Consumer sentiment - Retail: Christmas business significantly worse than 2022
Poor consumer sentiment, meagre sales: Retailers draw a negative balance at the end of the Christmas shopping season. "Unfortunately, business was significantly worse than in 2022 and did not provide much impetus," Stefan Genth, Managing Director of the German Retail Association (HDE), told the German Press Agency.
Two thirds of retailers are dissatisfied and complain about poorer sales than in the previous year, with only one in six expressing satisfaction. This is the result of a nationwide survey conducted by the association among more than 350 companies. Although Christmas business was already not good in 2022, Genth expects a price-adjusted decline of five to six percent. The HDE expects sales of around 120 billion euros in November and December 2023.
Genth believes that the main reason for the disappointing annual results is the massive consumer restraint. Recession, high inflation and wars had "triggered great uncertainty among consumers and had a very negative impact on consumer behavior". The retail sector also had to contend with a number of difficulties due to rising energy costs and higher purchase prices.
However, Genth also sees rays of hope. Sundays open for business were well received in major cities. Business was particularly good in sports retail. "People are inclined to do something for themselves. This trend from the coronavirus period has now been confirmed once again," says Genth. Retailers in the clothing sector were less satisfied. The sector was unable to achieve the usual sales and was particularly affected by the uncertainty among the population.
Business on the internet was also disappointing. According to the German E-Commerce and Distance Selling Trade Association (bevh), online retailers were barely able to benefit from Christmas business. Nevertheless, the trade association is satisfied with the development: Genth sees a sideways movement at a high level. Sales are 40 percent higher than in 2019, and many small and medium-sized stores have now also discovered online business for themselves.
Despite the disappointing annual results, the retail sector is looking to 2024 with cautiously optimistic expectations. The labour market is having a stabilizing effect and inflation is falling significantly. "These are good conditions for people to become more confident and optimistic again and for consumer sentiment to improve," says Genth. This could also increase the tendency to make higher-priced purchases again.
Nevertheless, retailers will once again have to contend with challenges in the new year. Genth points to the negative effects of the wars in Ukraine and the Middle East. In addition, many retailers are affected by delivery difficulties and labor shortages. According to the report, more than 100,000 jobs are unfilled in the retail sector.
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Source: www.stern.de
