian counterparts were the least positive.
Prices and margins - wholesale price inflation at thirteen-month low, margins fall again
Average prices paid by euro-zone retailers for goods for resale rose at the slowest rate for thirteen months in September, with the pace of inflation running well below that seen in the summer months. The prices index fell from 62.7 in August to 62.0, helped down in particular by lower petrol prices.
Food & drink retailers also reported an easing in inflationary pressures, as did firms in the pharmaceuticals sector. Germany and France experienced weaker rates of input price inflation. Italy experienced an accelerated rate of input price inflation.
Gross margins at euro-zone retailers continued to fall at a relatively sharp rate in September. The index was up at 40.8, from 40.0 in August, but remained firmly below the 50.0 no-change level. Wholesale price inflation eased during the month, input prices nevertheless continued to rise overall at a time when retailers reported the need to offer greater discounts to stimulate sales. All three countries covered by the survey reported a sharp deterioration in margins, led by a further near-record decline in Italy.
Employment - staffing levels fall at steepest rate for nearly four years
Euro-zone retailers cut staffing levels at the fastest pace since November 2004, reporting the sixth successive monthly drop in employment. The seasonally adjusted index weakened from 48.7 in August to 47.9. France saw the steepest rate of job losses, with employment dropping at a survey-record pace during the month. Italy followed, although the rate of job losses eased to a seven-month low. German retail employment fell at the strongest rate in ten months, though the decline was the weakest of the three countries covered.
Retailers' buying and stock trends - retailers cut back on purchasing
The value of goods purchased for resale by euro-zone retailers fell for the second successive month in September. Moreover, the rate of decline picked up to the highest since April, reflecting the ongoing need for retailers to keep stocks low in the face of increasingly tough trading conditions. The buying index fell from 49.5 to 47.9. Marginal declines in purchasing in Germany and France were accompanied by a steep fall in Italy.
Stocks of unsold goods fell slightly as a result of the reduction in purchasing by retailers, contracting for the first time since February of last year. Falling stocks in France and Germany were partly offset by a rise in Italy, where weak sales led to a further build-up of unsold goods.
