In this post from Reportlinker, we review the state of the retail market in MAPIC Italy.
Italy is the world’s eighth largest economy. As a consequence, it is attracting domestic and international retailers which want to establish themselves in this growing market. According to market researchers MarketLine, the apparel industry will be worth $65 billion by 2019, books industry will be worth $3 billion and food industry will reach nearly $200 billion. Let’s take a look at what retailers need to do to be successful in Italy as well as trends Italian customer trends.
What Types of Business Succeed in Italy?
So where do Italians prefer to shop? Since the turn of the century, the cosmetic market has done exceptionally well in Italy, even despite the economic downturn last decade, with Italian companies doing better than international ones. Italians prefer to purchase their cosmetics from pharmacies, believing they provide better customer service and are looking out for customers than other types of retailers.
This month, American coffee-house chain Starbucks announced it will open its first Italian café in Milan next year. Starbucks is hoping for success; Italy consumes 4.6% of the world’s coffee, but most Italians prefer to drink coffee at home. At the same time, the Italian café market is the world’s largest, generating $10 billion annually.
When it comes to groceries, Italy has the smallest number of large retailers among Western European countries. Italians prefer small, local stores and open-air markets because the nation’s shoppers prefer to purchase fresh foods. Laws also make it easier for smaller stores to open. The largest collection of supermarkets is in the north.
The room for growth, however, is enormous as smaller family size and an aging population is beginning to shift retail from mom-and-pop shops to large chains.
Customer Preferences and Trends
Retailers in Italy must meet several key factors to meet consumers’ needs, some of which might be challenging to mega international retailers. Italian customer preferences and trends include:
- Italian patrons prefer independent restaurants, bars and cafés. However, consumption at chains has been rising over the past decade.
- Italians prefer local brands when it comes to food. To overcome this, international retailers need to study and adapt to local culture. Starbucks, for example, will install a stand-up bar in its Milan café. Despite the challenges, other chains such as McDonald’s have become successful.
- Retailers are appealing to customers by offering a convenient, one-stop shop experience.
- Italians generally prefer name brands. However, Italy’s largest retailer Coop Italia is bucking the trend. It introduced its own private label, driving down prices, but the private-label market is still in its infancy.
- Discount retailers can grow in the market by distancing themselves from cheap, retail- branded products and introducing manufacture-branded and private labels.
- Italians are traveling more and becoming aware of and interested in foreign products.
Retailers planning to enter the Italian market may want to form a partnership or join a buying group. For example, Italy’s mass-market grocers are members of a buying group that make it impossible for others to enter the market. To gain a foothold, foreign retailers formed partnerships with Italian companies.
Market-trend company Percassi Group has formed partnerships with many foreign brands, helping to bring them to Italian markets. Clients include Gucci, LEGO Group, Nike, Ralph Lauren, Victoria’s Secret and now Starbucks. The group also created several shopping centers in Italy.
Top image via Sean Pavone