Economic policy organisation the ifo Institute has surveyed German retailers on their worsening business performance.

According to the analysis, the consumer electronics, clothing, furniture, and bicycle retail segments have experienced deterioration and food retailers are also pessimistic.

In January 2024, 54.4% of retailers reported sluggish demand, 32.7% of businesses said they were struggling to attract skilled workers and 20.5% were still affected by supply problems.

ifo representative Patrick Höppner explained that “supply chain problems for products from Asia have gotten worse again in recent weeks due to geopolitical uncertainties along major global shipping routes. Overall, though, this effect has so far remained manageable.”

Looking at 2024 as a whole, Höppner cites consumer restraint and a lack of skilled workers as key challenges that retailers in Germany are likely to face.

Hope for German retailers

However, the ifo Institute also reported improvement for retailers of computers, Software, toys and accessories, alongside drugstores and DIY stores.

GlobalData analysis expects the retail market in Germany to grow at a compound annual growth rate of more than 2% during 2027.

Another recent report provides also hope for online retail in Germany, which is predicted to represent 22% of total retail sales by 2028, compared to 16% in 2023.

The nation is still struggling from the macroeconomic effects of the Russo-Ukrainian war. The imposition of sanctions on Russia severely affected the German economy, as it was the largest European buyer of Russian oil and gas.