Retail lockdown: Association sees 250,000 jobs at risk

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The fear of a Christmas party free of presents drove German citizens into the city centers on the third weekend in Advent.

With the lockdown in mind, many consumers poured into the stores, at least significantly more than in the previous weeks.

Frequency and sales were still below the level of the previous year, as the regular trend survey by the German Retail Association (HDE) shows.

A drop in sales of 18 percent for downtown retail and 28 percent for frequency mean the lowest values ​​since the start of the Christmas business at the beginning of November.

For comparison: In the previous weeks, the corresponding numbers were sometimes twice as high.

And what's more: In some sub-areas of the industry, such as toys or electronics, there has even been a significant increase over the last few days compared to the previous year.

Source: WORLD infographic

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Nevertheless, the situation in the industry remains extremely tense.

"The 2020 Christmas business is lost for most downtown retailers," says HDE Managing Director Stefan Genth.

And that even without the lockdown now decided by the federal and state governments with shop closings for the majority of shops from December 16.

The HDE is therefore expecting dramatic consequences: 55 percent of downtown retailers currently see their existence threatened, reports the association.

“First the bad business in Advent and now a complete lockdown for all non-grocers.

Many trading companies cannot survive this without help.

Up to 250,000 jobs are at risk, ”warns Genth.

The federal and state governments recognize this emergency and want to support the industry.

Federal Finance Minister Olaf Scholz (SPD) has therefore announced “comprehensive economic and bridging aid”.

Accordingly, the maximum amount of the so-called bridging aid III for companies directly and indirectly affected by closings will be increased from 200,000 to 500,000 euros.

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At the same time, partial write-offs should be made possible quickly and unbureaucratically.

This means that unsold goods do not have to be included in current assets, but can be written off immediately.

Negotiations between commercial tenants and landlords about existing tenancies should also be simplified by classifying the current situation as a “serious change in the basis of business”.

Trade demands reimbursement of sales from the state

The HDE is already forecasting that this support will not be enough.

"The funds that have been earmarked so far are nowhere near enough to prevent a wave of bankruptcies in the city centers," the association said.

Because the affected non-food trade will end up in a range of minus 60 percent for the month of December in view of the lockdown from Wednesday.

Compared to the previous year, sales of around twelve billion euros are lost.

The HDE is therefore demanding the same support for December that the catering trade, which has been closed since the beginning of November, is receiving reimbursement of 75 percent of the lost sales.

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From January a new form of financial aid will have to be found.

“If we largely force the core industry of our city centers into bankruptcy with retail, it will not be easy to remedy after the crisis.

That is why politicians must now ensure with a strong aid program that there is no irreparable wave of bankruptcies, ”Genth demands.

The focus is primarily on the sellers of fashion and shoes, which, according to the Textile Trade Association (BTE), make up a good half of the shops in the city center.

"The textile, shoe and leather goods stores as a whole play an outstanding role as frequency generators and customer magnets for inner cities," says the BTE.

In “normal times” at any rate, the 33,000 companies with more than 80,000 sales outlets and 440,000 employees would attract several million visitors and customers to the city centers every day.

In the end, however, they have in no way done justice to this driving force.

According to the HDE trend survey, the sales and frequency losses in these two segments are significantly higher week after week than in the rest of retail.

In some cases, almost 60 percent fewer customers came.

And the loss of sales in clothing stores, for example, was eight to 17 percentage points higher than the average, depending on the week.

After all, the online business, which large parts of the industry are now also offering, can compensate for the losses to a certain extent.

This is shown by a current WELT survey of 13 well-known fashion retailers.

At Breuninger, for example, the online share has now doubled compared to the pre-Corona period.

And then this value went steeply towards 30 percent.

According to the company, colleagues from other areas are currently helping out in logistics and packing parcels.

Hugo Boss, in turn, reports an increase of 66 percent in the Internet business for the first three quarters, so that the online share of retail sales climbs to around 14 percent.

According to the survey, the digital business at Marc O'Polo has already exceeded the 20 percent mark, and the trend is growing rapidly.

Peek & Cloppenburg, on the other hand, reports “noticeable increases” to 15 percent.

Online sales increase significantly

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Current figures from the Federal Association of E-Commerce and Mail Order (BEVH) fit in with this.

According to this, German citizens bought goods worth around 17.4 billion euros over the Internet in October and November.

This means that online sales in this period are 17.5 percent higher than in the previous year.

The main driver of this development was the dispatch of clothing, as the BEVH analysis shows.

"We are seeing a clear shift in Christmas shopping on the Internet," describes Martin Groß-Albenhausen, the deputy managing director of the mailing association.

And the upcoming lockdown will push the online numbers even higher.

The HDE is therefore not only calling for state aid for over-the-counter trade - according to the association, the funds must also be paid out quickly.

Because the liquidity situation in retail is very tight for many companies.

And especially in the fashion trade, the current income can determine the survivability.

The new spring collections come partly in December, but especially in January and February.

And they have to be paid to the suppliers.

"Otherwise, customers will soon be faced with empty shelves," says BTE representative Axel Augustin.

A shop does not need to open without new goods.

And it doesn't help that there are still plenty of clothing left.

Because with each additional week in the direction of spring, fashionable sweaters, winter boots or bags can hardly be sold, describes Augustin.

"Stationary shopping is also part of our culture"

The BTE is therefore expecting closings quickly: initially of branches, later of entire companies.

In Cologne, for example, the traditional shoe store Kämpgen recently closed its branch on the Schildergasse shopping street due to Corona.

And that only a few months after the company, founded in 1938, extensively rebuilt and pimped up the branch.

Competitor Görtz, on the other hand, had to part with locations.

“This year we planned to close eight branches due to the pandemic.

Due to the fact that we were able to agree on a very acceptable rent with four landlords, only four branches now have to be closed ”, Managing Director Frank Revermann told WELT.

“In the next year we will then close locations if we cannot get an acceptable rent in line with sales with the landlord.” Basically, however, he still believes in stationary business.

“We are convinced that people want to come to the cities again.

Stationary shopping is also part of our culture. "