German retail sector down in September ’24

The German retail sector faced a setback in September, with the ifo Business Climate index declining to -25.6 points, down from -23.1 points in August.

Retailers expressed a more negative assessment of their current situation and displayed increased pessimism about the upcoming months.

Patrick Höppner, an expert at ifo, noted that “consumers are unsettled about the economic policy environment,” leading to expectations of stagnant growth in private consumer spending for the remainder of 2024.

Specific segments within the retail industry reported varied experiences. Car dealerships and furniture retailers indicated a noticeably less favourable business environment, while sellers of clothing, furniture, and DIY products assessed their conditions as below the sector average.

In contrast, bicycle retailers, food vendors, and consumer electronics merchants reported improvements in their business situations.

Despite some pockets of growth, many retailers have adopted a more cautious approach regarding pricing and hiring. Fewer expect price increases, and there is a notable hesitance to expand the workforce.

Höppner remarked, “In a predominantly difficult business environment, retailers see fewer and fewer opportunities for price increases,” indicating that employment in the sector is likely to decline in the short term.

Additionally, many retailers are grappling with excess inventory and plan to reduce their merchandise orders moving forward, further reflecting the challenging conditions in the retail market.

Attribution: ifo

Subediting: M. S. Salama