In a new manifesto, EuroCommerce, the European voice of the retail and wholesale sector, sets its priorities for the next five years. Director-General Christian Verschueren explains the four major themes.
“Retail is part of the data economy”
Digital transformation disrupts the retail sector, causing increasing international competition and a decrease in the number of physical stores. But also, retail is increasingly driven by data: not only traditional customer loyalty cards and CRM systems, but also new technologies such as artificial intelligence, face recognition, voice assistants, mobile payment or blockchain make data analysis, access to data and data ownership gain in importance.
“Retail is a part of the data economy. As a result, retail is being impacted by policy and legislation related to data: ownership, privacy, access, security. We saw it big time with GDPR: the impact of the GDPR directive on businesses is significant. The regulation is complex, the implementation was costly. We certainly do not want to roll back the clock, and we want the EU to be the global standard. Europe today applies much higher privacy standards than, for example, China or the United States, and this means a competitive disadvantage.”
“We stand behind a Europe that wants to assure consumers that their personal data is safe. And we see others following the European lead, look at California. Payment is an area that is increasingly digital and therefore data-driven. The three-digit code on credit cards no longer seems to be sufficient for customer authentication. Are we ready for biometric identification? With data being a core asset of each company, protection of those electronic data against hacking becomes crucial. A solid and coordinated European response is needed to effectively respond to the increasing threat of cyberattacks. We call for stronger powers and more resources for ENISA, the European Network and Information Security Agency.”
“Manufacturers become retailers”
“The whole competitive landscape is changing. Before the digital age, it was pretty linear and segmented. To make it simple, manufacturers were making products and were selling it to retailers, often with a wholesaler or importer in between. Strongly related to this theme is our plea for fair competition. Today, with digitisation, e-commerce, platforms, the frontiers between maker and seller are becoming blurred. More and more manufacturers approach the consumer directly and are retailing. Platforms offer more opportunities to reach the consumer. You can find Nike shoes today both in the Nike stores and webshops, as well as in sport chains, at Carrefour or at Bol.com and Amazon”.
“This raises many questions. Rules will need to be adapted to this new reality. Can you still maintain territorial exclusivity today? What about franchise contracts? And what about selective distribution?” A recent ruling by the European Court of Justice – following a conflict between cosmetic brand Coty and some vendors – allows suppliers of luxury products to ban selective distributors from internet platform such as Amazon, Bol.com or to sell on Ebay. But how do you define luxury?
“We will ask for fairness and a level playing field. As an example, we need to get rid of territorial restrictions: because multinationals impose territorial restrictions and counteract parallel imports, Coca-Cola and Pampers are more expensive in Belgium than in the neighbouring countries. It is simple: if retailers have to respect the Single Market principles, then suppliers should too. With the new geoblocking legislation, consumers can buy from everywhere the retailers has a website. Why should it not be the same for retailers buying from their suppliers?”
“Another major area where policy and legislation will need to be adapted to the digital age, is taxation. Our sector, which is still dominated by traditional bricks-and mortar shops, pays taxes where it does business (nationally, locally), but face an outdated tax system which no longer reflects either the global nature of buying and selling goods and services, nor ensures that every business pays its fair share of taxes. Local taxation of retail businesses on the basis of the shops square meters, as is the case in many countries, creates additional and sometimes crippling burdens on shops, even regardless of whether they make a profit. We also call for a rapid international arrangement within the OECD and the G20 on the corporate taxation of digital businesses.”
“Protectionist reflexes”
Open markets, inside and outside the EU, remain a major priority for EuroCommerce. “We are the engine of free trade. We want to be able to buy and sell everywhere. But we are seeing more barriers, and protectionist reflexes. Brexit is an example of this new growing protectionism and economic nationalism, and its impact on the food supply chain – but not only there – cannot be underestimated. The United Kingdom imports about half of its nutritional needs, and three-quarters of that comes from the EU. Without a deal, this will lead to customs duties, with considerable delays at the border. Retailers in the UK are now preparing and building large stocks. I remain an optimist, I continue to hope that politicians will take their responsibilities.”
“Especially in the former Eastern Bloc countries we see unmistakable forms of discrimination, to the detriment of international retailers such as Ahold Delhaize, Carrefour or Tesco amongst others. Legislation is often really aimed at disadvantaging foreign players: they receive tighter and more frequent controls, fines and extra taxes, restrictions in expansion…” Recently, EuroCommerce filed a complaint against Slovakia, for a regulation that imposes a new disproportionate and discriminatory tax on foreign companies: a form of unlawful state aid that also goes against the principle of freedom of establishment.”
“A responsible sector”
Sustainable living is the fourth pillar of the EuroCommerce manifesto. It combines an engagement for the skills of people working in retail, for the health and well-being of workers and customers, for the natural environment, and for the towns and communities were we operate. These are all high on the agenda for retailers. “We are a responsible sector. When it comes to employment, for example, we see that digitisation also means that we need different profiles in retail than before: on the one hand there is a demand for people with digital skills, on the other hand you cannot underestimate in our sector the importance of soft skills, such as customer friendliness and top-quality service. We need to be inspired by the best in class in other service industries. Four Seasons, Singapore Airlines, and Michelin-star restaurants are businesses that retailers need to look at for good practices.”
On the environment, Verschueren said that “the fact that the EU bans the use of single-use plastics is a positive and important decision. Nevertheless, retailers cannot carry the whole burden, just because they are the touch point with the end-customer. It is a shared responsibility involving all players of the supply chain, and the measures imposed must be proportionate to the environmental objectives pursued.”
Finally, the association sees the vacancy rate in city centres is increasing, because stores are disappearing. “That is worrying, because retail also has a social function. Shops play an important role in offering a space for people to meet and obtain expert advice, and provide other important services. Stores play a vital role in the social fabric of our towns. No shop, no traffic, no life. Towns then become ghost towns, and security issues ensue. Municipalities need to engage with the retail sector to address this fundamental societal issue.”
