HDE does not expect Christmas sales to be jubilant
Christmas is the most important time of the year for retailers. However, the industry association is not expecting a firework display of sales this year. The high cost of living is weighing too heavily on consumers and the crises are dampening the mood.
The traditionally important Christmas business could cause long faces in the German retail sector this year. In times of an economic slump and inflation, the industry association HDE expects sales of only 120.8 billion euros for the months of November and December. This would be a nominal increase of 1.5 percent; if increased prices are excluded, this would be a real decrease of 5.5 percent, according to the HDE. "The sector is feeling the economic effects of the war in Ukraine and the subsequent inflation, as well as the recent further decline in consumer sentiment as a result of the conflict in the Middle East," said HDE President Alexander von Preen. Due to the deadlocked wage dispute, companies are also worried about strikes in the coming weeks.
Christmas business is immensely important for many sectors. The toy trade, for example, generates almost a quarter of its total annual turnover in November and December. The same applies to watches and jewelry. Non-food retailers in particular are looking to the future with disillusionment: a good half of these companies expect sales to be poor or significantly worse than a year ago.
Online retail is also unlikely to provide much impetus. According to the HDE, it will be possible to maintain the nominal sales of 2022 in both the Christmas business and the year as a whole, but in real terms this means a drop of four percent for the Christmas business. For 2023, this corresponds to a real decline of 4.3% online. For the retail sector as a whole - stores and e-commerce - the association is sticking to its autumn forecast. According to this, sales are likely to increase by three percent in nominal terms to 650 billion euros, but fall by four percent in price-adjusted terms.
An average of 250 to 300 euros for gifts
Despite the threat of recession, consumers are planning to spend an average of EUR 295 on Christmas gifts, according to a survey by the HRI Institute. More than a quarter of the over 2000 Germans surveyed plan to spend more than 300 euros. Compared to the previous year, more than half plan to keep their budget for Christmas presents stable or even increase it. Vouchers remain the most popular gift, ahead of toys, books and stationery.
According to consultancy firm EY, however, the majority of people in Germany want to save money on Christmas presents this year. 27 percent of adults want to spend less money than last year. A further 40 percent plan to make slight savings. According to EY, the average budget is 250 euros. Although this is only two euros less than last year, it is the lowest figure since 2014. High inflation also means that consumers are able to buy less with their money.
At the same time, the budget for buying gifts online is increasing: from 111 to 117 euros. According to EY, department stores and shopping centers in particular have to expect lower sales. On average, consumers only want to spend 44 euros there, compared to 53 euros in the previous year. "The pandemic has alienated many people from city centers and Christmas markets and turned them into online shoppers," explained Michael Renz from EY. "In addition, many are still working from home and shy away from shopping centers."
The HDE is hoping for an improvement next year in the wake of a general economic upturn. However, a concrete forecast is not expected until the beginning of 2024. HDE President Alexander von Preen hopes that people will then invest more in durable consumer goods again. This is because Germans initially spent noticeably more money on furniture and kitchens in times of coronavirus and working from home. However, these sales then fell significantly. Retailers are counting on a trend reversal here.
The German Retail Federation (HDE) attributed the anticipated decrease in Christmas sales to elevated living costs and consumer concerns caused by global crises. Retail trade associations expect a real decrease of 5.5% in sales for the holiday season, affecting sectors like toys and jewelry greatly.
Despite the looming economic recession, consumers in Germany planned to spend an average of €295 on Christmas gifts, with a quarter of survey respondents intending to spend over €300. On the other hand, a majority of Germans, according to consultancy firm EY, intended to spend less on gifts compared to the previous year due to high inflation.
Source: www.ntv.de
