Christmas trade about to hit a new record, but growth momentum is easing

Christmas trade in the German retail sector has been rising continuously since 2010. According to the Association of German Retailers (HDE), the stable labour market, low interest rates and the continued lack of investment alternatives, will drive 2018 Christmas sales above the EUR 100bn mark for the first time. Sales in the last two months of the year are therefore expected to be up 2% on the previous year. However, the pace of growth has been flagging steadily since 2015, when the Christmas trade was still growing at a rate of 6.6%.

Larger retailers in shopping centres and industrial estates, as well as internet traders, were particularly satisfied with this year’s Christmas sales figures. This compares with many city centre stores that are still waiting for the situation to improve in the fourth advent week and also probably explains the marginal deterioration in the retailers’ assessment of the current business situation. Nonetheless, the Christmas season got off to a good start for the retail business with satisfactory results. These were supported by Black Friday and Cyber Monday, which are meanwhile viewed by internet traders and retail stores alike as welcome added promotional campaigns ahead of the advent weekends.

The HDE expects the online Christmas trade to rise by around 10% this year. While the pace of growth among online traders by far exceeds the 2% growth rate forecast by the retail trade as a whole, the growth momentum has weakened in the long term. The growth in sales has stagnated at around 10% annually for the last five years. However, online trading already accounts for more than 13% of Christmas retail sales overall and generates roughly a quarter of its entire annual turnover in the last two months of the year.

The toy retailers, who generate nearly 27% of their annual turnover in November and December, depend on Christmas sales even more than their online counterparts. Bookstores, the watch and jewellery segments, as well as entertainment electronics, are also characterised by above-average dependence on the Christmas business. Similarly, Christmas trade in cosmetics and body care products, and the clothing sector is also (slightly) above average. All in all, German retailers generate more than 19% of their annual turnover during the last two months of the year.

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