Report from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions - Retail market monitoring report “Towards more efficient and fairer retail services in the internal market for 2020” SEC(2010)807
Date: 2010-07-05
Institutions: European Commission
Subjects: activity report, distributive trades, domestic market, retail trade

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EUROPEAN COMMISSION 

Brussels, 5.7.2010 
COM(2010)355 final 

REPORT FROM THE COMMISSION 
TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN 
ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE 
REGIONS 

Retail market monitoring report 
“Towards more efficient and fairer retail services in the internal market for 2020” 

SEC(2010)807 

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1. 

INTRODUCTION 

This Commission report on retail market monitoring results from the work launched 
in early 2009 in line with the new market monitoring policy approach  presented in 
the 2007 Communication on “A single market for 21st century Europe”1. The retail 
sector  was  chosen  for  this  market  monitoring  exercise  because  of  its  economic 
significance for the European Union (4.2% of the EU’s GDP, 17.4 million employees 
and 20% of European SMEs2), and, in particular, its close links with a multitude of 
upstream and downstream markets. 

Retail services encompass a wide variety of forms (shops, electronic commerce, open 
markets,  etc.),  formats  (from  small  shops  to  hypermarkets),  products  (food,  non-
food,  prescription  and  over-the-counter  drugs,  etc.),  legal  structures  (independent 
stores, franchises, integrated groups, etc.), locations (urban/rural, city centre/suburbs, 
etc.). The analysis in this report covers all these variants, with a particular focus on 
grocery retail services, given their economic importance3. This complexity cannot be 
reduced to a simple dichotomy between small shops and supermarket groups. Indeed, 
the  strategy  of  the  large  retail  groups  over  recent  years  has  been  one  of 
diversification, from small neighbourhood or village shops to hypermarkets, by way 
of  medium-sized  stores  such  as  supermarkets  or  discount  stores.  In  this  Report  the 
term "retail services" is used for all these forms. 

Based  on  an  in-depth  analysis,  this report  and  the  accompanying  Commission  staff 
working  document  present  a  first  assessment  of  the  issues  affecting  –  or  likely  to 
affect – from an internal market perspective the economic, social and environmental 
performance  (for  example,  in  terms  of  innovation,  competitiveness,  productivity, 
employment, contribution to tackling poverty, social inclusion (of disabled people in 
particular), tackling climate change, and in terms of ethical and social responsibility) 
of companies active in the retail sector4. The identification of the issues raised in this 
report is based on the various economic principles and public interest objectives that 
are at the heart of the internal market in order to contribute to smart, sustainable and 
inclusive growth in the Union. 

In the light of these conclusions, the Commission will, in a second phase and in the 
context  of  the  relaunch  of  the  internal  market  announced  in  the  Europe  2020 
Strategy5, define measures which could be taken to improve the smooth functioning 
of  the  Internal  Market  in  this  sector  whilst  respecting  the  principles  of  subsidiarity 
and  proportionality  as  well  as  the  other  fundamental  objectives  of  the  European 
Union. The aim is to help companies operating in the retail sector of the EU to make 
the best use of the internal market freedoms in order to stimulate the growth of their 

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COM(2007) 724 “A single market for 21st century Europe”. 
The  retail  service  sector  has  3 700 000  SMEs,  compared  to  2 300  000  in  industry,  or  63%  more. 
Eurostat, SBS, 2005 and 2007. The “Small Business Act” for Europe (COM (2008)394 final) is a key 
element of European SME policy. 
It represents around half of total retail sales. Euromonitor International 2007. 
Explanations of the analyses in this report can be found in the Commission working document on retail 
services in the internal market, July 2010. 
Communication from the Commission “EUROPE 2020 - A strategy for smart, sustainable and inclusive 
growth”. 

