COVID-19 Impacts - Italy (April 15)

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COVID-19 Impacts - Italy

Three examples that can provide a measured outlook on the economy in Italy as it is beginning to recover from COVID-19 include orders in the fashion retail sector rising by 18% since 28 March, after recording a 40% drop in the previous two months of the COVID-19 pandemic. Searches and bookings for travel to Italy have also started to grow, with an increase in year-over-year bookings of 149%. Detailed information is below.

The Retail Industry

  • According to 365Retail, the Italian fashion retail sector is reporting a slow but steady recovery as the COVID-19 crisis starts to slow down. This is after recording a 40% drop in e-commerce orders for Italian brands in the last two months of the COVID-19 pandemic. The fashion and accessories segment also saw its revenue drop by 26%.
  • However, since 28th March of this year, orders have steadily climbed by 18% and revenue has increased by 13%. Luxury items such as trainers, handbags, sportswear, and gloves are currently experiencing a rise in sales and the trend seems to be happening globally.
  • According to the senior vice president of verticals at Emarsys, Alex Timlin, Italy leads the world in fashion and the COVID-19 pandemic has hit the sector hard because of lockdowns. However, he adds that consumer confidence has started to grow and the fashion retail sector has started to see a steady recovery.
  • Timlin notes that brands that only sold items in-store responded to COVID-19 by also switching to online selling and this has resulted in e-commerce orders increasing again. He states that if the trend continues, it could positively impact the Italian economy.
  • The sector still has a long way to go before it can register a full recovery, with Fashion Network reporting that online orders for fashion and accessories in Italy lagged behind those of the UK, US, and France.

The Travel Industry

  • Accord to Sojern, which has access to real-time data on travel trends, inbound travel intent to Italy has begun to show signs of recovery in the third and fourth quarter of 2020. Data that Sojern collected on April 6, 2020, indicates that travel searches to Italy rapidly declined in March, falling to -82.1%, while bookings to the country rapidly declined in March, falling to -95% on 22 March, as shown in the searches and bookings graphs.
  • However, in the past few weeks, searches and bookings for travel to Italy, although still low, have started to grow, starting in the fourth quarter, from as early as October. Flight searches to Italy are up, including an increase of 144.7% for January 2021.
  • Italy as a destination, one of those to experience a devastating impact of COVID-19, has started to see an increase in "year-over-year bookings of 149%, by February 2021." The country has always been a popular destination for travelers from other countries and signs of an intent to travel to the country are returning "as early as November 2020 and continuing well into 2021. The intent is currently strongest from Eastern and Western Europe and from the Middle East."
  • Although outbound travel from Italy has been low due to the COVID-19 pandemic, data from Sojern shows that intent to travel from Italy has increased in the third quarter of 2020 and is growing evenly into 2021.
  • Currently, Italian travelers are showing the biggest interest to travel to Spain, France, and the UK. Travel searches from the country to France in February 2021 have risen almost 600% year-over-year, increased 773% to the United Kingdom, and are up 489% to Spain. This is a positive trend especially if the searches translate into bookings and could help the economy start to recover.

The Financial Industry

  • According to Bloomberg, business investment in Italy has fallen by over 10% and the economy is on its way to a 6% contraction in 2020. In response, the Italian government has released around 50 billion euros or $55 billion to aid the economy. This will add to what the government has already borrowed, which is equivalent to 135% of GDP.
  • As new COVID-19 infections and deaths continue to slow down, the Italian government is allowing some businesses to re-open to kick-start economic recovery. The government has also announced a $435 billion package mostly to be given to businesses to help sustain the economy. The plan ensures that $217 billion is used to guarantee liquidity to companies, and another $217 is earmarked to sustain foreign trade.
  • According to the Italian minister of economy and finance, Roberto Gualtieri, this economic intervention has started to counter the economic impact of the COVID-19 pandemic and is helping the country start getting back up.
  • The Italian government also enacted the "Restore Liquidity" law on 8 April 2020 that is already providing businesses affected by the COVID-19 crisis with financial assistance to help stay afloat and weather the short term effects of COVID-19.
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COVID-19 Impacts on Film and Movie Theaters - Italy

The film and movie theater industry remains relatively unchanged from March 2020 to April 2020, due to the complete shut down of movie theaters and film production beginning on March 8, 2020, and currently in effect until further notice. Details of the industry impact have been provided below.

