Number of Retailers: a Measure of Competition

Consistent with traditional economic theory, the number of retailers per million compared to national inflation rates reveals that in markets with greater market competition, prices tend to rise more slowly. Retailers in the food and the sport and leisure sectors, however, work with unique market dynamics that diverge from this relationship and require careful branding and market positioning to succeed.

• Malta, Iceland, and Luxembourg have the highest number of retail chains per million and report inflation rates that are among the lowest worldwide, according to data from the Veraart Research Group Retail-Index* and the IMF. 
• Other countries with relatively high levels of competition (more than 25 retail chains per million people) and low inflation (lower than 1.15 percent) are Denmark, Croatia, Finland, Ireland, the Slovak Republic. The fashion and clothing sector is the most highly represented in each of these countries and likewise accounts for roughly 20 percent of total retailers worldwide. Eurostat reports that in June the sector continued to report one of the lowest inflation rates among all retail sectors in the European Union.
• The high competition, low inflation relationship fails in other sectors, including food and sport and leisure. In the sport and leisure sector, a higher number of retailers actually correlates to higher levels of inflation. 

*Note: The number of retail chains includes only retailers with a minimum of 5 stores or at least a €3 million turnover.