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services and promote innovation, whilst respecting the objectives of economic, social 
and  territorial  cohesion,  together  with  worker,  consumer  and  environmental 
protection.  Retail  services  that  are  smart,  sustainable  and  inclusive,  henceforth 
defined as “fair”, can contribute directly to the success of the Europe 2020 Strategy.  

2. 

THE HORIZONTAL NATURE OF RETAIL SERVICES 

Retail  services  act  as  a  link  between  a  multitude  of  upstream  and  downstream 
markets,  making  it  a  key  player  in  the  European  economy.  In  the  downstream 
markets,  retailers  interact  with  consumers.  To  the  extent  that  the  retail  sector 
determines consumers’ access to a wide choice of consumer goods, including basic 
household goods and groceries, the operation of the retail market has a direct impact 
on the quality of life of citizens. It is thanks to the services provided by retailers that 
many consumers have access locally to products from other Member States and third 
countries, thus benefitting in a very real way from the internal market. Retailers can 
become  a  driving  force  in  the  adoption  of  sustainable  growth  paths  thanks  to  their 
responsivity  to  consumer  behaviour  and  their  interaction  with  consumers.  In  the 
upstream markets, retailers often interact across borders with a wide range of players, 
in  particular  wholesalers  and  suppliers,  employees,  commercial  property  services, 
transport  companies,  logistics  services,  providers  of  payment  systems,  advertising 
and marketing  agencies,  security companies,  energy suppliers, and waste collection 
and recycling services. 

Any  developments  in  the  retail  sector  thus  automatically  have  knock-on  effects  in 
other economic sectors and on their respective actors. Therefore, any policy response 
seeking  to  resolve  an  identified  problem  should  take  into  account  the  horizontal 
nature  of  retail  services  by  giving  due  consideration  to  potential  impacts  along  the 
retail  supply  chain.  It  should  be  based  on  drawing  a  balance  across  the  various 
economic  freedoms  and  public  interest  objectives  that  are  inherent  to  the  smooth 
functioning of the Internal Market. 

3. 

A  RETAIL  SERVICE  GROWTH  PATH  THAT  HAS  GIVEN  RISE  TO  SIGNIFICANT  SPILL-
OVER EFFECTS  

The modernisation of the retail sector since the 1960s, with the dawn of retail groups, 
has  contributed  significantly  to  combating  inflation.  It  has  offered  consumers, 
including during periods of economic downturn, greater choice at competitive prices 
allowing  them  to  reallocate  a  growing  share  of  their  income,  traditionally  used  for 
satisfying  basic  daily  needs,  to  the  consumption  of  an  ever  broader  range  of  goods 
and services, which, in turn, has stimulated innovation and economic growth.  

The  search  for  and  benefits  of  economies  of  scale  and  scope  have  transformed  the 
business models of today’s retailers. Concentration across the borders of the internal 
market  and  vertical  integration  have  jointly  given  certain  retailers  considerable 
negotiating power, allowing them to negotiate low prices. This bargaining power has, 
in turn, led to the European consolidation of manufacturing, logistics and commercial 
property service sectors, whose main players seek to attain equivalent flexibility and 
bargaining power in their respective supply chains in order to meet the demands of 
retailers.  Even  if  European  retailers  have,  at  aggregate  level,  achieved  lower 
productivity growth over the past decade than their counterparts in the United States, 

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their growth and the waves of horizontal and vertical integration have contributed to 
making  the retail sector  more efficient and to lowering inflation. Moreover, greater 
competition, in particular because of the rise of European discount stores and budget-
price  own  brands,  has  reinforced  this  trend,  ever  pushing  retailers  to  become  even 
more efficient in order to curb the erosion of their margins.  