Box Office Revenue

  • Since the COVID-19 outbreak started, Italy has seen a strong decrease in revenue from box office sales measuring up to 75% decline year-over-year from the same time period in 2019 as of March 2020.
  • This decline continued into April 2020 when Italy was announced to be one of the top 3 countries to see box office sales decline along with China and South Korea.
  • As of March 2020, the industry had already seen a loss of revenue amounting to €7.3 million.

Film Shoot Delays

  • Filming has been disrupted throughout the nation for domestic and international films.
  • Mission Impossible 7 filming was put on hold as of February 26, 2020, due to filming being set in Venice.
  • As of March 2020, Dwayne Johnson’s Red Notice was delayed due to having to find alternative filming locations in the United States due to restricted travel.
  • In March 2020, the "Bachelorette" suspended filming which was supposed to partially take place in Italy.
  • In March 2020, "Cinecitta' Studios in Rome" shut down production activities.
  • On March 23, 2020, "Si vive una volta sola" and "A Beautiful Day in the Neighborhood" postponed movie theater release dates in Italy.
  • As of April 14, 2020, all filming was haulted in Italy (as well as China and South Korea) including domestic and international companies. The order was given due to the CDC Level 3 Travel Health Notice that was put into effect.

Event Cancellations And Delays

  • On February 27, 2020, Italy postponed Far East Film Festival until June 2020.
  • Italy canceled all appearances scheduled for CinemaCon as of March 5, 2020.
  • In March 2020, The Cannes Film Festival and the Irish Film Festa del Cinema di Roma were both postponed with no rescheduled date announced.
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COVID-19 Impacts on TV, Music, and Live Events - Italy

Since the national lock-down for the COVID-19 quarantine on March 9, 2020, the number of deaths in Italy has decreased steadily in the first half of April 2020. The Italian government has set strict rules on people's movement and interaction, which had a profound impact on the entertainment industry, where the music and live events sector continues to experience loss of revenues, audiences, and activities. Due to lack of updates, the TV sector is expected to continue the situation in March, due to the international practice of social distancing and reduced production of new programs, which has resulted in rising video streaming activities, such as movies.

Music

  • The total volume of music streaming activities has declined since the outbreak of the COVID-19 pandemic in March 2020, according to news released by Live For Live Music on March 20, 2020.
  • According to FIMI, Italian recorded music association, the recorded music industry that generated a revenue of 247.8 million euros in 2019 is expected to see growth halt in the coming months. This trend has been evident since the beginning of the national quarantine on March 9, 2020, when the sales of CD and vinyl saw a 60% year-on-year decline in the first three weeks of March. During the same period, performance licensing revenue decreased by 70% year-on-year between end of February and March 24, 2020.
  • As the major revenue contributor representing 70% of total revenue in 2019, the volume of on-demand digital audio streaming declined by 10% week-on-week between March 9, 2020, and March 24, 2020, which was largely due to the closure of retail and entertainment chain stores in early March. At the same time, the volume of performing licenses issued has also dropped significantly due to the closure of shops and the shortage of live music events.

Live Sports Events

  • Sports events were affected the earliest since the outbreak of COVID-19 in Italy, where governments initially disallowed all fans from attending live sports events and shortly canceled all sports events due to the rapid spread of coronavirus countrywide. A variety of sports events have been either canceled or postponed, for example, the Italian Soccer Premier League Serie A is expected to suspend its 2020 season until further notice. The Snowboard World Cup in Livigno that was initially scheduled for March 10 has been canceled.
  • The qualification tournament of women's water polo Olympic games was originally scheduled to be held in Trieste on 17–24 May 2020. The decision of whether to cancel or postpone the international event is expected to be finalized by April 20, 2020.
  • Three gymnastics events planned for April 2020 have been either canceled or postponed. For example, the Artistic Jesolo Cup on April 4-5 is canceled; Rhythmic World Cup in Pesaro on April 3-5 is postponed to June 5-7; the Trampoline World Cup in Brescia planned for April 24-25 is postponed to June 19-20.
  • Three major international rowing games to be held in Italy between April and May 2020, have all been canceled. For example, the World Cup I in Sabuadia on April 10-12, the European Olympic qualifying regatta in Varese on April 27-29, and the World Cup II in Varese on May 1-3.
  • 7 cycling matches that were originally planned for April and May 2020, are now canceled, such as Giro Di Sicilia, or postponed, such as the Tour of the Alps and Giro d'Italia.
  • Several rugby games that were originally scheduled for March 2020, such as the Women's Six Nations tournament, have been postponed.

