Digital commerce: A growth opportunity for Greece

| Report

At a glance

  • Greek businesses are less productive than their EU peers. Greece’s gap in productivity with Europe is much wider among the smallest businesses (3.8 times) than among the largest businesses (1.4 times).1 Within Greece, the productivity gap between larger and smaller businesses is much wider (5.8 times) than the respective gap within Europe (2.0 times). Digital-driven growth is critical to closing this gap.
  • Despite progress in the past few years, Greece still has significant room to grow in its digitization journey. The country ranks 22nd in digitization among the EU-27, as measured by the Digital Macroeconomic Index.2
  • Greece has recently improved its performance in key digitization indicators. The digitization of interactions between the public and the state shows that public institutions are gradually digitizing, and the country’s significant deployment of EU-provided funds in support of digital objectives demonstrates a strong momentum. Greece appears well positioned to further improve its digital standing.
  • The economic sectors that would benefit most from increased digital commerce maturity are retail and hospitality. Assuming the right levers are pulled, Greece could increase the gross value added (GVA) of the retail and hospitality sectors by more than 20 percent each—approximately €1.6 billion and €3.0 billion, respectively.
  • Retail and hospitality businesses that adopt digital-commerce solutions could materially increase their profitability. Moving from having no online presence to an intermediate level of e-commerce maturity could increase the EBIT margin of a small retail or hospitality business by up to 11 percentage points and 13 percentage points respectively. The potential increase depends on the business’s starting digital maturity.
  • Realizing this opportunity would require coordinated action by companies, the state, and society. Efforts could be considered within four areas: building skills, building trust, building awareness, and providing incentives for and capturing digital commerce’s potential to drive growth.

Digital commerce is widely considered a catalyst for economic development. Many countries around the world are experiencing its benefits, including higher consumer satisfaction, increased productivity, and stronger economic growth. In Greece, digital commerce is growing but uptake still lags behind peer countries in Europe and elsewhere.

In the wake of the financial and COVID-19 crises, analysis shows the Greek economy has rebounded and the country’s economic outlook appears to be stronger, as evidenced by a series of upgrades to government bond ratings. And because digital commerce could be a central contributor to Greece’s economic growth, we conducted a study to explore how Greek companies and the state could help spur its development.

Our study indicates that the development of digital commerce has the potential to help specific sectors grow their gross value added (GVA) by more than 20 percent. As indicated by recent improvements in the country’s digital maturity, Greek companies and public institutions have the capacity to develop the necessary tools and use digital commerce to create an engine for economic growth.

We begin this report with a review of Greece’s competitiveness and digital maturity in the European context. We then outline three digitization levers (digitizing commerce, digitizing assets, and digitizing work) and assess how they could be deployed to power economic growth. Following this, we analyze Greece’s competitiveness relative to its European peers at a more granular level, examining the structure and digital commerce maturity of retail and hospitality, which are the economic sectors that digital commerce can best serve as a catalyst for growth (Exhibit 1).

Greece can boost its digital macroeconomy by shifting its level of digital commerce maturity in the next three to five years.

Narrowing our focus, we illustrate how increasing the maturity of digital commerce in these two sectors—retail and hospitality—can generate significant value for the economy. Our analysis indicates that moving to the target digital-commerce maturity level could generate €1.6 billion in retail (Exhibit 2) and €3.0 billion in hospitality (Exhibit 3).

Greek retail could achieve sizable growth in gross value added—an estimated 20 percent or more, mostly from large businesses.
The hospitality sector could realize growth of 20 percent or more in gross value added from a mix of large, medium, and small businesses.

Finally, we identify best practices and ways in which institutional stakeholders and the state could help establish a supportive environment for the development of digital commerce and the digital economy overall.

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