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Ensuring maximum diversity of its retail landscape is Europe's best bet, says EESC

The EU should create the conditions for positive coexistence between online and offline, large, medium-sized, small and micro retailers, says the European Economic and Social Committee (EESC) in its response to the Commission's communication A European retail sector fit for the 21st century. Quality, consumer choice and awareness, together with the impact on society, should shape its vision of retail's future.

While there is no denying that e-commerce has changed the face of shopping, it is important to ensure that Europe has a vibrant and diversified retail sector. Too narrow a focus on price is neither in the best interest of consumers nor of society as a whole. In an opinion adopted at its December plenary, the EESC argues for a holistic approach factoring in other key aspects such as product quality and durability, value for money, information and service before and after purchase, shop proximity and accessibility along with the environmental impact.

In the EESC's view, the Commission's approach is skewed in favour of large retailers. Instead, it should ensure that in the future European consumers still have choice, countering the increasing concentration of the market, where big online traders such as Amazon take all.  

Despite lagging behind other sectors, retail is a leading player in Europe's economy. In 2016 it accounted for a EUR 9 864 468.4 million turnover and 33 399 447 jobs.  In 2015 there were 6 205 080 retailers, generating value of EUR 2 687 115 million.

Nevertheless, e-commerce has had some dire effects on the urban landscape of some regions. Opinion rapporteur Ronny Lannoo paints a bleak picture: There are countries where shops have closed down. Cities have been hollowed out and there is no commercial choice. The idea is to offer consumers the cheapest goods. But the truth is that someone is always going to pay the price at the end of the day. Think of agriculture, for instance. What we are witnessing is a rush to the bottom that has a negative impact on large chunks of society.  

Workers are among the hardest hit. They must be guaranteed fair remuneration and decent conditions: We need to defend adequate work contracts for thousands of those invisible workers working for online businesses that are not covered by collective bargaining and people who work for large retailers with casual contracts, where for instance weekends or nights do not count as overtime,says co-rapporteur Gerardo Larghi.

One other key aspect of the Commission communication that the EESC focuses on is establishing retail enterprises. The EESC's view is that full liberalisation does not ensure the necessary balance between large companies, SMEs and family businesses. National and subnational authorities are best placed to take decisions when it comes to opening commercial outlets, regulating sizes and locations and fixing working times and days. Much can be done to simplify the procedures for starting a business without affecting the restrictions designed to protect the urban environment and ensure vital city centres, says the EESC.

Going online can be a viable option for brick-and-mortar retailers looking to expand their business, but it should not be an obligation, advises the EESC. For SMEs and micro companies, cross-border expansion means facing a number of hurdles (adapting their organisation, learning languages, understanding legal information, establishing an efficient and competitive delivery system, dealing with VAT fraud and counterfeiting, etc.). Traditional shops are also key to the social cohesion of local communities and cater for the needs of non-native digital consumers, recalls the EESC.

Background

The European Commission's communication A European retail sector fit for the 21st century aims to boost the productivity of Europe's retail sector, specifically offline outlets. Accumulation of national, regional and local regulations is the main reason why it lags behind other parts of the economy. Best practices from across the EU are offered as inspiration to Member States taking a broad approach: this includes simplifying regulations, ensuring that they are fit for a multi-channel environment and reducing the burden of compliance, the cost of which is estimated at between 0.4 % and 6 % of retailers' annual turnover.

The Commission focuses on restrictions to the establishment and operation of shops which, while they may be justified by public policy concerns, raise barriers to the opening of new commercial outlets. The Commission advises screening these restrictions for proportionality and efficiency to ensure a level playing field with e-commerce.  Combining an online and offline presence is also recommended as a way to make the most of Europe's single market.