Live Music and Film Related Events

  • According to the latest data on Statista, the loss of the Italian entertainment industry due to COVID-19 amounted to approximately 23 million euros between February 23, 2020, and March 1, 2020. The two segments that incurred the largest loss were film screening and theater events, losing approximately 7.3 million euros and 7.2 million euros respectively. They were followed by live music (-4.1 million euros), dancing activities (-2.5 million euros) and exhibitions (-1.8 million euros).
  • Due to the COVID-19 virus rapidly spreading across the country, many Italian live music events have been canceled by now. For example, the Santana band recently canceled the European trip of Miraculous 2020 World Tour, which was planned for March 14, 2020, in Bologna.
  • Known as the Italian version of the Oscars, the David Di Donatello Awards has rescheduled its annual ceremony in Rome, from April 3, 2020, to May 8, 2020.
  • By early March 2020, all cultural sites have been closed throughout Italy, such as the Colosseum and Pompeii. Because of the negative impact of COVID-19 on the organization of live events, it is expected to harm the TV sector, as many live events are broadcast through the TV channels.
  • Due to the national lock-down for coronavirus quarantine, much public singing and music-making activities have emerged in Italy, which is seen as an effective means to calm anxieties.

Research Strategy

Based on our recent research delivered on April 2, 2020, this research focused on the update on the Italian entertainment industry through sourcing the latest news and statistics published between late-March and mid-April. By scouring various international news portals and databases, we found that the music and live events sector of the Italian entertainment industry has changed the most in the past three to four weeks. Due to the limited news updates, the TV sector is expected to continue the trend of rising online streaming and declining TV advertising activities. This is largely driven by the global practice of halting the production of new TV programs and retaining such essential services as news reporting.
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COVID-19 Impacts on Automotive - Italy

Due to the COVID-19 pandemic, vehicle sales and registrations in Italy have fallen considerably, amounting to less than 29,000 in the month of March. The Italian market has experienced an 85.4% reduction in car sales for March 2020 over March 2019. Shutdowns have led to a production loss of an estimated 108,595 automobiles. However, the delays and shutdowns in vehicle production have allowed some car manufacturers in Italy to produce medical supplies, equipment, and components to help hospitals combat the spread of the virus.

Car Sales and Registrations Have Plummeted

  • For the month of March 2020, less than 29,000 vehicles were purchased in Italy, which represented a considerably steep decline over March 2019 when the market recorded more than 195,000 car purchases.
  • Compared to the same point in 2019, the total volume of car sales in the country in March was down by about 85.4%. According to Inside EVs, expectations regarding car sales in Italy were already bleak due to the COVID-19 outbreak, but not as disastrous as the recent confirmed figures have revealed.
  • Italy recorded one of the largest declines (85%) in passenger vehicle registrations in March 2020 among large European nations. This figure is significantly higher than France (72%), Spain (69%), and Germany (38%).
  • Automotive sales for April 2020 in Western Europe (Italy, Britain, Spain, France, Germany, etc.) are projected to decrease by a massive 80%, according to Forbes. Frank Schwope, an analyst at Norddeutsche Landesbank Girozentrale, anticipates that sales in Western Europe "will almost stop" in the month of April. Furthermore, the forecasted SUV and car sales in the region are expected to fall by 18.3% to 11.7 million units.
  • Total car sales for the entire year in Italy could fall by approximately 15% due to the outbreak according to UNRAE, which operates as a foreign car manufacturing association. This possibility is a major concern, as the automotive industry makes up about 10% of the nation's total gross domestic product (GDP).
  • Fiat, Italy's top automotive brand, has recently fallen to about 9.9% of the Italian market, which represents an all-time low for the company. The company's auto sales fell by whopping 91.2% in March 2020 when compared to its sales in March 2019, as it only sold 2,794 vehicles in the region.
  • Meanwhile, Volkswagen's share of the Italian market shrank to 8.2%, as March 2020 registrations for the company's vehicles plummeted by 86.8% compared to March 2019. Volkswagen reported 2,316 vehicle registrations for the month of March 2020.

