European Retail Contracts, Raising Risk for 2023

Key Takeaways:

• European retail sales (Euro Area) weakened over the five months ended Nov 2022, down an average of nearly 2% YoY, a significant drop from the 4.9% average growth during the first half of 2022 (Jan-May), based on data from Eurostat, with fashion retailers feeling the brunt of this pullback during the holiday season

  • Downloads and MAUs for the region fell 4.1% and 5.2% YoY, respectively, in 2022, a deceleration after three years of positive growth, according to Sensor Tower data; led by weakness in the UK, Germany, France, Spain and Italy (collectively makeup about 80% of downloads and MAUs for the region)

• Downloads and MAUs declined for every retailer in Germany during 4Q22 YoY, with the exception of etsy and Zalando for MAU growth

  • German overall online sales crashed, down 17% from Oct. 1 to Nov. 30 (apparel category slid 28%), according to the German Federal Association for eCommerce

• Fashion retailers floundered in the UK in 4Q22

  • Download and MAU growth slumped 10% and 8% YoY, respectively, per ST estimates, with lower end retailers underperforming luxury

    • UK MAU growth for ASOS and boohoo dropped 11% and 21% in the quarter YoY, respectively

    • 4Q22 download and MAU growth increased for Farfetch and Net-A–Porter, highlighting the resiliency of higher-end consumers, who are typically better able to manage their discretionary income in an inflationary environment

  • During the key shopping days of Black Friday, Cyber Monday and Boxing Day, trends remained soft, with downloads decreasing an average of nearly 9% YoY and MAUs falling 17% YoY in the UK

• Customer engagement and loyalty for retail apps are slipping, with average session count and average time spent dropping, while the fluctuation in the churn rate suggests that the lack of switching costs puts the onus on retailers to continue to refresh merchandise or promote to drive traffic

For more information, request the full report from reports@sensortower.com.