Stationary retail should actually do the business of the year: the Christmas business. Although the retail trade is still allowed to open, unlike, for example, restaurants, the high number of infections and the partial lockdown seem to deter customers: the inner cities are significantly emptier than before the pandemic, many prefer to buy online.
In the first three weeks of November, according to a trend survey by the German Retail Association (HDE), the retail trade in the city center made around a third less sales compared to the previous year, and the clothing trade even posted a minus of 40 percent. That is not something that can simply be caught, Stefan Hertel, HDE press spokesman. “As a result, many inner-city retailers have one leg in bankruptcy.”
“Fiasco” instead of “Highlight”
The Christmas business is actually the “sales highlight” for many retailers. “This year is not a highlight for many, but a fiasco,” says Hertel. The Christmas forecast has just been adjusted to the extended partial lockdown: “We are assuming that another two billion euros will migrate from the stationary area to the online area.”
Kai Hudetz, Managing Director at the Institute for Trade Research (IFH), has observed something similar. Despite the fact that shops are open, consumers are insecure and are increasingly migrating to online retail. If they came to stationary retail, it would be very targeted, says Hudetz: “Browsing, strolling, getting inspired – that is more or less a thing of the past at the moment.”
The unofficial starting shot for the Christmas business is Black Friday with its numerous discount campaigns – not only on the Internet, but also in shops. This year, too, should be difficult: “If hardly any customers come to the city centers anyway, then the dealers will not have any success with this campaign either – not comparable to previous years,” says Hertel. Here, too, a large part will migrate to online trading.
Hudetz also assumes that online retail in particular will benefit from Black Friday. Even before the corona crisis, online retail in particular was able to score points on the day of action, even if stationary retail is increasingly taking part in the campaigns.
Corona is changing the city centers
The city centers in Germany have not only been competing with online retail since the Corona crisis. But the pandemic has exacerbated the situation: “The continuation of the Lockdown Light demands everything from the inner cities and in the end, we fear, it could significantly change the face of the inner cities,” says Hertel. According to Hertel, up to 50,000 stores in Germany could disappear after the corona crisis. One now has to act quickly to prevent the city centers from becoming deserted.
Hudetz observes a strong shift in shopping behavior in favor of online trading. It won’t go away entirely either, he predicts. “The satisfaction of customers in online retail is high – even among those who bought certain products online for the first time during the Corona period,” he says. It is possible that the growth in online trade will level off again at somewhat lower levels.
New concepts in demand
Hudetz sees the corona crisis as an accelerator of a development. It is to be feared that retail will be thinned out and there will be more vacancies that cannot simply be filled. “We will need a new mix of offers in the city center – from gastronomy to culture and sports to other leisure activities,” he says. Only in cities with particularly high purchasing power could one possibly return to structures similar to those before the pandemic. “It won’t be the same as before. That is as clear as day. “
This week, the Chancellor and the Prime Ministers decided on new restrictions – this time also for retailers. For example, shops with a sales area of over 800 square meters will in future only be allowed to allow one customer per 20 square meters into their shop.
Hertel criticizes this new regulation. It is feared that more queues could form in front of the shops. On the one hand, this is counterproductive because there is a risk of infection in the queue and people outside could catch a cold.
On the other hand, there is a special situation in the food retail sector. Many supermarkets have a sales area of more than 800 square meters. “If queues form there, then there is a psychological effect: If there are many people, people suspect that there is a shortage of goods,” says Hertel. It is feared that hamster purchases could then increase again.
“Open shop doors do not ensure existence”
Hertel criticizes the fact that there is currently no emergency aid from the federal government for retail. So far the argument is that the retail trade should be allowed to open further. “But that completely fails to recognize that open shop doors do not secure a livelihood if no one comes in,” he says. Therefore, the HDE is calling for an inner city fund with a volume of 500 million euros. This should ensure a comprehensive problem analysis of the inner cities, because every city is different, according to Hertel. At the moment there is still a problem with knowledge, for example because vacancies are not registered centrally.
In order to support retailers in the transition to the digital world, the HDE is also calling for a state digitization funding program with a volume of 100 million euros to promote measures in companies. The current advising retailers, if they have not already done so, is to consider building a foothold online, says Hertel. “Then they can also participate in the online growth,” he says. But that is the supreme discipline. In the crisis it is not possible for many small and medium-sized companies to make large investments in digitization.
After Corona: return to stationary retail?
For HDE spokesman Hertel, how things will continue for stationary retail depends primarily on one question: Will customers come back to the city centers after the pandemic or will people stay with online retail? It can be assumed that not all of them would completely return to stationary retail. “In the meantime, a critical period has been reached that allows getting used to it,” says Hertel.
You are dealing with two opposing movements, says Hudetz. On the one hand, there are high levels of satisfaction with online trading. On the other hand, there is also a certain longing for stationary retail. “I do believe that there is an opportunity for stationary retail,” says Hudetz. “We as consumers are becoming a little more greedy for events and social exchange. So if, for example, there is again the opportunity to go to a reading in a bookstore instead of ordering the book directly on the Internet, if you can visit a fashion show or stroll again, then some of them will come back. “
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