Production Impacted Severely Amid Shutdowns

  • According to an interactive map developed by the European Automobile Manufacturers Association (ACEA), the nationwide production losses because of factory shutdowns in Italy brought on by the ongoing COVID-19 pandemic has so far reached about 108,595 automobiles, as of April 13, 2020.
  • Since Italy implemented certain restrictions and measures to combat the spread of the virus, the automotive industry in the region has experienced shutdowns amounting to 26 working days, as of April 13, 2020.
  • It is estimated that at a minimum, at least 69,382 different employees operating in the automotive industry or related sectors in Italy have been negatively impacted in some form due to the shutdowns.
  • The Borgo Panigale base for Ducati is located within a significant coronavirus breakout zone in Italy. Compounded by the Italian government's nationwide lockdown, Ducati has had to close operations in the country. Lamborghini also had to cease production at its Sant'Agata Bolognese facility to combat the spread of the virus.
  • Moreover, numerous car manufacturers have been forced to extend production shutdowns at their plants situated in Italy. Following the extension of a nationwide lockdown by the Italian government, Ferrari, which had been scheduled to reopen its Modena and Maranello plants on March 27, recently postponed vehicle production operations at those facilities until May 3. In addition, Fiat had to delay its planned production resumption in Italy until May 4.
  • Lamborghini's planned reopening for March 25th has passed, and the company has yet to announce revised plans to begin vehicle production.

Many Carmakers Shifting Towards Helping Combat the Outbreak

  • In the face of a shutdown in its vehicle production operations in Italy, carmaker Fiat Chrysler has begun crafting vital ventilator components in an effort to assist the nation's Siare Engineering in increasing its medical equipment output to treat coronavirus-stricken patients throughout the country. Meanwhile, in collaboration with Exor and Ferrari, Fiat Chrysler Automobiles has produced its first set of electrovalves for ventilators at its Cento (located in northern Italy) plant.
  • Another major Italian carmaker, Lamborghini, halted production of its supercars in the country, but it is helping to produce medical supplies and equipment for local hospitals located within the Bologna region with assistance from health and government officials and the University of Bologna. As Lamborghini's automobiles are primarily assembled by hand, the company is able craft valuable materials for the medical field, and it has adjusted its interior upholstery division to be capable of producing surgical masks. Furthermore, its carbon fiber production center has been modified to create plexiglass face shields by utilizing advanced 3D printers.
  • Lamborghini has illustrated its capacity to produce approximately 1,000 surgical masks and 200 face shields each day to help medical professionals treat patients.
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COVID-19 Impacts on Travel and Hotels - Italy

After closing its borders on March 9, Italy is beginning to open retail businesses. The country reported its lowest number of new COVID-19 cases in March, and it's re-opening clothing and book stores. However, as of April 15, 2020, the United States Embassy was still warning travelers not to travel to Italy, and urging them to return on their own as soon as possible.

TRAVEL

  • Blue Panorama, an Italian leisure airline, offers low-cost flights for vacationing Italians. It was just before Italy closed its borders due to COVID-19 that the company announced a name change and a major branding update, both of which are marketing challenges during even the best of times.
  • The most recent hotel bookings numbers are published monthly. The March numbers were previously reported on April 2; April numbers are not yet available.

BORDERS

  • Most countries have kept their borders open to goods, although Poland has restricted load capacities on freight from Italy.
  • Austria's border with Italy is open to goods, but its passenger rail activity is limited to returning Austrians. Its restrictions are in effect until April 27.
  • Other than their own citizens, Qatar, Botswana, and Switzerland are among those that have denied travel for leisure or personal reasons.

HOTELS

  • Florence's Grand Hotel Minera shuttered for the first time in its 151-year history. "Seeing it empty was surreal," wrote Sara Maestrelli, whose family owns the property.
  • While many properties relaxed bookings policies early, some are just now doing so. Rocco Forte is offering free re-bookings, discounts, and up to two modifications for stays into 2021.
  • Interlude Hotels & Resorts is an Italian boutique chain of hotels. "We have closed several properties to cut costs," said CEO Laura Lo Mascolo and adviser to the University of Palermo.

