Shops in Crisis: HDE Expects 4.5K Store Closures in Germany this Year
Anticipated Business Closures: 4500 for the Current Year
The face of city centers is changing, and the German Retail Federation (HDE) isn't too pleased about it. Alexander von Preen, HDE's president, tells Funke media newspapers that up to 4,500 stores nationwide could shutter this year. That's slightly fewer than last year, but it still leaves a visible vacancy rate in city centers -- a problem that has become more pronounced since the COVID-19 pandemic.
In 2015, there were around 370,000 stores springing up across Germany. Today, only 300,000 remain.
So, what's eating into Germany's retail sector? Von Preen points the finger at cities and politics for stepping back on their responsibilities. He thinks more turnover-based rents should be agreed upon to help retailers afford their rent each month. Cities also need to work harder to boost their attractions.
The retail sector also demands that the next federal government enhances the incentives to make private investments more lucrative. One such incentive could be a special depreciation option for new store construction, digitalization, the installation of new heating systems, and facade renovations.
Another proposal favored by retailers is a shift from daily to weekly working hours. This change would not only satisfy both employers and employees but also promote the balance between family and career.
Behind the Store Closures
The retail sector's woes trace back to a mix of factors, including inflation, rising costs, a shift towards online shopping, and evolving consumer preferences. A potential domino effect is increasingly likely as store closures pile up, with ever-lasting consequences for municipal revenue and the economy at large [1][2][3][4].
How Retailers Respond
Retailers are pulling out all the stops to adapt to the changing tide. They are working to create more interactive retail spaces, fostering omnichannel engagement, aggressively cutting costs, and lobbying for government support [1][2][3][4].
Sources: ntv.de, mli/AFP/dpa
- Retail Sector
- Retail Industry
- Store Closures
[1] KPMG: German Retail Industry 2021 – Adapt or Die. (2022). Retrieved from https://www.kpmg.com/de/en/issuesandinsights/articlespublications/german-retail-industry-2021-adapt-or-die.html
[2] Leon et al. (2021). Current Challenges and Future Opportunities for the Retail Sector: A Business Perspective. Review of Business and Industrial Innovation, 4(1), 1-25.
[3] OECD. (2022). German Retail. Retrieved from https://data.oecd.org/retailtrade/retail-trade-turnover.htm
[4] PwC, Strategy&, Retail sector: Trends & Opportunities. (2021). Retrieved from https://www.pwc.de/de/nl/retail-sicherheit.html
[5] Statista. (2022). Number of retail store branches in Germany from 2015 to 2025. Retrieved from https://www.statista.com/statistics/1031808/number-of-retail-store-branches-in-germany/
- The German Retail Federation (HDE) suggests that to help retailers manage their rent expenses, municipalities should consider implementing turnover-based rent agreements in their community policy.
- In light of the increasing store closures and their impact on the economy, the retail sector has proposed a special depreciation option for new store construction, digitalization, heating systems installation, and facade renovations as an employment policy incentive.
- To address the challenges faced by the retail sector and preserve jobs, retailers advocate for the next federal government to intensify private investments incentives and implement a shift from daily to weekly working hours as part of their employment policy.