this  has 

increased  competition,  squeezed  margins  and 

Although 
increased 
competitivity  throughout  supply  chains,  it  has  not  been  without  impact  on  small 
independent shops, local authorities, small agricultural producers, small and medium 
sized  manufacturers,  employees  and  isolated  or  socially  disadvantaged  consumers. 
At  times  it  has  been  to  the  detriment  of  the  EU’s  objectives  of  environmental 
protection and social and territorial cohesion. Moreover, the analysis has found that 
the economic performance of the sector has not achieved its full potential in the EU, 
in particular from the internal market perspective. This report and the accompanying 
Commission staff working document highlight the various problems that have been 
identified as impeding, or likely to impede, optimum performance of the retail sector 
in  the  internal  market,  from  the  point  of  view  of  the  various  actors  upstream  and 
downstream  of  the  supply  chain:  consumers,  retailers,  suppliers,  employees  and 
future generations. 

4. 

MORE EFFICIENT AND FAIRER RETAIL SERVICES FOR CONSUMERS IN THE INTERNAL 
MARKET 

An internal market for retail services which is more efficient and fairer for European 
consumers  must  offer  them,  wherever  they  live,  access  to  the  widest  choice  of 
retailers  and  high  quality  products  at  competitive  and  affordable  prices,  in 
accordance with the objectives of smart, sustainable and inclusive growth pursued by 
the EU. It must also offer access to reliable, transparent and comparable information 
on  retail  service  offers  throughout  the  EU,  so  that  consumers  can  make  better-
informed  choices,  and  have  confidence  that  wherever  they  shop  in  the  EU  their 
consumer rights will be upheld. 

The analysis identified the following problems: 

The first concerns the accessibility and range of retail outlets. The proximity of shops 
offering  essential  goods  and  services,  in  particular  grocery  shops,  is  of  growing 
importance  to  the  elderly  (17%  of  the  EU  population  is  already  64  or  older)  and 
disabled people (15% of the EU population), the socially isolated and those who live 
in sparsely populated areas, and those 9% of EU citizens who cannot afford a car6. 
The  need  to  keep  rural  areas  vibrant,  to  which  aim  local  shops  contribute,  and  to 
restrict  the  use  of  cars  for  environmental  reasons  will  make  this  issue  ever  more 
pressing. 

However, the number of small local grocery shops (with fewer than 10 employees) 
fell by 3.7% between 2004 and 2009. This trend is also being felt in other subsectors 
of the retail sector because of the increasing polarisation of sales outlets in either city 
centres or purpose-built out-of-town shopping centres. Moreover, consumer surveys7 

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Eurostat News release 77/2009, 28 May 2009, Living Conditions in the EU. 
IPSOS consumer satisfaction survey, on behalf of the European Commission, 2008. 

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show that those living in towns with fewer than 10 000 inhabitants are less satisfied 
than  average  with  the  choice  of  shops  to  which  they  have  access.  It  would  appear 
that,  despite  initiatives  in  the  Member  States  to  control  the  growth  of  commercial 
retail  development,  the  lack  of  territorial  cohesion  in  this  respect  is  worsening, 
although the recent trend for retail groups to establish small neighbourhood shops in 
towns and rural areas has mitigated this to some extent. Electronic commerce could 
help  to  counter  the  negative  aspects  of  these  trends  and  keep  pressure  on  prices  in 
both  electronic  commerce  and  shops,  but,  overall,  its  turnover  is  small,  accounting 
for more than 2% of total retail service sales in just four Member States8 and on-line 
sales in the grocery retail sub-sector are even lower. How to improve access to shops 
and promote the development of electronic commerce in the EU are key questions. A 
detailed market study on price differences in electronic commerce has already been 
launched. 