FREIGHT

  • The transport sector is down approximately 12 percent in 2020.
  • Italy hasn't restricted cargo or goods, which can be transported as usual. However, surcharges, lack of capacity, and lack of equipment are creating challenges in the freight industry.
  • Fear of contamination also hampers the ability to pick up and deliver goods. "The industry is struggling to get drivers willing to drive into Italy and collect goods. It is also getting difficult to pick up cargo, because there is no staff in the factories to hand over the cargo," said Jochen Freese, chief commercial officer of Hellmann Worldwide Logistics of Germany.
  • Truckers are finding themselves ostracized at service stations and denied entry at destinations, notes Spanish truck driver Oscar Prieto, a 20-year transportation worker.

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COVID-19 Impacts on Finance - Italy

As an early and big victim of the coronavirus pandemic, Italy is facing various economic struggles such as a decline in borrowing, effects on manufacturing industries and a decline in the stock market, among others. These economical effects are expected to affect Italy’s GDP significantly.

Decline in Borrowing

Banks and SMEs Financial Crisis

  • The financial sector in Italy has been uniquely vulnerable due to the COVID-19 crisis. Thus, banks and small and medium-sized enterprises (SMEs) have continued to face threats due to delays in business loans. On the other hand, bank shares have continued to plummet significantly since mid-February as there has been a 40% decline from steep discounts to book value.
  • Italy’s lockdown has led to dried up cash flow in SMEs, which could see more businesses struggle to repay bank loans within the set deadline. Even though the lockdown has slowed down the economy, the debts continue to loom and banks are dependent on loan repayment to function. As a result, Italy’s government has had to approve a debt moratorium for six months.
  • However, banks continue to face pressure and mounting demands for emergency loans to cater for short-term needs in SMEs. Business owners, on the other hand, are skeptical about short-term liquidity, while banks are faced with enterprises that have maxed out all available credit lines.
  • UniCredit, Italy’s top bank, has pledged to lend SMEs an additional 10% of current financing through debt re-negotiations, while Banco BPM, Italy’s third-largest bank promised to earmark 3 billion euros for loans to enterprises hit by the coronavirus crisis.
  • Italy’s government, on the other hand, is working to guarantee 90% of new credit to cushion banks once the debt holiday ends, as well as to encourage banks to help SMEs. However, banks are still lobbying for more guarantee on the moratorium loans as they are concerned about potential future losses after the coronavirus pandemic.

Stock Market Decline

  • From the beginning of March, Italy experienced an extreme sudden financial risk, which coincided with the stock market crash around the globe. The spread of the coronavirus pandemic led to a lockdown in Italy, impacting the five-year yields and all maturities. The pandemic’s negative consequences on the economy and the stock market are expected to be long-lasting.
  • In February 2020, Italy experienced the worst weeks in the stock market. As the number of COVID-19 cases continued to increase, FTSE MIB, Italy’s leading stock index, registered one of the biggest drops in February, making it the eighth-worst week since 1998, for the Italian stock market. The worst day overall, was, however, on March 12, 2020, as the stock market experienced the biggest decline in a single day.
  • Currently, international investors are leaning heavily towards safe assets such as precious metals instead of stocks that carry more risks, which has, in turn, had a negative reflection on the stock market in Italy.
  • Many shares continue to lose their value significantly as analysts continue to predict that more wild swings are expected to hit the stock market, making the situation even more extreme in Italy. The FTSE MIB consists top 40 most traded companies that have so far lost 28% since the beginning of 2020.
  • After Italy locked down, some stocks were more exposed than others. Taly, an international game technology, for instance, gets over one-third of its total revenue (37.6%), from Italy.
  • Since the beginning of 2020, the stock has declined by 62.7%, due to virus fears, forcing the stock to trade at 7.86, (price-to-earnings ratio).
  • Dana/DAN is an Ohio-based company that creates power-conveyance and energy-management vehicle solutions. Dana generates 14% of its overall sales from Italy. Since the beginning of 2020, the company's sales have declined by 43.5%, forcing a 5.2 trading.

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COVID-19 Impacts on QSR - Italy

While Italy's lock down has recently been eased in some regions, re-openings have not yet included the QSR industry. These restaurants were temporarily shut down in the wake of the pandemic spreading in Italy, and many major chains have been severely affected as a result. McDonald's executives will be taking large cuts to their salaries, and the company will be tightening capital expenditures. Starbucks has established a relief fund for its European partners and employees. Autogrill has reported a 190-million-euro loss in sales and has requested a suspension of rent payments. Finally, Burger King Italia's managing director has asked to re-open as soon as possible, citing the company's preparedness for contactless service.

