Sector Overview: European Retail — Germany’s Shoppers Cut Back

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Key Points

Each of our Sector Overview reports provides an essential briefing on a sector or market. In European retailing:

  • U.K. retail demand has proved solid, but the impact of Brexit remains a big unknown.
  • German retail sales growth has been weak as consumer prices inflation has accelerated and global uncertainty has increased.
  • In France, consumer confidence has fallen, yet retail sales have proved robust.

Apparently alarmed by world events such as Brexit and tariff wars, and in a context of slowly climbing inflation, German consumers have retrenched their discretionary spending. The latest available data from Destatis, the German national statistics office, show that retail sales across a number of sectors declined year over year in many (or, in some cases, all) of the first nine months of 2018. These sectors include department stores, clothing retailers, footwear specialists, electronics stores, floor-coverings retailers, appliance specialists and furniture retailers. Retail sales growth was tepid at best at DIY retailers over the period. The internet pure-play and mail-order sector saw growth slow from a double-digit average through most of 2017 to a mid-single-digit average for the first nine months of 2018. Nondiscretionary sectors such as grocery and pharmacy retail have underpinned total retail sales growth.

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