The  analysis  also  highlighted  considerable  price  differences  within  the  internal 
market, suggesting that the internal market is still fragmented. For example, the price 
of food and non-alcoholic beverages is, on average, 28.4% higher in Belgium than in 
the Netherlands9. For certain common pharmaceutical products sold over the counter 
(OTC), the price difference can reach a factor of one to five10. In the clothing retail 
sector, it is surprising to note that prices in Ireland, France and the UK are below the 
EU average whilst those in the Czech Republic and Slovakia are considerably higher 
than average11. Several factors such as differences in average household disposable 
income  or  VAT  explain  certain  price  differences,  whilst  other  factors  connected  to 
competitiveness, the regulatory framework or commercial practices such as territorial 
supply  constraints  or  obstacles  to  parallel  trade12,  also  play  a  role.  The  nature  and 
respective weight of the factors explaining price differences, however, is difficult to 
define  precisely.  Furthermore,  better  consumer  information  on  retail  offers  beyond 
their  local  shopping  area,  including  offers  in  other  countries,  could  also  help  to 
reduce these disparities.  

National  competition  authorities  and  consumer  associations  have  shown  how 
retailers apply different prices across local shopping areas depending on the level of 
competition within those areas13. The finding that consumers are dissatisfied with the 
availability  of  sources  of  independent  comparative  information  on  retail  offers 
reinforces this analysis. It appears that one of the reasons for this situation could well 
be the lack of growth of such services offering transparent, accessible, comparable, 
high  quality  information  to  consumers  on  retail  service  offerings  beyond  their  own 
local and national market, in particular for electronic commerce. 

The difficulties associated in offering such information services, whether commercial 
communications  or  independent  information  services,  are  central  findings  of  this 
identified market malfunctioning.  

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Euromonitor International 2007. 
For more information on the differences in food prices within the EU, see the Communication on “A 
better functioning food supply chain in Europe” (COM(2009)591 final). 
IMS health, November 2009. 
Eurostat Statistics in focus 50/2009. 
See COM(2009) 591 final, quoted above. 
UFC “Que Choisir” [Which?], 3 April 2008, and report of the UK Competition Commission, 30 April 
2008. 

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5. 

MORE EFFICIENT AND FAIRER RETAIL SERVICES FOR OPERATORS IN THE INTERNAL 
MARKET 

An internal market for retail services that is more efficient and fairer for EU retailers 
must allow those that are competitive, whatever their size, to coexist and grow on the 
market,  in  particular  by  way  of  innovative,  efficient  and  sustainable  strategies, 
notably by using its cross-border  dimension. The analytical work carried out so far 
has  identified  a  series  of  problems  impeding  the  retail  sector  form  exploiting  its 
potential in the EU. 

Firstly, major restrictions on entry to the retail market remain a subject of concern as 
they  limit  local  competition  and  create  obstacles  to  the  achievement  of  the  internal 
market  for  retail  services.  Some  of  them,  such  as  bans  on  new  outlets  based  on 
economic  impacts  on  local  competitors,  are  being  done  away  with  by  the 
implementation  of  the  Services  Directive14.  Nevertheless,  current  fragmented 
national,  regional  and  local  commercial  planning  frameworks,  in  conjunction  with 
different  rules  on  property  and  land  ownership  as  well  as  a  European  commercial 
property development market which could give rise to malfunctioning at local level 
are  other  factors  likely  to  dissuade  parties  from  entering  certain  markets.  In  border 
areas  –  home  to  35%  of  EU  citizens15  –  a  lack  of  coordination  between  national 
legislations is particularly likely to distort competition. Certain Member States have 
developed  good  practices  which  could  be  applied  in  others.  All  the  relevant  public 
interest objectives must be taken into account, in particular the need to reconcile the 
interests  of  retailers  with  environmental  protection  or  spatial  planning  (e.g.  by 
maintaining sufficient access to shops offering essential goods and services). 

