SHOPPING REVOLUTION

The Great Disruption of Retail

Woman using tablet computer for online shopping with parcel delivery
The surge in online shopping will lead to the closure of some 45,000 stores by 2020, according to a study.
  • Why it matters

    Why it matters

    The retail trade is on the verge of a revolution, as cutting-edge technology transforms shoppers’ experiences in offline stores.

  • Facts

    Facts

    • Experts say 10 percent of all German retail outlets may close by 2020.
    • Amazon Germany grew 13.6 percent this year. The top 100 online retailers grew an average of 10 percent.
    • 8.6 million Germans went shopping in bricks-and-mortar stores on the last Saturday before Christmas.
  • Audio

    Audio

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The last Saturday before Christmas is the busiest day of the year for Germany’s retail trade: this year an estimated 8.6 million consumers stormed into the country’s shops, spending an estimated €1 billion, or $1.09 billion. A study from the Center for Retail Research predicts turnover in the holiday season – the six weeks running up to December 31 – will reach €74.1 billion. When online purchases are included, that represents an increase of 2.3 percent on the previous year.

But Germany’s retail trade knows strong figures are no cause for complacency. Many of the country’s retailers have their backs to the wall. According to the study, only online retail turnover is actually growing. For most bricks-and-mortar stores, sales have been declining for years. In short, digitalization will be fatal for many of them. According to the IFH – the Institute for Retail Research, based at Cologne University – around 45,000 shops in Germany will close by 2020, about 10% of the total. The retail trade in many small rural towns could be completely wiped out.

The challenges facing retail are huge. “In the next 5 years, retail will see more changes than in the last 50,” is the prediction from Kai Hudetz, head of the IFH. The Institute says that by 2020, as much as half of all sales in fashion and consumer electronics could take place online.

The biggest winner from the retail revolution has been U.S. online giant Amazon. According to the EHI Retail Institute, a German retail research group, the 100 biggest German online retailers will, on average, see growth of an impressive 10 percent in the past year. But Amazon.de is ahead of them, with turnover up 13.6 percent in the same period.

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