The sector recorded a 1.7% drop during the Christmas season alone, official statistics show

German retail sales saw a sharp drop in 2023, according to preliminary data released on Wednesday by Germany’s Federal Statistical Office (Destatis).

In price-adjusted terms, sales in the sector were down 3.3% from 2022 and 3.9% from 2021, a year in which retail revenues surged.

Particularly hard hit was the food sector, where sales fell by 3.9% compared to the previous year. Real non-food retail sales were down 3.1%, marking the first time they have declined since 2013. Sales generated by online and mail-order retailers, which had seen revenues boom during pandemic, fell by 3.9% last year.

Even the usually profitable Christmas season did not bring a turnaround for retailers. The figures show sales in December 2023 dropped 1.7% year-on-year and 1.6% month-on-month.

Analysts link the poor performance of the retail sector in the EU’s largest economy with persistently high inflation.

A recent survey conducted by the German Trade Association (HDE) revealed that only one in six retailers rated the current business situation as “good,” and only one in five predicted that sales in 2024 would be higher than last year. Among the major problems facing the sector, retailers cited consumers’ general reluctance to spend money, rising energy costs, inflation, labor shortages, and the effect of the conflicts in Ukraine and the Middle East on supply chains.

READ MORE: Germans spending less this Christmas – retail association

Still, HDE expects 1% growth in retail sales this year compared to 2023, according to vice president Alexander von Preen.

“The current year will most likely be better for retail than the last,” he said at a press-briefing on Wednesday, noting that “even if the purchasing power losses of the last two years cannot be compensated for,” there are still positive signals for the industry.

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