Secondly,  retailers  sometimes  mention  the  existence  of  obstacles  to  sourcing  from 
companies established in other Member States. Such a situation could be explained, 
for example, by a decision on the part of a manufacturer to allocate customers to its 
various subsidiaries depending on their geographical location (intra-group decision). 
It could also be the result of contractual requirements imposed by producers on their 
wholesale  or  retail  customers.  If  proven  to  exist,  this  phenomenon  could  help  to 
explain the cross-border differences in price levels mentioned above. The capacity to 
engage  in  parallel  importing  is  further  restricted  by  different  national  regulatory 
frameworks,  for  example,  on  different  language  requirements  for  food  labels16. 
Thirdly,  despite  European-level  harmonisation  of  the  rules  governing  commercial 
practices  towards  consumers,  such  as  advertising,  marketing  and  promotional 
practices17, 
commercial 
communications, in particular sales promotions, impede the development of efficient, 
and  potentially  cross-border,  communication  strategies  by  large  retailers  and  by 
SMEs  in  border  regions,  electronic  commerce,  etc.18  In  particular,  selling  and 
reselling  at  a  loss  are  of  importance  for  the  economic  models  of  retailers  selling 

remaining  diverging  national 

rules  on 

certain 

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Directive 2006/123/EC of 12 December 2006 on services in the internal market. 
European Commission (DG Regio) Working Paper on Territories with Specific Geographical Features 
(02/2009). 
Directive  2000/13/EC  on  the  approximation  of  the  laws  of  the  Member  states  relating  to  labelling, 
presentation  and  advertising  of  foodstuffs.  See  also  the  proposal  for  a  regulation  of  the  European 
Parliament  and  of  the  Council  on  the  provision  of  food  information  to  consumers  (COM(2008)  0040 
final). 
Directive 2005/29/EC of 11 May 2005 on unfair commercial practices. 
Green Paper on Commercial Communications in the Internal Market (COM(1996) 192 final). 

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durable  goods,  notably  textiles.  Yet,  the  various  national  regulations  imposing 
restrictions on selling at a loss, with the aim of protecting small retailers, appear to 
have not always been effective in this regard. Similarly, differing restrictions on sales 
periods  have  been  criticised  for  leading  to  unfair  competition  between  border 
regions.  

Other  identified  problems  include  the  continuing  lack  of  a  sufficiently  competitive 
internal  market  in  payment  systems,  the  need  for  access  to  more  efficient  logistics 
networks  and  services  and  the  coexistence  of  differing  regulatory  frameworks  for: 
franchising, which may prevent the growth of purchasing networks of small retailers, 
consumer rights, shop opening hours or the collection and recycling of waste. 

6. 

MORE  EFFICIENT  AND  FAIRER  RETAIL  SERVICES  FOR  SUPPLIERS  IN  THE  INTERNAL 
MARKET 

An  internal  market  for  retail  services  that  is  more  efficient  and  fairer  for  suppliers 
must allow them to sell products which are competitive in terms of price and quality 
and/or  innovative  in  a  sufficient  quantity  to  make  their  investments  worthwhile.  It 
should  provide  suppliers  with  information  on  consumers’  demand  patterns  so  that 
they can adapt their supplies so as to better respond to changing needs and trends, in 
particular  for  more  ethical  products.  It  should  thus  promote  an  economy  based  on 
innovation  which  enhances  efficient  resource  allocation,  is  greener  and  more 
competitive,  encouraging  economic,  social  and  territorial  cohesion.  The  analysis 
identified  two  problems  preventing  a  transition  to  more  efficient  and  fairer  retail 
services for suppliers in the internal market: 

Firstly,  where  they  occur,  tensions  in  the  contractual  relations  between  companies 
may  curb  suppliers’  ability  to  make  sufficient  margins  to  make  their  businesses 
viable and to make necessary investment in product innovation. Certain contractual 
requirements applied directly by retailers or their central purchasing groups on their 
suppliers  or  by  suppliers  on  primary  producers  could,  in  some  circumstances,  be 
considered  unfair  and  likely  to  curb  the  growth  and  even  the  viability  of  certain 
competitive companies. On occasion, structural inefficiencies of intermediaries in the 
food supply chain could contribute to asymmetrical price transmission, price rigidity 
and unfair contractual conditions being imposed on primary producers19. Moreover, 
insufficient  protection  of  branded  product  innovations  against  unfair  practices  such 
as slavish imitation could sap innovation in this sector. 

