Consumers in the mood to buy again
Retailers are pleased with the increase in sales
April 30, 2024, 2:56 p.m
Retailers are assessing their situation better and are recently making more sales. The IFO Institute even sees them as supporting the overall economy this year. The food retail sector in particular is recording a considerable increase.
Things are looking up a bit in German retail. The mood in the industry improved in April, as the Munich IFO Institute announced. In addition The Federal Statistical Office reported increasing sales in March. Adjusted for price and seasonal effects, retailers sold 1.8 percent more than in February. Here economists only had an increase of 1.1 percent after a decline of 1.5 percent in February and 0.1 percent in January.
The Sentiment in retail raised by the IFO improved by three points to minus 14.5 in April. The current situation in particular was assessed more positively again and was only slightly negative.
Consumer sentiment is improving – but there is still room for improvement
“The recent increases in real incomes are stimulating consumption,” said IFO expert Patrick Höppner. “Consumers are spending more money again, which is also strengthening retail.” This also helps the economy: “The consumer-related sectors will probably provide support for the overall economy in 2024,” he expects.
This is also supported by the fact that the mood of German consumers is currently better than it has been in two years. The barometer for the consumer climate in May rose surprisingly significantly by 3.1 points to minus 24.2 points, as determined by GfK and the Nuremberg Institute for Market Decisions (NIM). This is the third increase in a row. However, consumer sentiment is still underwhelming: NIM expert Rolf Bürkl points out that the barometer is still at an extremely low level.
Dealers are happy about higher demand
According to the IFO, the situation has recently improved particularly significantly at hardware stores, DIY stores and clothing retailers. In both cases, the proportion of companies complaining about low demand fell by more than 30 percentage points from the fourth quarter of 2023 to the first quarter of 2024.
According to the Federal Statistical Office, food business was particularly good in March. There it was up by 3.6 percent in real terms compared to February and by 4.1 percent in price-adjusted terms compared to the same month last year. The authority recorded a decline of 0.2 percent in non-food items for this period compared to the previous month and 1.7 percent compared to the same month last year. Internet and mail order sales recorded a real sales increase of 3.3 percent. The chances are not bad that the upward trend will continue.
At the same time, the shortage of skilled workers has eased somewhat. A third of retailers still have difficulty finding skilled workers. In the fourth quarter, however, it was still just under 43 percent, said the Munich economic researchers. The shortage is particularly high in the car trade as well as in the areas of electrical engineering and electronic household appliances.