A survey of 100 retailers with annual turnover of more than $1 billion, published on the first day of the World Retail Congress in Berlin, showed western European store groups more pessimistic about domestic consumer confidence than those in any other part of the world, except Australia.
“People are afraid of losing their money. People are not spending as they could,” Lovro Mandac, chairman of German department store chain Kaufhof and vice president of the German retail federation told an audience of around 900 industry leaders.
“The savings rate is going up tremendously in Germany this year, and this will not help.”
Ira Kalish, director of global research at business consultants Deloitte, said euro zone countries needed to align their fiscal policies, debt-laden states like Greece needed to reform their labour markets and wealthier countries like Germany and France needed to do more to subsidise poorer ones.
But there were few signs of that happening, he added.
“We see band aids, periodic bailouts, but not yet fundamental reforms necessary to make this thing (the euro) work,” Kalish said, forecasting the euro zone was heading for a recession and that if policymakers did not take decisive action soon there would be a deep recession that would jeopardise economic recovery in the United States and elsewhere.
The pessimistic tone of the conference came after euro zone leaders faced stinging criticism from counterparts in the United States, China and other countries at the weekend for failing to act more decisively.
Ernst Burgbacher, member of parliament at the German economy ministry, told delegates he was confident policymakers would get the crisis under control, but also signalled Germany would not write a blank cheque for its struggling partners.
“Everybody has to be responsible for putting their own houses in order,” he said.
The survey of top retailers from across the world measured their perception of domestic consumer confidence on a scale from -5 for deep pessimism to +5 for high levels of optimism.
The reading from western Europe was -1.2 percent, just ahead of Australia on -1.3, but below north America on -0.3.
Retailers elsewhere were more positive, producing scores of +2.5 in South America and +2.8 in Asia.
Rick Darling, U.S. president of supply chain management company Li & Fung, said he was seeing that diversity in his business.
“We’re in a very slow to no growth market (in the United States and Europe) ... In Asia, we’re still seeing tremendous growth,” he said.
John McCarvel, chief executive of U.S. shoe company Crocs , told Reuters strong demand in Asia, together with new products and low selling prices, was helping the firm to offset “patchy” trading in Europe and the United States.
He warned against excessive pessimism — a point echoed by Javier Perez, president of MasterCard Europe, who said declining consumer confidence had so far not resulted in a slowdown in growth of payments using MasterCard.
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