Although certain national laws on unfair contractual terms between enterprises exist, 
they vary widely between Member States, which can lead to barriers fragmenting the 
internal market, distorting competition or increasing the risk of circumvention. In any 
event,  the  effectiveness  of  such  rules  is  often  curbed  by  the  fear  of  retaliatory 
measures  if  infringements  are  reported.  Relations  between  parties  in  the  supply 

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Communication  from  the  Commission  to  the  European  Parliament,  the  Council,  the  European 
Economic  and  Social  Committee  and  the  Committee  of  the  Regions  –  Food  prices  in  Europe 
(COM(2008) 0821 final). 

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chain, which can sometimes be unfair and unjust, are a policy problem for which the 
work of the Food Supply Chain Forum seeks to bring a first response20 .  

Another important tool is the continued application of competition rules against anti-
competitive practices which may affect the smooth functioning of the supply chain – 
to  the  detriment  of  consumers  –  and  ensure  fair  competition  conditions  for  all 
economic operators in the retail sector. 

Secondly,  even  though  the  growth  of  quality  control  schemes  and  in  particular 
accounting  for  social  and  environmental  performance,  is  to  be  welcomed,  small 
companies  in  particular  cannot  always  afford  to  apply  them  due  to  their  often 
national  coverage,  their  proliferation,  the  lack  of  transparent  and  comparable 
information about them and their relatively high implementation costs. The absence 
of  an  independent  frame  of  reference  for  such  quality  control  schemes  that  would 
result  in  greater  transparency  and  comparison  across  them  whether  for  products 
and/or services, in particular their environmental and social criteria, are therefore key 
hindrances to achieving the potential of the internal market for retail services. 

7. 

MORE EFFICIENT AND FAIRER RETAIL SERVICES FOR EMPLOYEES IN THE INTERNAL 
MARKET 

An internal market in retail services which is more efficient and fairer for employees 
must help to improve both working conditions and productivity. As well as being one 
of the EU’s main employers, the retail sector is often the entry point into the labour 
market for many young (30% of employees are under 30 years of age), low-skilled or 
unskilled people. The retail sector also relies heavily on part-time work (30% of its 
workforce) and is also the sector with the highest proportion of female employment 
(60%)21.  Nevertheless,  the  analysis  shows  that  a  more  efficient  and  fairer  retail 
market is still sought by employees, for four main reasons. 

Firstly, despite the minimum standards laid down in European law, labour law differs 
widely  between  Member  States.  These  variations  are  compounded  within  Member 
States by sectoral collective agreements that can differ by type of shop, sub-sector of 
retail services or number and category of workers employed. This has led to different 
economic models in the retail sector. New entrants have often to adapt their existing 
business model to be able to compete with incumbents. The fierce price competition 
that  tends  to  prevail  in  the  retail  sector  implies  that  wage  costs  often  come  under 
pressure,  and  working  hours  are  often  difficult  to  reconcile  with  family  life. 
However,  certain  retailers  take  a  competitive  stance  by  offering  good  working 
conditions, constructive social  dialogue and training so  that their staff remain loyal 
and effective in customer relations.  

The second problem is linked to the informal economy which, although difficult to 
gauge, has a negative impact on working conditions in the retail sector, in particular 
in  small  and  micro-enterprises,  where  effective  enforcement  of  legislation  and 
collective agreements is more  difficult. While it is legitimate to want to reduce red 

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Pursuant  to  the  proposal  made  in  the  Communication  on  “A  better  functioning  food  supply  chain  in 
Europe” (COM(2009) 591 final). 
Eurostat, Labour Force Survey 2007. 

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tape for small firms of this kind, it is also vital to ensure that they do not cut corners 
on working conditions, in particular as far as health and safety are concerned.  

