Italy’s Economic Resilience Post-Covid
The Italian economy has navigated the post-Covid landscape better than anticipated, with a GDP growth of 1% in 2023 that outperformed the Eurozone, UK, and Germany. This success stems largely from the construction and service sectors, particularly tourism, which saw substantial spending from international visitors. Unemployment has dropped to its lowest since 2008 at 7.2%, thanks to a strong job market. Also, Italian families have lower debt levels compared to other Europeans, and the debt-to-GDP ratio has been falling since 2020. Italy’s inflation rate stands at a modest 0.8%, hinting that monetary policy shifts might not occur until later in 2024. The retail industry in Italy is on the upswing, with a notable increase in sales in both national and Eurozone markets. Large retailers are outperforming small shops, forecasting a genuine recovery for the retail sector.
Italy’s E-commerce Landscape
While e-commerce has reshaped consumer behaviour, Italy lags behind at only 51% usage rate compared to the European average of 69%. The growth of e-commerce in Italy is slowing, as the jump from 12% to 13% in market share is minor, especially when other European nations are seeing penetration rates beyond 20%. The dynamics within e-commerce sales are also shifting, with goods taking a smaller slice of the pie and services, particularly tourism and transportation, seeing a boom.
Performance of Italian Shopping Centres
Amidst the changing trends, Italian shopping centres are witnessing a revival in visits, though not quite to pre-pandemic figures. Shoppers may be less frequent but are increasingly likely to buy, evident in categories like personal care and food & beverage. The fashion industry, while facing challenges, still feels the impact of lifestyle changes and seasonal weather. With this higher intent to purchase among visitors, revenues are nearly back to 2019 levels. Despite this recovery, it’s important to note the effect of inflation. A divide is emerging between top-tier and secondary shopping centres, with brands choosing locations based on foot traffic and catchment area quality. Landlords are diversifying their offerings to maintain visitor interest and sales.
For local shopping centres, accessibility, convenience, and services like click & collect are key. The presence of a strong grocery store also adds appeal. A successful shopping centre fundamentally meets consumer demands and remains an attractive investment option. In 2023, shopping centre investments showed signs of revival, with transactions reaching around €150 million. As the market adapts, we see potential for investors, especially given the limited availability of top-tier shopping centres. New prospects are on the horizon for well-performing establishments and secondary assets, with the possible added benefit of an attractive risk premium making the sector more competitive.
