Struggling Retail Sales in Norther Germany: A Challenging Christmas Season
The retail sector in Hamburg, Schleswig-Holstein, and Mecklenburg-Western Pomerania is experiencing a tough haul this holiday season, as per the Northern Trade Association (Handelsverband Nord). The primary culprit? A dismal consumer sentiment, marked by inflation and unease due to war and global crises, as reported by Managing Director, Mareike Petersen.
A week before the first Advent, consumer sentiment showed signs of improvement, but over half of the surveyed companies remained unsatisfied with their sales, especially in the fashion and footwear sector. Traditional holiday favorites, such as vouchers, toys, books, cosmetics, and cash, continued to make an appearance on shopping lists.
By the second week of Advent, the retail sector saw a significant drop in footfall, particularly in city centers. No notable variations were observed between the three federal states. Feedback from retailers surveyed by the German Retail Association revealed that only 15% remained satisfied with their overall Christmas business up until the second week.
The Handelsverband Nord anticipates a nominal increase of around 1.0% in Christmas sales for Schleswig-Holstein but a real (price-adjusted) decrease of approximately 6.0%. For Mecklenburg-Western Pomerania, a nominal growth of 2.5% is expected along with a real decline of 4.5%. In contrast, Hamburg's projection remains flat at 0.0%, with a projected price-adjusted decrease of around -7.0%. The online retail sector has thus far managed to hold steady in nominal sales but has seen a real-terms decline of around -4.0%.
Additional Insights:
- In response to the tough retail environment, many businesses are offering generous discounts during the holiday season to attract customers.
- Over two-thirds of retailers in Hamburg's region are grappling with high inflation and uncertainties affecting their Christmas business.
- Various trade associations nationwide, including Hamburg, are championing local heavy industries and their products to aid retail businesses during the holiday season.
- Despite the lackluster Christmas business in Mecklenburg-Vorpommern, some retailers have reported an uptick in sales of traditional German handcrafted goods, providing a glimmer of hope for the region's economy.
Regardless of the predicted sales growth or real decline across the aforementioned federal states, the retail sector remains resilient, adapting to the ever-changing consumer preferences and market dynamics. The ability of retailers to innovate, adapt and offer customers value will undoubtedly be key to navigating these challenging times.