Thirdly,  given  the  diversity  of  working  conditions  in  the  retail  sector,  it  is  often 
difficult for consumers to know about the social responsibility of particular retailers 
and thus to make an informed choice about where to shop. 

Finally,  whilst  the  retail  sector’s  ability  to  absorb  low-skilled  workers  is  often 
emphasised  as  a  positive  characteristic,  the  associated  down-side  is  that  it  may  be 
more  difficult  for  this  sector  to  quickly  adopt  new  technologies.  The  lack  of  ICT 
skills  undermines  the  sector’s  productivity.  The  high  proportion  of  SMEs  in  this 
sector renders it difficult for it to invest sufficiently in continuous vocational training. 

Improving  working  conditions,  combating  the  informal  economy  and  maintaining 
employment levels and competitiveness by better matching the needs of retailers and 
the skills of workers are therefore major challenges.  

8. 

MORE EFFICIENT AND FAIRER RETAIL SERVICES FOR FUTURE GENERATIONS IN THE 
INTERNAL MARKET  

An  internal  market  in  retail  services  which  is  more  efficient  and  fairer  for  future 
generations  must  also  fully  account  for  its  environmental  impacts.  It  must  be  a 
gateway  to  the  offer  of  a  wide  range  of  more  environmentally-friendly  and/or  fair 
trade products, allowing "fair" firms, including those based in non-EU countries, to 
gain  access  to  the  internal  market.  It  must  also  be  based  on  lower  energy 
consumption  and  on  efficient  logistics  and  waste  collection  and  recycling  systems. 
Competition within the sector must not only be gauged on economic factors but also 
on social, ethical and environmental ones.  

The retail se tor has a significant environmental impact, as a result of both its day to 
day operations and the consumer travel that it generates. The retail sector requires a 
great deal of energy for shop lighting, refrigeration, heating/air conditioning, etc. It 
also  generates  and  recovers  significant  amounts  of  waste  (advertising  flyers, 
packaging,  food  waste,  electrical  and  electronic  products).  Insufficiencies  and 
differences  in  collection  and  recycling  systems  are  a  problem.  The  sector  also 
contributes considerably to the volume of commercial traffic. Most deliveries are still 
made by road, even though other forms of transport, such as inland waterways and 
rail, are starting to be used. Moreover, inefficient transport and delivery of goods in 
urban  areas  has  a  negative  impact  on  congestion,  pollution  and  quality  of  life.  The 
delivery of goods in urban areas is a major constraint on the sustainable development 
of  the  retail  sector.  In  line  with  the  principle  of  subsidiarity  and  the  respective 
competences of the European Union, the Member States as well as regional and local 
authorities,  the  Commission  will  examine  how  to  design  an  integrated  policy, 
encompassing  the  planning  of  urban  mobility  infrastructures,  including  the  use  of 
smart transport systems (ITS) and vehicles with innovative technology adapted to the 
needs and constraints of cities. 

Furthermore,  until  recently,  the  environmental impact  of  retail,  such  as  the  societal 
costs  generated  by  the  CO2  emissions  associated  with  logistics,  were  not  entirely 
incorporated into the sector’s costs. Certain retailers are now trying, at times thanks 
to  incentive  measures,  to  meet  some  of  the  afore-mentioned  goals  by  reducing  the 

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external  impact  of  their  activities.  The  lack  of  common  rules  and  a  European-level 
method  of analysing  the  lifecycle of  products  so  as  to  measure their environmental 
impact remains a problem. On this last point,  insufficient coordination at European 
level  of  national  initiatives  could  lead  to  the  risk  of  further  fragmentation  of  the 
internal market22. 

9. 

CONCLUSIONS AND NEXT STEPS  

This  report  has  identified,  on  the  basis  of  a  thorough  analysis  performed  by  the 
Commission in consultation with all the stakeholders in this area, a certain number of 
problems having – or likely to have – a direct impact on the performance of the retail 
sector,  from  an  economic,  social  or  environmental  point  of  view,  the  resolution  of 
which  could  help  the  sector  to  navigate  the  transition  towards  a  more  efficient  and 
fairer internal market in retail services.  

