German Retail Sales Experience Sharp Decline in 2023, Data Reveals

In price-adjusted terms, the sector witnessed a 3.3% decline compared to 2022 and a 3.9% decrease from 2021, a year marked by a surge in retail revenues.

The food sector was particularly affected, experiencing a 3.9% drop in sales compared to the previous year. Real non-food retail sales also saw a decline of 3.1%, marking the first time a decrease has occurred since 2013. Sales from online and mail-order retailers, which thrived during the pandemic, fell by 3.9% last year.

Even during the typically profitable Christmas season, retailers did not see a turnaround. December 2023 sales figures indicate a year-on-year drop of 1.7% and a month-on-month decrease of 1.6%.

Analysts attribute the poor performance of Germany's retail sector, the largest in the EU, to persistently high inflation.

A recent survey by the German Trade Association (HDE) revealed that only one in six retailers assessed the current business situation as “good.” Additionally, only one in five predicted that 2024 sales would surpass those of the previous year. Retailers identified various challenges, including consumers' reluctance to spend, rising energy costs, inflation, labor shortages, and disruptions in supply chains due to conflicts in Ukraine and the Middle East.

Despite the challenges, HDE anticipates a 1% growth in retail sales this year compared to 2023, as stated by vice president Alexander von Preen. He mentioned at a press briefing on Wednesday, "The current year will most likely be better for retail than the last," noting that positive signals for the industry persist, even if the purchasing power losses of the last two years cannot be fully compensated for.