Driven by online retail: HDE expects record Christmas business

Driven by online trading
HDE expects record Christmas business

According to the German Trade Association, high savings and good consumer sentiment point to a conciliatory end to the year. For the upcoming Christmas business, an increase in sales of two percent compared to the previous year is possible – despite various delivery bottlenecks.

Corona crisis, delivery problems, high inflation – despite these risks, German retailers are expecting record sales in the current Christmas business. Revenues in November and December should increase by two percent compared to the same period of the previous year to just under 112 billion euros, as the German Retail Association (HDE) predicted. “The high savings and the good consumer mood set the course for a conciliatory end to the year after a first half-year that threatened the existence of many retailers with the lockdowns,” said HDE Managing Director Stefan Genth in Berlin.

The Christmas business is driven by online retail, which is expected to grow by 17.3 percent to 23.1 billion euros. The association also sees dangers for a successful year-end spurt. “It all depends on how the pandemic unfolds and what measures it takes,” said Genth. The trade will use its tried and tested hygiene concepts, maintain the mask requirement and try to convince more people to have a corona vaccination. The nationwide seven-day incidence of positive tests has risen above the threshold of 200 for the first time. Despite this record number, Genth warns of a lockdown with renewed forced closings of shops. “Nobody can afford that anymore,” he said. “The effects would be serious.” Safe shopping in the pandemic is possible. The stores are not corona hotspots.

Most German retailers expect negative consequences for their Christmas business due to delivery bottlenecks for microchips and other products. Around three quarters of the companies surveyed report delivery bottlenecks that could have an impact on sales, according to the HDE. According to this, every fifth retailer assumes that the material shortages are likely to have a “significant” effect on their sales. About 57 percent expect that there will be a “small amount” of losses. Around 24 percent do not see any negative consequences. Retailers of entertainment electronics and electrical household appliances in particular fear that the shortage could affect their Christmas business.

When it comes to sporting goods, furniture and toys, too, an above-average number of shops expect clear skid marks. “It’s not going to lead to empty shelves,” said Genth, warning against scare tactics. Individual products such as certain game consoles could be affected. “Yes, there are bottlenecks,” Genth admitted. “There are a few gaps.” But that has happened earlier here and there for particularly popular or new products. “We had that again and again in previous years,” said Genth.

Germans want to spend 237 euros on gifts

There are currently shortages in semiconductors, for example, which are used in many products and are currently in short supply worldwide. The Japanese entertainment company Nintendo, for example, just had to lower its production target for the Switch game console due to the shortage of chips and electronic components.

High inflation could also dampen German consumers’ appetite for Christmas shopping. At 4.5 percent, the inflation rate is currently higher than it has been since 1993, because more has to be paid for energy in particular. “After the Corona lockdowns in the first half of the year, the last two months are more important than ever for many retailers,” said Genth. “Traditionally, classic gift industries such as the toy trade make more than a fifth of their annual turnover in November and December.”

An HDE survey of 450 companies from all industries, size classes and locations shows that 45 percent of retailers expect sales increases compared to the previous year. A third calculated with stable sales. With an average of EUR 273 per person, customers want to slightly increase their spending on Christmas gifts compared to the previous year. Gift vouchers remain the most popular gift. For the full year 2021, the HDE expects a sales increase of 1.5 percent to around 586 billion euros. The online business is expected to grow by almost a fifth to a good 87 billion euros.

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