The German retail sector is expected to experience a 4 per cent decline in sales income in real terms this year, according to the HDE retail association (the German Retail Federation Handelverband Deutschland – HDE).
This revision reflects the impact of persistent inflation and is a downgrade from the previously forecasted 3 per cent drop. While nominal revenue growth is anticipated to be 3 per cent, an improvement from the previous forecast of 2 per cent, the HDE warns that significantly higher costs for energy and goods, coupled with weak private consumption, have placed immense pressure on the retail trade during the first half of the year. HDE President Alexander von Preen acknowledges the challenging economic situation faced by retailers.
Overall, the challenging economic conditions and increased price sensitivity among consumers have led to a downward revision in sales forecasts for German retailers in 2023
The HDE conducted a survey of approximately 900 companies, revealing that 35 per cent of respondents expect sales to decline in the second half of the year. For the year as a whole, only one-third of retailers anticipate revenue growth.
Stefan Genth, the HDE’s secretary general, notes that a quarter of the population fears being unable to meet their financial needs. This apprehension has led to changes in consumer behavior, with individuals adapting to higher prices.
The survey also reveals substitution effects, as consumers opt for cheaper brands or pursue special offers.
The HDE highlights that 45 per cent of Germans have a net household income of less than 2,000 euros per month. This suggests that a considerable portion of the population faces financial constraints, contributing to the cautious spending patterns observed in the retail sector.