McDonald's

  • All McDonald's restaurants are still closed in Italy.
  • In response to the economic strain of the pandemic, McDonald's will be "cutting capital expenditures by $1 million in 2020" through minimized remodeling plans and new store openings.
  • In efforts to weather the economic downturn, McDonald's CEO Chris Kempczinski will be taking a 50 percent pay cut and other executives will take a 25 percent cut from April 15 to September 30.
  • McDonald's has also temporarily halted its share repurchase program and obtained $6.5 billion in new financing.
  • Before COVID-19 and the national shutdown of the restaurant, the 600 McDonald's in Italy served almost 1 million customers per day and employed about 24,000 people.

Starbucks

  • On April 8, Starbucks established the Starbucks Global Partner Emergency Relief Program to provide $10 million in aid to European partners and employees affected by COVID-19.
  • Requests for these hardship grants will be processed through the Emergency Assistance Foundation and Starbucks EMEA, and these funds were available for equity partners in Italy as of April 9.
  • These grants cover situations such as "loss of household income, urgent travel needs, back-up child care, sudden loss of home, death of a family member or partner and related funeral expenses," which could provide essential relief to Italian partners and employees.
  • The Milan Roastery is the only Starbucks Reserve Roastery in Europe and is where all Starbucks Reserve coffee is roasted before it is served in locations across Italy, the rest of Europe, the Middle East, and Africa.
  • The Starbucks Reserve location in Milan is listed as open for takeout only.

Autogrill

  • Autogrill is an Italian fast-food caterer with restaurants designed for travelers, serving customers at highway stops, airports, and train stations in Italy and abroad.
  • In 2019, Autogrill made almost 5 million euros in revenue across its 1,000 international locations, serving over 900 million customers.
  • The COVID-19 pandemic reportedly resulted in a 190-million-euro loss in sales for Autogrill as of the end of March.
  • Autogrill is temporarily halting or minimizing planned investments, and they are cutting labor costs in response to the economic effects of the pandemic.
  • AIGRIM, a lobby group that includes Autogrill, has requested "rent cuts, relief from investment obligations and the extension of concession contracts" in the wake of decreased travel and the resulting severe loss in sales.
  • AIGRIM has asked for the government to step in and pressure motorway, airport, and railway station operators to cancel rents while Italy is still under lock down, then continue to offer support until sales return to pre-COVID-19 levels.
  • According to a press release, Autogrill has about 600 million euros in liquidity, which it will use in addition to its cost-saving measures, to handle this crisis.

Burger King

  • Burger King Italia's website promises it will be "re-whoppening" soon.
  • In response to the pandemic and nation-wide lock down, Burger King closed its over 200 restaurants in Italy.
  • The fast food company has over 40 franchises and employs about 4,500 people directly, generating over 750 new jobs in both 2019 and 2018.
  • Andrea Valota, the managing director of Burger King Restaurants Italia, has now asked to be able to reopen as soon as possible with a set of predetermined rules, given well in advance, to govern safety.
  • Valota asks that the use of the drive-thru lane be granted, as it provides a relatively contactless method of transaction, and it would ease the burden on delivery riders; additionally, she asks for customers to be able to use the touchscreen kiosks for takeaway orders with contactless payment and no staff contact.
  • Valota also emphasized that Burger King has intensified their hygiene standards, including hand-washing requirements, the wearing of masks and gloves, and the sanitation of surfaces.

Research Strategy

To find examples of impacts or changes in the QSR industry in Italy as a result of the COVID-19 pandemic, we researched company websites, news articles, and press releases. We included only information that had been released since the previous research report.
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COVID-19 Impacts on Retail - Italy

Italy’s retail sector is significantly impacted by the COVID-19 crisis. Though retailers of essential goods are seeing some growth in their online sales and a number of their product categories, the same cannot be said with retailers of non-essential goods. To survive the crisis, some retailers, especially those in apparel retail, are resorting to aggressive discounting.

