German retailers warn of worsening business conditions as costs rise
German retailers are warning that business conditions are deteriorating as rising energy, labor and purchasing costs continue to squeeze profits while consumer spending remains weak. The industry is urging the government to take swift action to prevent further economic strain.
According to a survey by the HDE (Handelsverband Deutschland – German Retail Association) involving around 600 retail companies, 42% of businesses described their current situation as poor. Nearly two-thirds said business conditions had worsened during the first half of 2026 compared with the same period last year, while 69% reported lower profits.
The HDE said weak consumer confidence remains one of the biggest challenges facing the sector. Association President Alexander von Preen compared current consumer and business sentiment to the extremely low levels seen during Germany's second COVID-19 lockdown, highlighting the pressure retailers continue to face despite hopes of an economic recovery.
Looking ahead, the outlook remains pessimistic. Around 65% of retailers expect sales in 2026 to be slightly or significantly lower than in 2025, while only 18% believe sales will improve. Although the HDE continues to forecast nominal retail sales growth of 2% this year, it says many businesses are struggling to translate higher revenues into profits because operating costs continue to rise.
The retail association has called on the German government to improve business conditions by limiting non-wage labor costs to 40% and avoiding additional restrictions on Minijobs (mini-jobs – low-income part-time employment). It argues that reducing the financial burden on employers is essential to protect jobs, support investment and help retailers recover from prolonged economic pressure.