Retail: Worry and Confidence: Retail Christmas Expectations

This year, it might make sense for consumers to look for Christmas gifts early. Because it is very possible that there will be delivery bottlenecks at one point or another during the Christmas business.

The persistent shortage of chips is a concern of retailers, particularly in the household and entertainment electronics sector. “There may be gaps in individual ranges,” said the managing director of the German Retail Association (HDE), Stefan Genth, on Monday in Berlin.

But the dealers had prepared themselves and the warehouses were well stocked. “It won’t mean that we will see completely empty shelves,” said Genth, looking ahead to the coming weeks. “I see the problem approaching us more in the first half of the coming year.” So then, when the stores had emptied.

Fear of delivery bottlenecks

It’s already the second Christmas during the pandemic – and in addition to fear of renewed corona-related restrictions, some retailers are also worried about delivery bottlenecks this year. “That’s the uncertainty we feel with the dealers,” said Genth. “So we have mixed expectations for the Christmas business.” The HDE’s sales forecast for November and December is primarily indicative of confidence.

The HDE expects revenues of almost 112 billion euros for this year’s Christmas business. That would be 2 percent more than in the previous year and even around 8.7 percent more than in 2019, the last Christmas before the Corona crisis. But the current situation as well as the expectations for this and next month are very different for the individual lines of business. This is shown by an industry survey conducted by the HDE among 450 member companies, which the association presented on Monday.

Accordingly, the textile and fashion trade in particular is expecting better Christmas business than last year. Toy and jewelry retailers are also optimistic about the coming weeks.

High sales expected

Across all industries, 45 percent of the companies surveyed stated that they expected higher or even significantly higher sales. Only 22 percent expect worse or significantly worse business. In addition, there is no overriding expectation in any retail sector that the Christmas business will return to the level of 2019, even if the HDE’s sales forecast suggests this. According to the association, the background is that the survey mainly contained the responses from brick-and-mortar retailers, while sales growth was primarily generated online.

The furniture and electronics retailers in particular are among the skeptics. The lack of chips will burden the electronic products business for a long time, said the boss of the Düsseldorf retail group Ceconomy, Karsten Wildberger, on Monday. “Depending on the manufacturer, the issue can be defused again at the beginning of next year, but with some products it can take even longer,” he told the “Handelsblatt”. The brands Media Markt and Saturn belong to Ceconomy.

More optimistic than a year ago

Overall, however, according to HDE, entrepreneurs are much more optimistic about the upcoming Christmas business than they did last year. “We saw that business actually works well in October if we have stable framework conditions,” said HDE Managing Director Genth.

The reopened stores would not have caused the boom in online retail to end: Internet orders remain the main driver of growth in retail. The HDE is assuming online sales of 23.1 billion euros this month and next – more than a fifth of the forecast total sales. Many retailers used large trading platforms such as Amazon to make the move into the Internet. More than half of Internet sales are made on such portals, according to the HDE.

The association has meanwhile also asked consumers what they want to give their loved ones for Christmas: 32 percent of those surveyed want to hand over gift vouchers. 29 percent give away books and 27 percent toys.