Retail Under Pressure: Environmental Requirements and Inflation Form New Challenges
Boedapest, woensdag, 11 juni 2025.
The European retail sector faces complex challenges with strict CO2 emission rules for vehicles and ongoing inflationary pressures. Trade organisations report that retailers are struggling to limit the impact of regulations and price increases without burdening consumers. Notably, the sector is succeeding in protecting consumer prices through sharp competition between large retail chains and continuous negotiations with suppliers. The challenge lies primarily in finding a balance between profitability, compliance with environmental regulations, and maintaining affordable prices for consumers.
European Retail Confronted with Environmental Regulation
The European retail sector faces challenging transitions, particularly in the automotive sector, where new CO2 emission rules are bringing about radical changes [3]. From 2025, the permitted average CO2 emissions for passenger cars in the EU will drop to 93.6 g/km, and in 2030 to as low as 49.5 g/km [3]. Exceeding these emission targets can result in fines for car manufacturers that could reach up to 20 billion euros [3].
Inflation and Price Pressure
Consumers are facing persistent price pressures. In May 2025, consumer prices were on average 4.4% higher than the previous year [2]. Notably, there were price increases in specific products: eggs rose by 26.0%, cooking oil by 25.3%, and flour by 25.0% [2]. However, the retail sector is managing to partially mitigate this price pressure through sharp competition between retail chains [1].
Retail Strategies
Traders are attempting to dampen the impact of regulations and price increases without directly raising consumer prices [1]. Data shows that the largest retail chains are competing fiercely with each other, allowing them to resist supplier pressure. They continuously negotiate to secure more favourable purchase prices [1].
Electric Vehicles and Market Developments
The electric vehicle market shows interesting dynamics. Currently, 46% of European buyers indicate they want to purchase an electric vehicle, with conditions including a range of at least 460 km and reliable charging infrastructure [3]. Manufacturers are currently focusing primarily on the premium segment, while affordable alternatives remain scarce [3].