Impact on Product Sales

  • Retailers saw sales of fast-moving consumer goods (FMCG) shoot up on February 21, the day the first COVID-19 death in Italy was recorded. When seven new deaths were recorded on February 24, sales rose again. Retailers attribute these increases to Italians rushing out to purchase groceries.
  • Sales continued to rise in the four weeks following February 24, as the Italian government increasingly implemented restrictions. Sales declined in the two weeks following this four-week period, however. It became evident to retailers that consumers had already filled their pantries or cupboards, and that shopping has shifted “from stock-up to meal maintenance.”
  • Retail sales growth seems to have peaked in the week of March 9-15.
  • Coop, Italy’s biggest supermarket chain, reported on how the sales of certain products had changed between February 24 and March 8. There was an increase in the sales of hand sanitizers (+547%), hygienic wipes (+478%), ethanol (+203%), surface disinfectants (+197%), flour (+80%), canned meat (+60%), canned beans (+55%), pasta (+51%), bleach (+47%), rice (+39%), canned fish (+26%), and frozen fish (+21%), and a decrease in the sales of wine (-20%), soda (-10%), beer (-7%), and snacks/baked goods (-10%).
  • Between January 2020 and February 2020, the year-on-year growth in FMCG sales decreased from 3.8% to 1.6%, the year-on-year growth in food and beverage sales decreased from 4.1% to 1.2%, the year-on-year growth in household care product sales increased from 0.0% to 3.0%, and the year-on-year growth in personal care product sales increased from 2.9% to 5.4%. These figures indicate growth in the household care, and personal care segments.
  • With consumers seeking to make their groceries last, basket sizes are now up by 69%.
  • Basket composition is now different as well, with sales of essentials such as eggs, pasta, and milk increasing by 20% to 40% and sales of home baking ingredients, disinfectants, and wipes growing as well.

Impact on Sales Channels

  • Online sales have grown, with click and collect services winning over home deliveries. Retailers seem to be finding click and collect services more practical to implement than home deliveries. Kantar reports an exponential growth in the adoption of click-and-collect services.
  • Between January 2020 and February 2020, the year-on-year growth in online sales increased from 12.9% to 23.9%.
  • Some producers have stepped in to sell products directly to consumers. To illustrate, agriculture association Coldiretti set up a system enabling farmers to distribute fresh produce directly to consumers.
  • According to Livio Martucci, vice president for solutions at IRI Italy, consumers may not go back to their old ways when the COVID-19 crisis is over. Retailers will have to identify which changes in consumer behavior will stick. For example, now that older consumers are learning how to shop online, they may decide to just shop online in the future.

Impact on Pricing

  • Retailers, with the prodding of the government, were prompted to either freeze prices or offer discounts.
  • Retail associations Ancd-Conad, Ancc-Coop, and Federdistribuzione have all committed to offering a 10% discount, while supermarket chain Coop and distribution group Gruppo VéGé have committed to a two-month price freeze.
  • Fashion retailers are discounting more aggressively than grocery retailers, with discount rates averaging 37%. Fashion retailers Coach and H&M, for example, have offered average discount rates of 52% and 40%, respectively.
  • Apparel retailers are now putting over 45% of their product assortments on discount.

Shifts in Competitive Advantage

  • Because consumers are advised and warned to stay close to home, smaller retailers are now winning over larger retailers. Larger retailers, particularly those located out-of-town, are losing sales due to local lockdowns. Local convenience stores, on the other hand, are seeing a 41%-increase in visits.
  • Discount stores are also observing a surge in visits, an indication that consumers may be exercising frugality or experiencing financial difficulties.

Impact on Retailers Selling Non-Essential Products

  • Retailers of non-essential products are feeling left out. Just recently, over 50 non-food retailers, including the Calzedonia SpA Group, Coin, Douglas, Kiko, OVS, Rinascente, and Twinset, wrote an open letter to the country’s prime minister, minister of economy, and minister of economic development to air their concerns and recommendations.
  • They have noted in the letter how the lockdown has become unbearable and how the pandemic’s impact on their sector is more significant than what the government perceives it to be.
  • As they have noted in their open letter, some companies in their sector may close if certain government measures are not taken. Some of the measures they are proposing are the reduction or postponement of tax payments and the revision of rents.
Sources
Sources

From Part 01
Quotes
  • "Of note, Spain and Italy as destinations, which are experiencing the heaviest impacts of COVID-19, see increases in year-over-year bookings of 503% and 149%, respectively, by February 2021."
  • "At present, Italian travellers are showing the most interest in travel to France, Spain and the UK. Travel searches from Italy to France in February 2021 are up nearly 600% year-over-year, up 489% from Italy to Spain, and up 773% from Italy to the UK for the same period."
From Part 03
From Part 05