German retailers are entering the holiday season with increased pessimism, as the Ifo business climate index for the sector fell slightly in December - to -23.0 points from -22.2 points in November. Retailers reported a marginally worse current situation and slightly lowered expectations for the coming months, according to the Ifo Institute.
“2024 was a tough year for the retail sector, and the economic environment in 2025 is likely to remain challenging, even though many retailers hope for improved consumer sentiment,” said Ifo expert Patrick Höppner.
The retail sector showed temporary improvement in the first half of 2024 but faced worsening conditions in the second half, driven by weakening demand and a persistent shortage of skilled workers.
Sector-specific trends in December were mixed. Retailers of consumer electronics, electrical goods, and food saw improved business climates, while furniture stores, DIY shops, and bicycle retailers reported worsening sentiment.
Looking ahead, the outlook for 2025 is uncertain. Rising disposable incomes could provide a positive boost, but ongoing economic policy uncertainties continue to weigh on retailers and consumers.