Estimated trade turnover excludes potential risks in prediction
The German retail sector, which experienced €700 billion in sales in 2024, may face potential indirect consequences from escalating trade and tariff disputes in 2025, according to recent analysis.
The German Trade Association (HDE) has revised its sales growth forecast for the year downward to 2.0%, adjusted for inflation (from 2.2%). The CEO of HDE, Stefan Genth, stated that they are currently above their sales forecast, but the risks are too high for an upward revision. The signals for the development in the second half of the year are too contradictory, according to Mr. Genth.
Supply chain disruptions, cost inflation, consumer sentiment, online retail efficiency, and sector-specific effects are the key areas of concern. Increased tariffs could raise costs for imported goods, such as electronics, clothing, and other non-food retail items, potentially leading to higher retail prices and reduced availability. This may result in a dampening of retail sales growth in 2025.
Tariff-induced cost increases on imported consumer goods could also exacerbate inflationary pressures, reducing real consumer purchasing power and depressing consumer spending, particularly on discretionary retail items. Escalating trade tensions often create economic uncertainty, which can negatively affect consumer confidence and spending habits.
The strong online retail sector, a key growth driver, may be disrupted by increased tariffs on imported goods or retaliatory measures, raising costs and delivery times. This could weaken the competitive advantage of online retail, indirectly slowing growth.
Sector-specific effects could shift growth patterns within the retail sector, with essential sectors like food and grocery less affected but discretionary sectors such as clothing, footwear, electricals, and consumer electronics more vulnerable to trade escalations.
An escalation of the trade and tariff dispute could cause additional burdens through indirect effects, despite an otherwise positive retail outlook for the year. Retailers assess the prospects for the second half of the year predominantly negatively.
The German Trade Association (HDE) is concerned about potential indirect consequences of escalating trade and tariff disputes in 2025, since increased tariffs could raise costs for imported goods like electronics, clothing, and other non-food retail items, leading to higher retail prices and reduced availability, which may result in a dampening of retail sales growth.
The strong online retail sector, a key growth driver, may be disrupted by these increased tariffs or retaliatory measures, raising costs and delivery times, potentially weakening the competitive advantage of online retail and indirectly slowing growth.
