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"Consumption mood in the basement" - 60 percent of households limit their purchases

Due to the high prices, 60 percent of Germans now limit themselves when shopping.

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"Consumption mood in the basement" - 60 percent of households limit their purchases

Due to the high prices, 60 percent of Germans now limit themselves when shopping. This is shown by a current survey by the German Retail Association (HDE), which is exclusively available to WELT. In part, there is no alternative to this reluctance, because otherwise consumers would no longer be able to get by with their money.

At least that's what 83 percent of respondents with a net household income of less than 1,500 euros and at least 62 percent of the participants with an available monthly budget of between 1,500 and 3,500 euros report. According to the HDE survey, shopping behavior has also changed in households that could still afford to spend the same amount of money. After all, 71 percent of this group buy less or at least cheaper out of concern about further rising costs.

Savings are made above all on clothing, furniture and consumer electronics. In addition, consumers are announcing that in future they will reduce the number of visits to restaurants and pubs, take fewer vacations and trips, and often cancel leisure and cultural events such as cinemas, theaters and concerts. "Consumer sentiment has been in the basement for months, customers are very cautious in view of the great uncertainties about energy and prices," says HDE Managing Director Stefan Genth.

Shopping behavior has also changed radically when it comes to groceries. While there was still a trend towards organic and branded goods during the Corona crisis in order to treat yourself to something, the focus is now again on price. 60 percent of those surveyed stated that they increasingly use special offers when buying groceries, and many are also switching to cheaper private labels.

46 percent, in turn, forego the purchase of certain products and almost a third reduce the quantities of food and drinks they buy. The HDE study with its pessimistic view of the industry is confirmed by the consumer researchers at GfK.

Their sentiment barometer continued the downward trend of the past few months in September – both in terms of income expectations and propensity to buy. The latter fell to its lowest level since the 2008 financial crisis, and income expectations hit a new all-time low. And GfK expert Rolf Bürkl expects the consumer climate to continue to fall.

"The currently very high inflation rates are leading to large real income losses among consumers and thus to a significantly reduced purchasing power."

There is no improvement in sight. "Since it is not foreseeable at the moment when inflation will noticeably weaken again, difficult times are ahead for the consumer climate in the coming months," predicts Bürkl. In fact, economists do not expect a noticeable improvement in inflation until at least mid-2023. However, if private consumption continues to weaken, the already existing tendency towards recession will intensify.

The HDE survey, for which a good 1,600 consumers were questioned in the last week of August and the first two weeks of September, also points to this weakening. A full 76 percent of them want or have to limit themselves in anticipation of further price increases in the coming months. That is another 16 percentage points more than at the present time.

The HDE now warns of bankruptcies and impending structural breaks. “Poor consumer sentiment is a major challenge for companies. Because after two years of the pandemic, which were extremely demanding and for many economically difficult, they also have to cope with the exorbitantly increasing energy costs in their own operations. That overwhelms many and endangers entrepreneurial livelihoods and jobs,” says Genth, referring to another HDE survey from last week, according to which every second retailer in this country now believes that they are in existential distress.

The companies report that energy costs have risen by an average of 150 percent since the beginning of the year. "This turns all calculations upside down and puts many retailers in situations that they cannot solve on their own," says Genth, according to which the average return on sales in retail is 1.5 to two percent.

As a result, an increasing number of companies are already on the edge of profitability. And passing on the costs to customers is only possible to a very limited extent or not at all in view of the dramatic loss of purchasing power in private households, but also because of the tough competition in Germany.

The HDE, meanwhile, is calling for temporary and quickly effective economic aid, such as a gas and electricity price brake. “In addition, trade must not fall behind in the aid programs. Anyone who forgets the industry ignores its importance as an employer and core element of the inner cities," says association leader Genth. “So far, large parts of the economy, such as retail, have been exempt from the relief measures. Hundreds of thousands of small and medium-sized businesses are alone in the difficult times. That needs to change."

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