Annual Report 2012/13 - Clas Ohlson

Market overview
Overall, the retail trade in Sweden, Norway, Finland and the United Kingdom
showed weak growth during 2012. Christmas trading is critical for the retail
segment and declined in both Sweden and Norway, which has not been noted for
several decades. Consumer confidence was relatively weak in all markets, due to
continuing concerns about the global economy. Many store chains and e-retailers
expanded their operations during the financial year, which led to continued and
intense competition. In combination, this trend had a negative impact on both
growth potential and profitability in the retail industry.
Weak growth in the retail market in 2012
In 2012, low growth figures were recorded in all four
markets where Clas Ohlson is active. According to Statistics
Sweden (SCB), the average increase was 2.2 per
cent in fixed prices, compared with 1.3 per cent in 2011.
In Norway 1 , the corresponding increase was 3.2 per cent,
compared with 2.6 per cent in 2011, in Finland 2 1.2 per
cent, compared with 2.7 per cent 2011 and in the UK 3 ,
which is 1.5 per cent compared with 0.4 per cent in 2011.
Despite the bleak market climate, Clas Ohlson continued
to expand during the 2012/2013 financial year and, due to
new stores and e-commerce services, captured market
shares in all countries where the company operates. Sales
growth totalled 4 per cent during the 2012/2013 financial
year, while sales in comparable stores declined 4 per cent
due to continued weak demand. In local currencies, Clas
Ohlson’s sales growth per country was 3 per cent in Sweden,
5 per cent in Norway, 15 per cent in Finland and 3 per
cent in the UK.
Record weak trend in Sweden
In 2012, Swedish convenience goods performed better
than sales of consumer durables. According to the Swedish
Research Institute for Trade (HUI), in a recession, households
reduce their spending on needs-driven products
rather than convenience goods. In 2012, sales declined
in December, the most critical month for the retail market,
which has not been noted since 1995. According to HUI,
the weak global outlook and concerns for possible layoffs
are still affecting household consumption.
However, rising consumer confidence and fewer layoffs
in early 2013 will hopefully lead to improvements this year.
For the full year 2013, HUI predicts that the retail market will
develop in line with 2012, which means that current prices
will grow 2.5 per cent during both 2013 and 2014.
Household economic outlook
Regular surveys of consumer buying behaviour and confidence
in the future are conducted in countries where Clas
Ohlson is active. In Sweden, the National Institute of Economic
Research (NIER) is responsible for the Consumer Confidence
Index (CCI), which is based on four questions about
personal finances and the Swedish economy at both the
present time and 12 months ahead, and a question about
the benefits of buying consumer durables now. The graphs
below show the monthly trend in each country compared
with the 10-year average.
As shown by the graphs, all markets recorded their
lowest figures in connection with Christmas trading, which
is a critical period for the retail trade. Since early 2013, the
indicator has risen slightly compared with December but
remains below the historic average which, according to
NIER, indicates that the household economic outlook is
considerably more negative than normal.
Retail sales growth
16
Consumer Confidence Index
130
14
120
12
10
8
6
4
2
0
Sweden Norway Finland UK
Clas Ohlson growth
2012/13
Retail Growth 2012
110
100
90
80
70
60
2008 2009 2010 2011 2012 2013
Sweden
Norway
Finland
UK
Ten-year average
Source reference: 1 Source SSB 2 Source Statistikcentralen 3 Source National Statistics
Market overview 9