German retailers are experiencing deteriorating business conditions due to rising energy, labor, and purchasing costs, coupled with weak sales, according to the German Retail Association (HDE). The association urged government action to improve the situation.
The worsening conditions for German retailers signal broader economic challenges within Europe's largest economy, potentially impacting consumer spending, employment, and overall economic growth.
German retailers are experiencing a significant downturn in business conditions, with rising energy, labor, and purchasing costs impacting profits while sales remain sluggish. The German Retail Association (HDE) reported that a survey of 600 companies revealed 42% consider their current situation poor, and nearly two-thirds noted a deterioration in the first half of the year compared to 2025.
HDE president Alexander von Preen stated the situation is more dramatic than in the previous year, comparing current sentiment among consumers and companies to that during Germany's second coronavirus lockdown. The survey indicated that 69% of companies saw profits decline year-over-year. Looking ahead, 65% of retailers anticipate lower sales this year, a notable increase from 53% in last year's survey, with only 18% forecasting higher sales.
Despite the challenging outlook, the HDE maintained its forecast for nominal retail sales growth of 2% in 2026, projecting a total turnover of €697.4 billion ($813 billion). The association has called on the government to implement measures to improve business conditions, including avoiding curbs on mini-jobs and capping non-wage labor costs at 40%.
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