Something does not add up in Italian retail balance sheets. Revenue is rising, nominal sales are growing, yet margins are retreating slowly, almost imperceptibly. By the time they become visible in annual results, recovery is already difficult.

The explanation is not in a single factor. It lies in the combination of three simultaneous pressures: procurement costs rising, consumer prices unable to follow, and domestic demand stagnating in real terms. Three forces that compound and compress margins from different sides.

Growth that cannot be felt.

Italian retail sales grow +3.7% year-on-year in March 2026 (Istat). But inflation over the same period is 2.9% (HICP). Real volume growth is close to one percent. Italian GDP grew 0.5% in 2025, with a forecast of +0.6% for 2026 (Trading Economics). Household consumption will grow less than 0.6% annually in nominal terms: below inflation.

The Italian consumer in 2026 has become far more selective. Confidence fell to 90.8 points in April, a three-year low, with the economic climate sub-index collapsing to 82.7 and the future climate to 82.5 (Istat press release, 29 April 2026). Non-urgent purchases are being postponed. The promotional pressure required to move volumes further erodes the margin.

Contractual wages grew +2.4% year-on-year in March 2026 (Istat), below inflation. Households have less real purchasing power than a year ago and act accordingly: lighter baskets, more selective purchases, and greater use of price comparison tools, which have grown from 3% to 6.1% as a product discovery channel (Casaleggio Associati, 2025).

The real problem: costs rise faster than prices.

Italian producer prices are growing +4.2% year-on-year in March 2026, with peaks expected at +9.0% in June (Trading Economics). The CPI is at 2.9%. The gap of over one percentage point cannot be recovered in the short term without losing customers.

Container freight rates on the Shanghai-Genoa route showed extreme volatility in 2024-2025: after the Red Sea crisis they partially normalised, but in March 2026 a new weekly spike of +12% was recorded (Drewry World Container Index via Geagency), driven by US tariff tensions. The US-EU agreement of July 2025 set a base rate of 15% on European goods entering the United States: for footwear and fashion, which already faced high tariffs, the impact is direct.

Currency risk adds a further layer. Buying in dollars or yuan without hedging means that every weakening of the euro amplifies procurement costs without appearing on the supplier’s price list. For many Italian SMEs, this is an invisible cost that erodes margin as effectively as an explicit price increase.

The squeeze is not temporary. It is structural. And it widens in silence because procurement cost is monitored per order, not as a structural trend over time. The effect of product mix on average unit cost is not tracked. Currency risk is managed, when managed at all, as a topic separate from purchasing policy.

E-commerce. The myth of the high-margin channel.

Italian B2C ecommerce exceeds 62 billion euros in 2025, growing +6% (Netcomm-Polimi). The figure is solid. But almost half of that growth, around 3 points out of 6, is inflation, not new customers (Casaleggio Associati). Product ecommerce exceeds 40 billion euros, with online penetration of product retail at 11.2%. For consumer electronics, that penetration reaches 43%.

There is a persistent misconception about ecommerce: that it is a higher-margin channel than physical retail, because it eliminates rent and store staff costs. On paper that is true. In practice in 2025, it no longer is. The gross margin of a product ecommerce typically sits between 25% and 40%, but the net margin, after logistics, digital marketing, return management and platform commissions, oscillates between 5% and 12% (2025-2026 sector analyses). Similar to a well-managed physical retailer, but with a far less predictable cost structure.

The three silent eroders.

Customer acquisition cost is the first. Digital advertising absorbs an average of 30% of the marketing budget of Italian ecommerce businesses (Casaleggio Associati). CPMs and CPCs continue to rise while conversion rates remain stable or declining. Marketplaces went from +55% growth in 2023 to just +1% in 2024: the market cooled faster than most expected.

The return rate is the second. In online fashion, where digital penetration exceeds 20%, returns average 20-30% of orders (Shopify, 2025). Every return has a cost: collection, inspection, restocking or write-down. A sixth of global returns in 2024 were fraudulent, worth an estimated 100 billion dollars. For Italian mid-market ecommerce businesses, reverse logistics is not yet optimised and represents a hidden cost eroding between 2 and 5 gross margin points.

Platform commissions are the third. 53% of Italian ecommerce businesses sell on at least one marketplace (Casaleggio Associati). Amazon, first choice for 40% of operators, charges commissions of 7-15% depending on category. Add payment gateway costs (1.4-3.4% per transaction) and fulfilment fees. The direct channel is more profitable in absolute terms, but requires marketing and loyalty investments that most SMEs cannot sustain alone.

The online channel does not solve the squeeze: it relocates it.

Opening an ecommerce channel is not the way out of margin pressure in physical retail. It changes the cost structure, it does not reduce it. Baskets are getting lighter: purchases become more frequent but more selective (Netcomm-Polimi). Three profiles dominate the Italian market: the price-sensitive consumer, the second-hand oriented consumer, and the experiential consumer. The first two erode margins structurally.

The most telling data point comes from Casaleggio Associati: among priorities declared for 2025, only 23% of Italian ecommerce operators cite ‘improving margins’ as a primary objective. 64% want to grow revenue. Margin comes after. Which explains a great deal.

A market of 91,000 active businesses (Netcomm/Cribis, 2025), where nearly half of nominal growth is inflation, is a market where revenue is no longer a reliable indicator of economic health. The only indicator that matters is margin. And margin, in ecommerce as in physical retail, is being compressed.

The problem is not growth. It is who is truly growing, and who is growing only in revenue.

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