German retail sector records 3.3 pct sales drop in 2023

BERLIN -- Price-adjusted sales in the German retail sector fell by 3.3 percent year-on-year in 2023 amid a recession in the country, according to preliminary figures published by the Federal Statistical Office (Destatis) on Wednesday.

Compared to the record year 2021, turnover dropped by 3.9 percent, the figures show. In online and mail-order retail, sales even slumped by 12 percent in real terms.

"Online retail made a huge leap in sales during the COVID-19 years. It was to be expected that growth would not continue unabated afterward," said Alexander von Preen, president of the German Retail Association (HDE), on Wednesday.

The important Christmas business did not bring a turnaround for retailers in Europe's largest economy. According to Destatis, sales were 1.7 percent lower in December 2023 than a year earlier.

Although inflation in Germany gradually weakened in 2023, it picked up again to 3.7 percent in December. Compared to other European countries, consumer prices are normalizing slowly. Meanwhile, average inflation for the eurozone dropped to 2.9 percent at the end of last year.

For the current year, the German retail association is anticipating an inflation-adjusted sales increase of 1 percent. "The current year will most likely be better for the retail sector than last year," said von Preen.

However, the HDE warned that many risks remain, including the conflicts in Ukraine and the Middle East, and a "worsening labor shortage."