German retailers face 4% slump in sales in real terms in 2023 – HDE

BERLIN (Reuters) – German retailers expect to bring in 4% less sales income this year than last in real terms as inflation remains stubborn, the HDE retail association said on Tuesday, revising its forecasts down from a 3% drop.

The association expects nominal revenue growth of 3%, compared with 2% in its previous forecast.

“Significantly higher costs for energy and goods as well as weak private consumption have put the retail trade under pressure in the first half of the year,” HDE President Alexander von Preen said, adding that the economic situation remained challenging.

The HDE said 35% of some 900 companies surveyed expect sales to decline in the second half of the year, while for the year as a whole, only one third of retailers expect revenues to increase.

“A quarter of the population has a strong fear of not making ends meet,” said Stefan Genth, HDE’s secretary general.

Consumers are changing their habits to adapt to higher prices. The survey showed that half of respondents had stopped buying or were buying less strawberries, for example, while 36% of those surveyed had done the same with chocolate.

According to the HDE’s president, German consumers are increasingly conscious of food prices. “Price sensibility has considerably increased,” von Preen said.

There are also substitution effects, consumers changing to cheaper brands or chasing special offers, an option chosen for 41% of those buying kitchen roll.

According to the HDE, 45% of the Germans have a net household income per month under 2,000 euros ($2,179.80).

($1 = 0.9175 euros)

(Writing by Maria Martinez and Friederike Heine, Editing by Rachel More and Philippa Fletcher)