• More than half of businesses foresee a decline on the year
  • High inflation, global conflicts hurting consumer sentiment

More than half of Germany’s retailers in the non-food sector are expecting weaker sales during the key Christmas period due to the negative impact of geopolitical upheaval on consumer sentiment, according to a survey by the HDE trade association.

HDE President Alexander von Preen cited Russia’s war on Ukraine — and the resulting energy-related surge in inflation — and the Israel-Hamas conflict as factors weighing on household spending, and said persistently high rental prices are also hurting retailers.

“The times when retail companies could pay top rents are over,” von Preen said Monday at a presentation in Berlin. Expensive power bills are also a problem, he added, calling for cheaper electricity for all companies rather than only for some “privileged” sectors.

The lobby association expects nominal sales growth of 1.5% for November and December — a drop of 5.5% after taking the annual increase in consumer prices into account.

For the full year, including the food sector, it confirmed its prediction for sales to increase by some 3% to about €650 billion ($695 billion) — a decline of 4% after factoring in inflation.

The job situation in the German retail sector — which employs about 3 million people — remains stable, von Preen said.

Written by: @Bloomberg.com