Gastronomy is also under pressure
There is a risk of bankruptcies in retail due to inflation
By Christina Lohner
06/02/2023, 6:30 p.m
The buying mood of the Germans is in the basement. For some industries, this reluctance, combined with increased procurement costs, is becoming an existential threat.
As a result of high inflation, there is a risk of bankruptcies in retail. Trade expert Jörg Funder sees companies in danger that are aimed at the general public with their offer, as he explains in an interview with ntv.de. “Because this is the largest market, but also the most hotly contested,” says Funder, who heads the Institute for International Trade and Distribution Management at Worms University. A significant increase in company closures can already be observed in the medium-priced textile sector.
As a current example, he cites the insolvency of the fashion retailer Peek & Cloppenburg, which used to be in the high-price segment. The problem for retailers: Germans are reluctant to go shopping in view of the high level of inflation. “Unprofitable providers are then eliminated,” says Funder. According to the expert, suppliers of shoes and accessories are particularly struggling. “These are often small and medium-sized companies that will stop in the medium term,” reports the industry expert. Because of the lack of yield prospects, they would no longer be passed on to the next generation. “There’s still something ahead of us.”
The German Retail Association (HDE) fears that up to 9,000 shops will have to close this year, as a spokesman explained to ntv.de. Around 11,000 shops closed last year, partly as a result of the corona pandemic, according to the spokesman. But before the current crises, significantly fewer shops closed their doors forever, with an average of around 5,000.
“Big wave of consolidation in online retail”
Funder also expects a big wave of consolidation in digital retail. “Many companies across the board are dropping out there.” Increased transport and energy costs would accompany the slump in consumption. In addition, the professor expects increased closures in the catering industry. Restaurateurs are not only struggling with the blatant increase in food prices and higher energy costs, but also with a lack of service staff.
Because of the acute shortage of skilled workers in the industry, companies would have to pay higher salaries, which also drives up prices for customers, according to Funder – a vicious circle: If companies don’t pass on the increased own costs, they no longer make a profit. But if the schnitzel suddenly costs 30 instead of 19 euros, the guests go out to eat even less often. There are already a lack of customers anyway, because they spend less money and shop less often in the inner cities where there are many restaurants. “In this mixed situation, many restaurateurs are getting out,” says Funder. The industry has already been badly hit by the Corona crisis.
However, the expert clarifies that a structural adjustment is not fundamentally bad. Some closures are simply due to the fact that a company does not act at the cutting edge. “The customer decides with his feet,” says Funder. “The best offers survive and can then realign themselves.”
A general wave of insolvencies across many sectors is currently not to be expected. In a long-term comparison, the number of company bankruptcies in Germany is currently low. The credit insurer Allianz Trade predicted in April: “Even by the end of 2023, Germany is unlikely to have reached the level before the pandemic.”