The Germans’ purchasing mood is clouded: high inflation and global crises are causing uncertainty.Trade association boss Genth explains what this means for the economy.
The latest economic forecasts are likely to concern many business owners. The industrialized nations institution OECD, for example, sees Germany as bringing up the rear in terms of economic growth in the coming year. Read more about this here. And the German institutes are also making rather cautious noises. The ifo Institute is already expecting more short-time work and further job cuts.
In an interview with t-online, the managing director of the German Retail Association (HDE), Stefahn Genth, explains how the Christmas business has started so far, which trend products encourage people to buy and why he is optimistic about the year 2025 despite all the forecasts.
Stefan Genth: Only partially. Every summer I think to myself: I shoudl actually start doing it earlier this time. In the end it always ends up being november and December.
It’s more the other way around: people mainly come to the city center to shop and then also go to a Christmas market. But the great atmosphere there actually increases the desire to buy. Christmas markets create an emotional habitat that takes people out of their everyday lives.
Does that mean things are going well in stores right now?
It effectively works. Even if the weekends are busy: consumers are unsettled by inflation, high electricity prices and geopolitical crises. Therefore, overall purchasing behavior is cautious.
Nevertheless, your association expects a slight increase in sales of 1.3 percent in the Christmas business. How does that fit together?
This is certainly mainly due to the Advent weekends, which are traditionally strong. Our forecast shows: On average, people want to spend around 300 euros per person on gifts.And retail companies have sales of around 121 billion euros in the last two months of the year. Even outside of Christmas, we see stable sales development in retail.
Then where is the problem?
Companies’ demands for Christmas business are higher than what we are currently seeing. Many industries make a quarter of their annual turnover during this time. there would be a lot more possible, as the Germans are actually in an excellent position compared to other European countries. We have high incomes and assets. A lot of savings were made during the Corona period. But many people are unsure whether their job will be secure in the future and prefer to save money. This uneasy feeling inhibits consumption. One in two non-grocery retailers thus expects Christmas business to be worse than last year, as our surveys show.
Do you see any trends this year?
It was just Black Friday and Cyber Monday. Are these discount battles pushing back the Christmas business?
No, they are rather additional impulses. Consumer electronics is notably benefiting here, but other sectors are also getting involved. We expect sales of around 5.9 billion euros for the two days of the campaign, similar to last year.
Online retailers are of course benefiting,but stationary retail is also doing well. Only around 17 percent of the Christmas business in November and December takes place online: around 21.5 billion euros. Many consumers are flexible: they buy wherever it is convenient for them – online or offline.
What are the main factors contributing too the current economic challenges in Germany?
Interview: Economic outlook in Germany During Challenging Times
Time.news Editor: Welcome, everyone, to todayS interview. Today, we have a special guest, Stefan Genth, Managing Director of the German Retail Association (HDE). Stefan, thank you for joining us.
Stefan Genth: Thank you for having me.
Editor: Let’s dive right in. The current economic climate in Germany is quite challenging, with high inflation and global crises creating uncertainty. How would you describe the purchasing mood of Germans as we head into this holiday season?
Genth: It’s certainly a mixed picture. While I would say there is a buzz in the shopping districts, prompted by the festive atmosphere, the reality is that many consumers are feeling unsettled. High inflation, soaring electricity prices, and ongoing geopolitical tensions are causing them to adopt a more cautious purchasing behavior.
Editor: You mentioned the festive atmosphere in city centers. Do you think that events like Christmas markets influence people’s shopping habits this time of year?
Genth: Absolutely! Christmas markets create an emotional habitat,pulling people out of their everyday rhythms. They foster a unique atmosphere that can stimulate spending, but the underlying concerns about finances still weigh heavily on many consumers’ minds. It truly seems that while people visit these markets for enjoyment, they’re still careful about what they spend.
Editor: Recent forecasts suggest that Germany might lag behind other industrialized nations in terms of economic growth. The OECD has even predicted a slowdown. How does this perception affect retailers and the overall market?
Genth: Those forecasts are indeed concerning. They create a climate of uncertainty for business owners, and we’re already seeing some signs, such as the Ifo Institute’s predictions of increased short-time work and job cuts. Retailers are cautious, adjusting their strategies to navigate the fluctuating consumer confidence.
Editor: But despite this uncertainty, you’ve expressed some optimism about the year 2025. Can you elaborate on that?
Genth: Certainly! While the current landscape is challenging, I believe in the resilience of the German retail sector. Economic conditions—though tough now—can improve over time with the right policies and innovations in the market. We must adapt and find ways to inspire consumer confidence again. If we leverage trends that resonate with consumers, such as lasting products or local shopping, we could see a rebound sooner than later.
Editor: That’s an captivating point. Speaking of trends, are there any particular products or categories that are gaining traction among consumers right now?
Genth: Yes, absolutely! Many consumers are gravitating toward products that align with their values, especially those that promote sustainability. Items that embrace eco-amiable practices tend to encourage spending, as more people want to contribute positively to the environment even amid economic challenges.
Editor: As we wrap up, what would you say to retailers who are feeling the pressure from both economic forecasts and consumer behavior?
Genth: I would encourage them to stay agile. Understand your customer base, engage with them, and foster community around your brand. Create emotional connections, especially in challenging times; people want to feel good and purposeful in their purchases. The future can indeed be luminous, but it requires effort and understanding of the evolving landscape.
Editor: Thank you, Stefan, for sharing your insights on this crucial topic. It’s always a pleasure to hear from experts like you.
Genth: Thank you for having me. It’s crucial to foster discussion about these issues, and I appreciate the platform.
Editor: And thank you to our audience for joining us today.we hope this conversation has provided valuable insights into the current state of the German economy and what the future may hold. Until next time!