The Italian Retail Renaissance: E-commerce Fuels Local Store Growth

21 Oct, 2023

The Italian Retail Renaissance: E-commerce Fuels Local Store Growth

The commercial landscape in Italy is evolving rapidly, shaped by various dynamics and trends that significantly influence the way businesses operate and consumers shop. Of particular note is the increasingly prevalent "multi-channel" nature of commerce, where both online and offline channels play complementary roles in the consumption habits of Italians.

This multi-channel phenomenon has been highlighted in a study conducted by the De Gasperi Foundation with support from Amazon. The study, titled "The Evolution of E-commerce: Between Myths and Evidence," offers valuable insights into the world of e-commerce and its impact.

One crucial finding of the study is that employment dynamics do not establish a direct link between the expansion of e-commerce and the loss of jobs in traditional businesses. In fact, traditional business activities saw growth up until the outbreak of the COVID-19 pandemic, with a positive trend. Data from ISTAT (the Italian National Institute of Statistics) over the past decade, pre-pandemic, shows that the commercial sector grew in tandem with the spread of e-commerce. Despite the disappearance of some small and medium-sized enterprises (SMEs), the overall trend was positive. However, it's worth noting that

the decline in the number of small businesses was offset by a slight increase in the total sales area, reflecting a consolidation toward fewer, larger businesses. Employment in SMEs seemed to follow local rather than national dynamics, with a population increase of 1% in a given area resulting in a 1.2% rise in commercial sector employment.

E-commerce penetration in Italy currently stands at around 12%, representing a relatively small portion of the traditional commerce landscape, which still accounts for roughly 90% of purchases in the sector, including shopping centers and large-scale organized retail facilities. In a context where these established players continue to play a significant complementary role, the multi-channel strategy paves the way for competitive dynamics, creating new opportunities for both businesses and consumers.

The adoption of e-commerce as an additional sales channel has brought about several benefits. It optimizes distribution processes, reduces the number of customers in physical stores, minimizes unnecessary travel, and lessens environmental impact, ultimately enhancing the sustainability of the commercial sector. This aspect aligns with a previous study conducted by Oliver Wyman, which revealed that the fastest delivery options result in lower CO2 consumption, and e-commerce can save four to nine times the traffic generated by in-store shopping.

The study, conducted by IPSOS as part of the De Gasperi Foundation's research, asked Italians about their reasons for using e-commerce sites. The research showed that a wide selection and the availability of home delivery services are key factors influencing consumers' choice to shop online. However, "traditional" stores remain the go-to channel for various products, especially artisanal items, where the sensory aspect of purchasing retains its importance.

Crucially, the De Gasperi Foundation's analysis underscores that e-commerce represents an opportunity for local stores. For 71% of Italian consumers, local businesses that have embraced e-commerce have enhanced the quality and quantity of services offered to customers through online stores. Moreover, 60% of Italian consumers appreciate the ability to use their trusted local stores as

stores as convenient delivery points.

The study has attracted the interest of institutional representatives and trade associations, who are keen to share their thoughts on the findings. Senator Claudio Durigon, undersecretary at the Italian Ministry of Labour and Social Policies, emphasized the importance of dispelling stereotypes about e-commerce. He recognized that e-commerce can serve as a springboard for many Italian companies, particularly smaller ones.

Confesercenti, an Italian association representing SMEs, commented that the report reaffirms the preference of consumers for physical stores as their primary purchasing channel. This preference is influenced by the unique role that local businesses play in Italy compared to businesses in other countries. With

concerns about job contraction and the migration of people and workers from small municipalities to large cities, there's a pressing need to address commercial desertification. In this regard, strengthening the technological capabilities of commercial activities and promoting integration between digital and traditional tools is essential.

Today, technology provides tools that enable merchants to retain customers, offering them increasingly personalized and high-quality service. All stakeholders, both public and private, must collaborate to meet the challenges