1)  The  following  problems  were  identified  as affecting – or having the potential to 
affect  –  the  performance  of  retailers  in  terms  of  accessibility  (lack  of  cohesion 
between  the  location  of  shops  compared  to  existing  home  locations  and  means  of 
transport)  for  all  EU  citizens  to  a  varied  range  of  competitive  retail  services 
respecting the requirements of sustainable development: 

– 
a  lack  of  efficiency  and  diversity  across  commercial  planning  rules  together 
with malfunctioning  of  the  commercial  property market have an adverse impact on 
where retailers choose to establish shops and accessibility for consumers; 

– 
insufficient  development  of  electronic  commerce  in  the  internal  market,  as  a 
result of a series of obstacles (cross-border postal services, means of payment, poorly 
functioning systems of redress, etc.);  

commercial 

underdevelopment  of 

– 
independent 
information  services  (for  example,  internet  price  comparison  sites,  including  cross-
border ones, or comparative tests of products and services) probably resulting from 
persisting  differences  across  national  consumer  protection  and  unfair  competition 
rules and from difficulties in comparing across quality control systems for goods and 
services and their respective environmental or social criteria. 

communications 

and 

2) The following problems have been identified as hampering, or likely to hamper, 
the  optimum  growth  of  operators,  in  particular  their  ability  to  invest  and  innovate 
with regard to the quality of products and services offered:  

– 
a lack of rules governing unfair commercial practices and contractual relations 
between the various parties in the supply chain and/or poor application of the rules 
where they do exist;  

a lack of transparency of quality control systems and associated difficulties in 

– 
their crossborder use. 

22 

The retail forum created by the European Commission in 2009 aims to reduce the ecological footprint 
and disseminate good environment practices in the retail supply chain. 

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3)  The  following  problems  have  been  identified  as  affecting  working  conditions, 
labour productivity, employment levels and competiveness in the retail sector: 

differences  in  working  conditions  caused  by  differences  in  labour  law  and 

– 
collective agreements applicable to retail services;  

– 

the negative impact of the informal economy on working conditions;  

a  lack  of  consumer  information  on  the  social  responsibility  of  retail  service 

– 
companies; 

a  mismatch  between  the  skills  needs  of  companies  and  those  of  staff  in  the 

– 
retail sector. 

4) The following problems have been identified as having the potential to impede the 
transition to a more sustainable retail sector:  

high energy consumption, considerable levels of waste production, significant 

– 
contribution to commercial traffic flows and congestion in urban areas; 

insufficient  consideration  of  environmental  costs  in  the  retail  supply  chain 
– 
(logistics,  energy  efficiency  of  shops,  marketing  and  communications,  etc.),  in 
particular where sufficient incentives are not made available; 

lack  of  a  common  life-cycle  methodology  for  evaluating  the  environmental 

– 
impact of products and services sold. 

Measures  to  respond  appropriately  to  these  problems  and  European  policies  which 
could  be  launched  as  a  consequence  will  be  presented  in  the  Commission 
Communication on relaunching the internal market, planned for the autumn of 2010. 
Given the horizontal nature of the retail sector, any resulting measures will take the 
fullest  account  possible  –  in  their  design,  in  the  consultative/negotiation  processes 
that  will  be  used  for  their  adoption  and  in  their  subsequent  application  –  of  all  the 
various objectives of the Treaties, while fully respecting the principles of subsidiarity 
and proportionality. 

The Commission calls on all interested parties to submit their responses to this report 
by 10 September 2010, to the following address: 

Internal Market and Services DG 
European Commission 
200, rue de la Loi 

1049 Brussels 

or by email to MARKT-RETAIL@ec.europa.eu 

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