Credit Suisse, Fuhrer & Hotz Study Finds Staffing Issues Persist in Swiss Retail Industry

Credit Suisse, Fuhrer & Hotz Study Finds Staffing Issues Persist in Swiss Retail Industry

(PRESS RELEASE) ZÜRICH, 4-Jan-2023 — /EuropaWire/ — Credit Suisse Group AG, a global wealth manager, investment bank and financial services firm, has announced that, according to a study published by the bank together with consulting firm Fuhrer & Hotz, the retail trade in Switzerland is facing a shortage of skilled and labor workers. The study, which provides an annual outlook on the prospects for Swiss retail trade, found that despite a robust labor market and immigration, the retail sector recorded slower sales growth in 2022 as the one-off effects of the COVID-19 pandemic faded. In addition, retailers had difficulties recruiting new employees and were impacted by labor shortages. The authors of the study attribute the staffing shortage to a lack of industry entrants and a lack of young talent. To address this problem, companies are taking new approaches to attract and retain employees.

The authors of the study expect non-food sales in the retail sector to grow by around 0.8% in the coming year, while food/near-food sales are expected to increase by approximately 2.1%. These projections are based on the assumption that the labor shortage issue will continue to be a challenge for the retail industry in Switzerland. In order to overcome this challenge and maintain sales growth, companies will need to find creative ways to attract and retain a skilled workforce. This could involve offering competitive salaries and benefits, providing professional development opportunities, and implementing flexible work arrangements.

The Swiss economy proved highly resilient in the challenging global environment in 2022, with consumption supported by a robust labor market and immigration. However, the retail trade saw the one-off effects of the pandemic fade. As a result, the sector experienced a decline in sales after two years of strong pandemic-driven growth, although retail sales remained above pre-pandemic levels. Segments that had benefited from pandemic-related factors recorded slower sales growth in the absence of these one-off effects – with food and near-food sales being particularly affected. The non-food segment performed comparatively better, buoyed by catch-up consumption in the leisure sector in particular.

No resurgence in shopping tourism
Credit Suisse economists estimate that while the Swiss population gradually increased its spending in the retail sector just across the border in 2022, there has been no great resurgence in “shopping tourism”. Given that the Swiss franc appreciated significantly against the euro last year, thus strengthening the purchasing power of Swiss consumers abroad, this is somewhat surprising. On the other hand, the currency effect was mitigated by higher rates of inflation abroad. Among other things, the modest rise in cross-border shopping suggests that shopping tourists are price-sensitive, since foreign purchases appear to be less popular as prices rise. Other reasons for this cross-border shopping restraint are likely to be the higher cost of travel due to increased fuel costs, as well as a behavioral shift toward e-commerce and rapid delivery services.

Digital skills support online trading
In 2022, the online trade segment was unable to replicate the strong growth rates seen in the two previous years, although sales remained at a high level. This was not least due to the improved digital skills and interests of consumers. The exceptional circumstances resulting from the pandemic and the associated incentives to make online purchases mean that digital competence has taken a further leap forward – particularly among the 60+ age group. The use of social media has also reached a high level. As a result, 62% of the population now participate in a social network, with the equivalent figure for 15- to 29-year-olds standing at 91%. This highlights the potential for growth in a further emerging channel of online commerce: Shopping via social media. Credit Suisse economists therefore expect sales in online trading in Switzerland to rise to around CHF 13 bilion in 2023.

Staff shortages and recruitment difficulties pose challenges
The healthy post-pandemic labor market situation is also evident in the retail trade, with unemployment at a record low and a large number of vacancies. As a result, numerous retailers face increasing difficulties in recruiting new employees and are confronted with labor shortages. As an analysis by the Swiss Labor Force Survey (SLFS) shows, this trend cannot be explained by an increased number of staff departures during the pandemic. Instead, the main drivers seem to be the absence of industry entrants as well as a lack of qualified young talent. In particular, there is a shortage of new apprentices. This is also reflected by the intensity of training within the retail trade, which has gradually decreased in recent years. At the same time, large numbers of trained staff appear to be exiting the industry. The most frequent reason cited for this turnover in personnel is unsatisfactory working conditions (47%). Due to structural factors such as the wave of baby boomers retiring – around 20% of the sector’s workforce will retire in the coming years – the problem of staff shortages is likely to persist. In view of this situation, companies in the retail and consumer goods sectors need to find innovative ways of attracting and retaining employees. According to the results of a survey of top decision-makers from the sector conducted by the consulting firm Fuhrer & Hotz, a leadership culture focusing on recognition and appreciation is a key factor in this context. Working time models that can be adjusted flexibly in terms of hours and/or locations, an attractive working environment, as well as appropriate training and development opportunities are also considered to be of particular importance.

Sales expected to stabilize in 2023
Economic growth is likely to slow in 2023. However, the continued stability of the labor market, slight growth in real wages, and immigration are likely to be supportive of retail sales. Nominal sales in the food/near-food sector are therefore likely to increase by around 2.1%, not least due to expected inflation (+1.6%). Across all non-food segments, Credit Suisse economists expect sales growth of around 0.8%. In addition, the shift in sales from offline to online channels is likely to remain significant.

The “Retail Outlook” is published annually in German and French and can be viewed on our website at: www.credit-suisse.com/retailoutlook

Further information

Martin Hotz
Managing Director and Owner
Fuhrer & Hotz AG – Excellence in Retailing
+41 41 766 14 14
hotz@fuhrer-hotz.ch

Meret Mügeli
Economist and Retail Expert
Credit Suisse AG
+44 332 56 16
meret.muegeli@credit-suisse.com

Claude Maurer
Chief Economist for Switzerland
Credit Suisse AG
+41 44 333 41 90
claude.maurer@credit-suisse.com

Media Relations
Credit Suisse AG
+41 844 33 88 44
media.relations@credit-suisse.com

Credit Suisse
Credit Suisse is one of the world’s leading financial services providers. The bank’s strategy builds on its core strengths: its position as a leading wealth manager, its specialist investment banking capabilities and its strong presence in its home market of Switzerland. Credit Suisse seeks to follow a balanced approach to wealth management, aiming to capitalize on both the large pool of wealth within mature markets as well as the significant growth in wealth in Asia Pacific and other emerging markets, while also serving key developed markets with an emphasis on Switzerland. The bank employs more than 50,000 people. The registered shares (CSGN) of Credit Suisse Group AG, are listed in Switzerland and, in the form of American Depositary Shares (CS), in New York. Further information about Credit Suisse can be found at www.credit-suisse.com.

Disclaimer
This document was produced by and the opinions expressed are those of Credit Suisse as of the date of writing and are subject to change. It has been prepared solely for information purposes and for the use of the recipient. It does not constitute an offer or an invitation by or on behalf of Credit Suisse to any person to buy or sell any security. Any reference to past performance is not necessarily a guide to the future. The information and analysis contained in this publication have been compiled or arrived at from sources believed to be reliable but Credit Suisse does not make any representation as to their accuracy or completeness and does not accept liability for any loss arising from the use hereof.

SOURCE: CREDIT SUISSE GROUP AG