Edition 28 June, by Femke van Iperen
Early this June, CBS (Centraal Bureau voor de Statistiek) reported on improvements in the retail sector in the first quarter of 2019, and particularly for branches in the retail trade that are related to the housing market. Looking at Dutch retail trade in general, figures showed it booked 3.4 percent more turnover in the first quarter of 2019, compared to the same period one year previously, and its total sales volume was 2.6 percent higher. CBS releases these figures for every quarter and for more than five years, retail trade turnover has been higher every quarter than in the same quarter a year earlier.
The most promising figures were related to the housing market. Compared to the same period last year, furniture stores improved by 4.7 percent and do-it-yourself stores had an 8 percent higher turnover. The positive results in this so-called nonfood sector even made up for the negative turnover in the first quarter at toy stores (-15 percent) and clothing stores (-0.8 percent), as well as the lower sales volume in the clothing sector (-4.7 percent). On 4 June, in one of its expert insights entitled ‘Do-it-yourself sector gets off to a flying start’, experts at ABN AMRO attributed the improved performance for DIY and furniture stores to the rise in home sales. Basically, a lot of work is being done by homeowners on their newly-purchased houses. In addition, sales for gardening products have risen sharply in 2019, a trend which the ABN AMRO experts said also occurred last year.
A need for service
Despite the strong increase, the ABN AMRO experts explained that the current market situation for DIY and construction stores is not as straight-cut as the figures may suggest, citing strong and increasing competition in recent years from large international players such as Hornbach and Bauhaus, who, warns the bank, are in a better position to offer lower prices. However, according to the bank’s experts, this has led construction and DIY stores to differentiate themselves in order to stay out of the price competition, particularly by offering additional services: ‘the need for [service] among customers for hardware stores is relatively high’, the bank wrote, claiming that between 2015 and 2018, the need for knowledge and skills in the construction market had continued to grow. As a result, according to ABN AMRO, stores such as Gamma and Praxis have started offering special DIY support, whilst others such as Hubo now offer installation support at home.
Internet sales continue to grow
Meanwhile it was reported that internet sales increased again, as the turnover from internet sales was 16.6 percent higher than a year earlier. The CBS figures show that selling products via the internet continues to show great potential, as the turnover of retailers who sell their products only on the internet was 12.2 percent higher. Socalled multi-channel companies, which offer their products both online and in physical stores, saw an even large increase in sale: growth at these companies was 23.6 percent. Despite the increasing role of online purchases for DIY and construction, which, ABN AMRO forecasted, will continue to grow, the physical store remains the primary sales channel, particularly if it can further distinguish itself in terms of service and expertise, ABN AMRO said.
Looking at other retail sectors, particularly supermarkets were at the forefront of sales growth in the food sector, as they booked 2.7 percent more than in the first quarter of 2018. The sales volume for supermarkets grew by 2.1 percent in the first quarter, but the turnover of speciality shops, such as butchers, greengrocers, cheese shops and liquor stores decreased by 0.8 percent. On 1 January 2019, the reduced VAT rate was increased from 6 to 9%, which raised the prices of goods and services related to food, books and agricultural goods. This may have negatively impacted sales in these sectors, although the CBS does not draw any definitive conclusions about this factor.