Hope in many shops is dwindling: "In Bavaria, 2000 dealers are threatened with the end"

Created: 10/18/2022, 12:01 p.m

By: Sebastian Hölzle

Reluctance to buy, expensive energy, corona pandemic: Especially in the city centers - like here in Munich - retailers fear a hard winter.

The prospects are bleak for municipalities and cities.

© IMAGO/Alexander Pohl

After Corona, retailers hoped for a return to normality.

Then Russia attacked Ukraine, confidence was gone.

Now the first traders fear for their existence.

Munich – Everything actually looked good: “The retailers started the year optimistically, Corona was no longer a big issue for many months,” says Bernd Ohlmann, spokesman for the Bavarian Retail Association.

"Then came the Russian war of aggression in Ukraine, which thwarted trade."

Ukraine war triggers two major problems for retailers

The first problem: customers' reluctance to buy.

"Inflation, war, energy prices - there's bad news around the clock," says Ohlmann.

"People keep their money together, and we notice that." The German trade association surveyed more than 1,000 people nationwide, according to which clothing and fashion retailers in particular are likely to suffer (see graphic).

"Anyone who has 15 pairs of winter boots in their closet wonders whether they really need the 16th pair this year."

Second problem: Expensive energy.

Retailers who have a long-term contract with their suppliers are still in a comparatively comfortable situation, says Ohlmann.

"And then there are those who are now receiving their down payment and are amazed." In a large department store, that can easily amount to tens of thousands of euros a month.

Video: Concerns about Christmas sales - should retailers worry about inflation and delivery problems?

2,000 retailers could close in Bavaria by the end of the year

"In the worst case, 2,000 of the almost 60,000 retail stores in Bavaria alone will close by the end of the year," Ohlmann fears.

Businesses in inner cities are particularly affected, and the wave of bankruptcies could intensify in the coming year.

"We don't see any gloomy clouds on the horizon, we see a real storm brewing." Ohlmann says that retail can only overcome the crisis with government support.

At the beginning of the corona pandemic, the association expected 10,000 closures in the Free State, but thanks to state aid, the big wave of bankruptcies did not materialize at the time.

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Especially since the dealers are threatened with a third problem: yesterday the seven-day incidence in Bavaria was 822, and the trend is rising.

For fear of a Covid infection, people could avoid shops before Christmas, and a possible mask requirement should reduce the desire to shop.

"With around 14 billion euros, the Christmas business accounts for a fifth of the total annual turnover in the Bavarian retail trade," says Ohlmann.

"In Bavaria, the city centers are in intensive care"

In municipalities and cities, the specter of a desolate inner city is making the rounds again.

"20 years ago I said: In Bavaria, the inner cities are in intensive care, and since then the situation has worsened," says Ohlmann.

A lack of parking spaces, booming online trade, monotony in the inner cities with the same chains everywhere - many problems are not new.

The inner city will not die, but it urgently needs to change, says Ohlmann.

“We have to move away from the division of functions, living in the residential area, working in the commercial area, shopping in the city center.

We need places where people can work, live and shop, which creates inner-city life.”

There is hope that there are still niches in retail where the spirit of optimism is evidently continuing.

Shortly before the start of the Frankfurt Book Fair, Nina Hugendubel, managing partner of the book chain of the same name, says: "The city centers have been filling up again for several months, not least due to the increasing number of tourists." For the branches in Munich, this results in "a pleasing frequency". .

She also observes a “cross-channel brand loyalty” of the customers.

What is meant is that book lovers continue to visit the branches and shop in the company's online shop.

Despite the current uncertainty, it is possible to retain customers, says Nina Hugendubel.

And even association spokesman Ohlmann has a remnant of confidence - for the entire industry: "I hope there will be a defiant reaction from consumers,