Rewritten Article:
Slowing Down the Holiday Spirt: Retailers in Northern Germany
There's a less than festive vibe among retailers in Hamburg, Schleswig-Holstein, and Mecklenburg-Western Pomerania this pre-Christmas season. Despite a predicted small increase in nominal sales for November and December, the Handelsverband Nord anticipates a decline in real sales due to inflation, according to Managing Director Dierk Böckenholt.
Christmas cheer may be in short supply as half of non-food companies expect sales to drop or decrease significantly compared to the previous year. The retail sector is grappling with the economic repercussions of the war in Ukraine and subsequent inflation, as well as the most recent decline in consumer sentiment due to Middle Eastern conflicts.
As reported by Handelsblatt Research Institute for the German Retail Association, the average German consumer plans to spend €295 on Christmas gifts this year. A quarter of the surveyed individuals intend to spend above €300 on holiday presents. Popular gift categories include gift cards, cosmetics, personal care products, books, stationery, watches and jewelry, toys, consumer electronics, and clothing. The trade association highlights that the Christmas shopping season is the retail sector's strongest period, generating almost 20% of brick-and-mortar retailers' and over 25% of online retailers' annual sales.
Regrettably, retail closures continue across Germany, with nearly 9,000 stores shutting their doors within the past year. In the northern states, approximately 600 to 700 stores have closed, according to Böckenholt. The retail closure trend is expected to persist due to high stock levels putting a strain on some companies' liquidity and the lack of skilled workers.
The labor market shortage poses further challenges, potentially leading to shorter store hours, which would negatively impact city center locations. Many sales associates have left the sector to pursue opportunities in other areas, citing less attractive salaries as a contributing factor.
The Handelsverband Nord forecasts sales of €24.88 billion for Schleswig-Holstein, a 3.4% increase for the year as a whole. Hamburg's projected sales total €16.99 billion for a 2.4% upswing, while Mecklenburg-Western Pomerania anticipates sales of €11.09 billion, a rise of 4.6%.
Faced with modestly positive forecasts for the retail sector during the holiday season, many non-food companies anticipate a sales decline compared to the same period last year.
Enrichment Insights:
According to industry reports, the retail sector's overall picture for the holiday season shows both positive and cautious trends:
- Strong sales in the grocery sector, particularly at Lidl, Aldi, Ocado, and Booths.
- Significant online sales growth as consumers shopped from home during the festive season.
- The health and beauty sector performing well, with average sales increasing by 2.9%.
- A continued need for retailers to adapt to cautious consumer sentiment and stimulate demand within an uncertain economic environment.
- Inflation and economic uncertainty are still present, with the ECB indicating that inflation will persist in the UK and Euro area.
- The gift card market in Germany remains strong, providing retailers with an opportunity to boost customer acquisition, engagement, and loyalty during peak shopping seasons.
Sources: [1] [2] [3] [4] [5]
