After a slight spring revival and more sales, developments in the retail sector are currently clouded again. Consumers are more reluctant to shop and continue to put more money aside to save, according to the Wifo report.
The poor economic situation continues to worry retailers. “Retailers achieved a slight increase in turnover in the second quarter, but this cannot compensate for the cost increases in purchasing, personnel, debt and rents,” says Rainer Will, head of the industry association. There are currently sales in fashion stores in many places. This increases the frequency somewhat, but hardly yields any returns.
Consumers save more due to uncertainty
The assessment of the situation shows a bleak picture; traders have probably been too optimistic recently. But due to the great uncertainty, it is mainly the higher household incomes that are being spared. According to Wifo, the savings rate remains high at 9.8 percent.
However, individual retail sectors are at least on the rise again, such as sports retail, which can also build on the major events (European Championships and Olympic Games) this summer. However, the furniture trade, which has already lost more than ten percent in 2023, and the electronics trade continue to face major problems.
Despite the generally weak development, retailers are looking for numerous employees, even though vacancies are decreasing. There are currently 10,670 vacancies, the majority of which are in crisis-resistant food retail.
“Reduced working hours do not work”
Will does not believe in short-time working due to the need for skilled workers: “Demanding short-time working in times of economic downturn is like fighting the climate crisis with more CO₂ – that won’t work,” says the stakeholder.
Even in the near future, the economy is unlikely to recover quickly. Economic weakness is likely to persist into the second half of the year. Consumption growth should moderate in 2025. Inflation is likely to return to normal. After 3.4 percent this year, Wifo expects a rate of 2.5 percent in 2025.
Inflation remains too high
That is still too high, however; inflation in the EU is already 2.5 percent on average. Some higher costs are also persistent, especially when energy or rental contracts sometimes have a longer term.
Source: Krone
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
