1 in 4 German retailers face bankruptcy

#Shoppingvorfreude is the hashtag the German retailers association, HDE, use to express joy for an eagerly anticipated event: The end of lockdown.

On Twitter and Facebook, the association has started a campaign showing over 100 retailers' personal messages.

"After this difficult time, I am looking forward to welcoming my customers back into my shop," writes Katrin Gerstberger. She runs a lingerie shop in the Bavarian town of Hersbruck.

And shop staff from a fashion outlet express their anticipation and delight by collectively jumping for joy.

The owners of a travel agency in the northernmost city of Kiel say on Twitter: "We want to start making money again and give our employees their full-time jobs back."

"The social media campaign is meant to send a positive signal and give our members a psychological boost," HDE spokesman, Stefan Hertel, told DW. "(We want to) stop complaining about how dire the situation is for retailers."

For the past six months, most stores have been closed — apart from supermarkets, drugstores, pharmacies, bookstores, and opticians.

Depending on the incidence rate in the respective region, all other shops can now reopen as well.

Small shops especially may struggle to survive. They have been eligible for state support to cover at least a part of their fixed costs — such as rent, electricity, and heat — if they could prove their sales had gone down by over 30%. 

There was no state support to compensate for the loss of income; retailers have been using their personal savings.

"Livelihoods have gone down the drain. What has been built in a lifetime has been used up and they have nothing left of what was meant to guarantee a pension," Stefan Hertel said. The HDE estimates that 120,000 of Germany's 450,000 retailers are facing bankruptcy after the pandemic. The association of German cities and municipalities estimates that 250,000 jobs will be lost.

To rescue what can still be saved, retailers are calling for all shops to be allowed to open immediately without restrictions. They are hoping that the customers will return. This is not a given: Online sales have been booming, and many customers have come to appreciate ordering online and then trying items out in the privacy of their own homes.

Online sales in Germany have risen by 23% in the course of the pandemic. Total revenue rose by €13.6 billion ($16.6 billion) to €73 billion in 2020 alone, the retailers association found.

No carefree shopping sprees in sight

But a quick and complete reopening is not in the cards. There are numerous restrictions and strict requirements: If the incidence rate is under 50 per 100,000 people within the course of five consecutive business days, shops may welcome customers – and only those who are either fully vaccinated, have tested negative in the previous 24 hours, or can prove they recovered from infection within the last six months.

Everyone still has to wear a mask and there are limits on the number of customers at any given time.

All that does not make for an appealing shopping experience in the eyes of many customers. Customer traffic has dropped 60 percent from 2019 and revenue has been cut in half, according to an HDE survey, for stores required to see a negative test.

Fashion retail is suffering the most, with an industry association reporting "historic losses." From January to April 2021, Germany's fashion retailers posted a six-billion-euro loss ($7.3 billion), compared to 2019 figures. The financial hit will be difficult to recover from. Spring and summer season clothes are in stock and will become a challenge to sell in a few months.

"Clothes have become very cheap and fashion retailers are forced to sell large quantities," HDE's Hertel said. High turnover is often only possible in busy pedestrian areas in the city centers, which have long been deserted.

State assistance until the end of the year?

Many retailers may have to rely on state subsidies for months to come. In response, Germany's federal government has extended the assistance program until the end of the year.

Retailers say it is not enough. They point to aid dished out to restaurants and bars, which were forced to do takeout only starting at the beginning of November. The state paid restaurant owners 75% of their 2019 income in November and December. Retailers are demanding the same kind of compensation and some are going to court. The retailers' association has said it will support its members in their legal battle. 

This article has been translated from German.

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