Non-food retailers in Germany likely to lose 40 bln euros in sales in 2020

Source: Xinhua | 2020-07-16

The non-food retail sector in Germany could lose 40 billion euros (45.77 billion U.S. dollars) in sales in 2020, shrinking by four percent year-on-year even if there was no second wave of COVID-19 in the country, the German Retail Federation (HDE) announced on Wednesday.

"The coronavirus crisis is tearing big holes in many non-food retailers, money is running out in many places," said HDE Managing Director Stefan Genth. The number of customers was still below average and sales had consequently fallen "far below normal levels."

In 2019, non-food retailers in Germany had still recorded an increase in sales of 3.2 percent. According to Germany's Statistical Office (Destatis), it had been the tenth consecutive year of growth. This year, HDE is expecting that COVID-19 would drive insolvencies of non-food retailers to up to 10,000.

The obligation to file for insolvency in Germany was suspended until the end of September and HDE warned of a "wave of insolvencies" at the end of 2020 or later, depending on whether or not the German government would extend the measure.

According to HDE, in the months of March, April and May, expenditures per purchase in stationary trade fell by 10 percent, but rose by 20 percent in online trade. This development would put pressure on local retailers to adapt their business models, locations and investment decisions.

"The coronavirus crisis will keep the trade busy for some years to come. Many consumers have changed their shopping behavior," warned Genth, stating that "retailers must react to this."

In order to counter the rising need of the German non-food retail sector, HDE called for a state subsidy for digitization, especially for smaller companies. In addition, access to existing COVID-19 bridging loans should be made easier.