“Trade has passed the low point”

After a year marked by bankruptcies and real declines in sales, there is a spirit of optimism in retail: “Our surveys show a reversal in consumer sentiment. This is still at a low level, but it is getting better”says trade researcher Peter Voithofer from the Institute for Austrian Economics. Today he took stock with trading chairman Rainer Trefelik and division manager Iris Thalbauer and gave an outlook for 2024. Retailers’ expectations are also improving. “The industry has left its lowest point behind it.”

According to Voithofer, there are several reasons for this: On the one hand, inflation will settle at a lower level this year. On the other hand, consumers would have more money at their disposal due to the high level of collective bargaining agreements: “The opportunity and willingness to spend money is present.” Trading is strongly driven by sentiment and depends on the assessment of the future, said Trefelik.

Where there is light, there is also shadow: Although consumers have more money at their disposal, retail companies also have to pay their workers and employees significantly higher wages and salaries. The fixed costs (rent, insurance, etc.) are high. “The return on sales in retail is significantly lower than in other industries. If there is no improvement here, some staff will have to make adjustments.”

In real terms, i.e. adjusted for inflation, retail sales fell by 3.4 percent last year. Furniture and electronics retailers in particular recorded high losses. Things went comparatively well in the clothing retail sector in 2023 (plus 1.0 percent), while there was a minus of 1.0 percent in the food retail sector. The number of bankruptcies rose by 14 percent to 944: “Bankruptcy is not the consequence of a few bad months, but of years of difficult phases”says Voithofer: There will be some bankruptcies this year too, but he doesn’t expect a wave.

Many “Boy” lock to

Around 10,000 companies were closed in 2023: This affects, on the one hand, companies that cannot find a successor and, on the other hand, very small or young companies. “Half of the start-ups close within the first five years.” There are around 90,000 companies (retail, wholesale and motor vehicle trade) in Austria.

Retail was not the industry with the highest Corona funding. “However, there is no longer any continuous business development, as there was five to ten years ago.” He cites the example of the warm winter, which poses problems for the sporting goods industry, or the high demand for e-bikes, which has now leveled off: “With greater volatility, the risk of making a mistake when purchasing increases.” The behavior of consumers is changing, it is the responsibility of retailers to reduce their costs and bring customers to their company, “no matter what channel”. But there is no recipe here.