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German retailing is currently undergoing a period of readjustment. Challenges arising from the COVID-19 pandemic and global supply chain shocks have now become entrenched in the industry and are being exacerbated by new developments. While consumption and consumer confidence are declining in bricks-and-mortar retailing, online sales are experiencing an upswing. So what is the current state of the retail industry in Germany?

“The retail sector in Germany is under considerable pressure and is also undergoing profound change,” states Dr. Ralf Deckers, member of the management board of the Institute for Retail Research (IFH) in Cologne. The last few years have been particularly challenging for bricks-and-mortar retailers: declining spending power, financial concerns among shoppers and falling consumer confidence have hurt city-center retailers and caused sales to slump. Political developments, such as tariff conflicts between major economic powers and sanctions, are increasing uncertainty and putting pressure on both profit margins and purchase prices.

The economic uncertainties are also affecting the wholesale sector: among wholesalers 2025 was characterized by volatile sales figures and a pessimistic mood. The industry recently made headlines with 43,000 layoffs within a single year.

Meanwhile, online retail is continuing its rapid rise, with sales figures and turnover increasing steadily. “Particularly striking and much discussed are the so-called Asian platforms, especially Temu and Shein, which have gained considerable reach and market share in a short period of time and are continuing to grow,” explains Dr. Deckers. Boosted by artificial intelligence, sales expectations in e-commerce continue to rise, while shop operators are expanding their customer outreach with psychological expertise and new marketing initiatives.

Small and medium-sized retailers are now faced with the challenge of counteracting weak consumer spending. There are many ways to do this, as Dr. Deckers explains: “Retailers have various tools at their disposal, from extended warranties and returns policies to financing offers. For bricks-and-mortar retailers, the key now is to make visiting the store an incentive and an attraction. This will keep footfall high and encourage spending.” The fact remains that consumers don’t just want to make purchases, they want to have an experience. An enjoyable shopping experience, expert advice and friendly service are effective tools for countering increasing pressure on margins and high purchase prices. At the same time, retailers need to keep an eye on the continuing online trend and seize the opportunity to use the appropriate channels and services for their own products.

An integral part of commerce is the increasingly versatile use of artificial intelligence, which has long been capable of much more than just creating product descriptions or preview images. Using human-like interaction, AI chatbots and AI agents can simplify inquiries, purchases, or orders, offering automation and savings potential for resourceful companies. At the same time, well-known large language models such as ChatGPT and Google Gemini are increasingly being used for online shopping.

Specialist trade fairs such as the IAW help to maintain an overview in this economically uncertain situation. As Dr. Ralf Deckers from the IFH Cologne says: “The entire industry comes together at the trade show, providing an opportunity for an in-depth exchange of ideas, as well as for orientation and reflection. This makes visiting the trade fair an important and valuable experience.”