The immigration and refugee crisis: implications for the retail industry

This year approximately 1 million refugees arrived in Germany and at least 600,000 are expected in 2016. A major challenge for society but also an opportunity for the retail industry. If most refugees spent their "pocket money" (approx. 140 euros a month) at the next discounter or supermarket companies will earn about an additional 1.8 billion euros.

In the short-term, local retailers near the accommodation will certainly benefit as will Turkish and Arab markets with special ranges such as halal food. However, in the long-term many immigrants, who have come to Germany as refugees, will stay and thus increase demand and change in the retail environment. In this context, considerable secondary effects will occur due to investment e.g. in household appliances, home textiles, bedding etc.

Not all locations will benefit as refugees are rarely mobile by car, do not usually have credit cards or bank accounts and in general their purchasing power is too low. In the short-term, the influx of refuges will not increase sales in locations with high footfall, luxury locations in city centers, trendy neighborhoods in big cities, out-of-town shopping centers and retail parks. In the long-term, however, city centers and shopping centers would benefit from refugees gaining long-term residency and the resulting rise in per capita spending. The low purchasing power of refugees cannot compensate for the effects of e-commerce for retailers as their shopping habits are presently focused on those retail formats where online trading plays little importance.

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Markus Wotruba

BBE Handelsberatung GmbH
Brienner Str. 45
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Tel: +49 89 55118-176
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E-Mail: wotruba@bbe.de