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Business

German Retailers Upbeat for Christmas

German retailers are expecting a slight rise in Christmas sales this year and have generally reported good business on the first of the four crucial Saturdays in December.

After the first of four Saturdays in which shopping hours are extended in the run-up to Christmas, German retailers reported a rise in sales revenue from the same day in 2000, industry association HDE said. December is a key month for retailers, since it accounts for much of their annual sales revenue. In some sectors such as jewelry or toy retailing, it accounts for as much as 25–50% of the annual total.

For the four Saturdays of December, shopping hours are extended to end at 6:00, not 4:00 as in the rest of the year.

HDE is expecting total retail sales of DM24 billion over the Christmas period this year. Last year, as increases in fuel and heating prices impacted on consumers' spending power, some 23.7 billion Marks was turned over. This was a disappointing figure, given the HDE's forecast of 27 billion Marks. Now, the global downturn and the events of September 11 have made it cautious.

But HDE spokesman Hubertus Pellengahr said that in the wake of September 11, a number of Germans have chosen to stay at home, not go on holiday. This should increase their propensity to consume, he added.

All that sparkles

Each retail sector sees a different impulse for business. In the case of jewelers, for example, it's the introduction of the euro as legal tender at the start of next year. Bobo Jonda, the managing director of the industry association, said jewelry retailers are expecting to see some consumers invest their money in gold or precious stones before the introduction of the new currency.

The industry is expecting to repeat last year's Christmas retail turnover of 7.2 billion Marks although it has had a different year so far. The Christmas period accounts for one third of annual sales revenue for jewelry retailers.

Music to their ears

The music industry is hoping that Germans will choose to give the gift of music this Christmas, and that seasonal sales can make up for the weakness of business so far this year. Industry association managing director Heinz Stroh estimates that sales of recorded music are down by 10–20% so far this year. And the sale of musical instruments is stagnant.

The toys industry, meanwhile, believes that it's the new items in its catalogue – notably the Harry Potter and Lord of the Rings merchandising – that will boost its sales. But so far this year, sales of licensed articles have declined, whereas the more classic items from games to cuddly toys have done quite well.

By the end of the year, the sector expects at best to have generated sales revenue of 6.2 billion Marks, equaling last year's figure.

Textile and clothing retailers, on the other hand, are expecting to see a contraction from year-ago levels. With annual sales of around 116 billion Marks last year, this is Germany's number two retail segment behind food.

According to Peter Engmann of industry association BTE, the Christmas period is no longer enough to save clothing retailers; it can only paper over the cracks. "We're expecting a decline of 1% or 2%," Engmann said. The home furnishings sector, meanwhile, is expecting annual sales to come in at 56–57 billion Marks, down 3% on the year.

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