A European retail sector fit for the 21st century

Retail is the second largest EU service sector after financial services, generating 4.5% of the value added in the EU economy and providing 8.6% of all jobs in the EU. EU households spend up to one-third of their budgets in retail shops. Retail is also a major driver for innovation and productivity. Through its interactions with other economic sectors, a better performing retail sector can trigger positive spill-over effects for the entire economy. Fewer restrictions in retail mean higher productivity in manufacturing. A more efficient retail sector can offer consumers lower prices which creates more demand and steers producers towards more innovative goods.

The retail sector is one of the biggest sectors in the EU economy, with almost one in ten people working in over 3.6 million retail companies. The sector is changing rapidly with the development of e-commerce and multi-channel retailing, and has the potential to perform better. This is why the Commission is helping Member States and operators to overcome the current challenges by addressing an accumulation of restrictions in the retail sector.

The Commission Communication “A retail sector fit for the 21st century” and Annex with retail establishment and operations restrictions rankings issued on 19 April confirms that the Commission is not setting out to liberalise via regulation. The Communication contains guidelines and best practice to support Member States’ efforts to create a more open, integrated and competitive retail sector.

What are the main areas where Member States can make further progress?

  • Facilitating retail establishment: The rapid setting up of a new shop is crucial for retailers to access the market, thereby fostering productivity and innovation. By improving compliance with the Services Directive, Member States can make establishment easier without putting at risk public policy interests, such as town and country planning, protection of the environment and consumers. National, regional and local authorities are encouraged to reduce undue or disproportionate burdens, making retail establishment procedures simpler, shorter and more transparent.
  • Reducing restrictions to daily operations of shops: These may become a significant burden for businesses and affect their productivity, which is why the Commission has identified best practices on sales promotions and discounts, specific sales channels, shop opening hours, retail specific taxes, purchasing of products in other Member States and contractual practices of modern retail. The aim is to ensure a level playing field in retail as well as fair and efficient supply chains, while not restricting the freedom to pursue justified public policy objectives.
  • Adopting new approaches to promote vitality of city centers: The Commission has also published today a guide on fostering the revitalization and modernization of the small retail sector. The guide gives public authorities practical suggestions on how to help small retailers embrace technological change and meet the challenges of the future. Each solution is underpinned by practical real-life examples, gathered from best practices across the EU, which can be transferred to the local setting. The guide identifies success stories from which Member States can draw inspiration for example, on how to build retail communities to help bring consumers to city-centers.

Additionally, the Retail Restrictiveness Indicator (RRI) provides a useful snapshot of the state of play of retail in Member States. It helps to identify best practices as well as areas for possible reforms. The RRI is also a dynamic monitoring tool to measure Member States’ efforts in reducing retail restrictions and the impact of such reforms on market performance including productivity, prices and innovation, as well as spill-over effects on other sectors.

A well-functioning Single Market and a modernized regulatory environment are indispensable for an EU retail sector fit for the 21st century. The legal guidance and best practices set out in this Communication should assist Member States in their reforms towards a more open, more integrated and more competitive retail market without putting at risk the pursuit of legitimate public policy objectives.

The Commission will continue to monitor the evolution of the relevant regulatory frameworks and the trends in the retail sector. An effective partnership between relevant EU and Member States’ actors at all levels is necessary to improve the overall policy framework for the retail sector. The Commission will continue the dialogue between the EU institutions and the national, regional and local authorities as well as the representatives of the retail sector on the future of this sector.

 

 

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