After two quarters of decline, Switzerland's retail market has shown tentative signs of recovery in the third quarter of 2022. According to GfK reports, while overall retail sales in the first three quarters decreased by 3.5% year-on-year, the third quarter alone recorded a significant 5% growth, offering retailers a glimmer of hope during challenging economic times.
Swiss Retail Under Pressure: Pandemic and Inflation
The first half of 2022 proved particularly difficult for Swiss retailers, with recurring pandemic waves and rising inflation putting significant pressure on consumer spending. Both non-food and food sectors experienced declines of 1.5% and 4.8% respectively, as consumers tightened their budgets and reduced discretionary spending.
Q3 Rebound: Leisure and Fashion Lead Recovery
The 5% retail growth in the third quarter suggests a gradual restoration of consumer confidence. The leisure and entertainment sector emerged as the strongest performer, with stable toy sales and positive momentum in sporting goods.
The fashion industry showed particularly strong results, with growth across all segments. Summer saw sustained demand for seasonal items like swimwear and sandals, while September brought increased interest in winter apparel such as coats, sweaters, and rainwear. This shift suggests that practical considerations, particularly warmth during the energy crisis, are becoming key factors in consumer purchasing decisions.
Diverging Trends: Home Improvement Slows While Energy Products Boom
In contrast to fashion's success, furniture and DIY markets continued to decline. While pandemic lockdowns had previously driven explosive growth in home improvement and gardening sectors, growing economic uncertainty has led consumers to reduce spending in these areas.
However, soaring energy prices have created new demand patterns. Swiss consumers are increasingly purchasing firewood, liquefied gas, generators, electrical installations, candles, and flashlights—products that help mitigate the impact of rising energy costs.
Electronics Decline and E-commerce Stabilization
The home electronics sector experienced declining sales in Q3, primarily due to ample inventory and falling prices, particularly for premium products. E-commerce sales showed a nearly 3% year-on-year decrease across the first three quarters, though notably stabilized in Q3 to match 2021 levels, suggesting the channel retains significant potential.
Ongoing Economic Headwinds
Despite Q3's positive indicators, Switzerland's economic outlook remains uncertain. The State Secretariat for Economic Affairs (SECO) has revised downward its growth forecasts for both 2022 and 2023, while anticipating prolonged inflationary pressure. With projected inflation rates of 3.0% for 2022 and 2.3% for 2023, consumers will continue facing elevated living costs.
Retailers must carefully navigate these challenges by focusing on value propositions while managing their own rising operational costs, particularly energy expenses. The coming months will test the industry's ability to adapt to evolving consumer priorities in an unstable economic environment.