BERLIN: German shoppers are tightening their purse strings this festive season, the HDE retail association warned today, forecasting a 4% slump in Christmas sales as high inflation and the energy crisis take their toll on consumer purchasing power.
It was one of the first forecasts from a major European economy for the festive period, which will be one of the toughest as households struggle with soaring energy and food bills.
According to the HDE’s survey of 500 companies, just over half expected this Christmas sales period in Germany to be worse than last year, while another 21% fear it would be considerably worse.
In nominal terms, sales are expected to rise by 5.4% year on year in the final two months of the year, the association said.
“Sales are only growing through inflation-driven price increases. This remains a difficult time for retail companies,” HDE managing director Stefan Genth said.
In October, German inflation climbed to 10.4%, its highest level in around seven decades.
The retail sector is emerging from two years beset by Covid-19 restrictions, including in December 2021 when fears of the newly emergent Omicron variant forced a pre-Christmas lockdown.
“Today, it is a different situation. This uncertainty in Europe with a war that is very close to us ensures that consumer sentiment is not good,” Genth said.
After two exceptionally strong years during the pandemic, online retail is seeing a normalisation in sales, with its first ever year-on-year decline in sales forecast by the HDE – a nominal 2022 decline of 2.3% or 7.2% in real terms.
The HDE saw silver linings for the 2022 Christmas period in a relatively stable job market and the fact that one fifth of consumers plan to spend more than €300 on presents, according to its survey of over 2,000 people.
Many European retailers have fought to keep prices low in a bid to lure cash-strapped shoppers, with Dutch grocer Ahold Delhaize and Primark owner Associated British Foods among those seeing a boost in sales.
With Black Friday approaching on Nov 25, shoppers could rush for discounts.
However, Genth warned that German retailers might not have the luxury of offering discounts due to economic difficulties.
“In retail, we have absolutely nothing to give away these days because the costs are rising for us just as much,” he said.
Source: https://www.freemalaysiatoday.com/category/business/2022/11/10/inflation-dampens-festive-spirit-as-german-retail-faces-slump/