At -3.4%, the retail sector recorded the largest real sales decline of the entire decade, but the low point has been reached: the outlook for 2024 is positive
Vienna (OTS) – “We are feeling the first signs that the consumer climate is improving and retail has finally overcome the economic low. This is also urgently needed, because several challenging years were followed by an even more difficult year in 2023. “The previous year was, so to speak, a black year for domestic trade,” said Rainer Trefelik, chairman of the federal trade division at the Austrian Chamber of Commerce (WKÖ), when presenting the annual balance sheet at a press conference today at the WKÖ. The entire Austrian trade recorded a nominal sales decline of -0.4% in 2023 compared to 2022. If price developments are taken into account, the real decline was even -3.4%.
“The economic developments of the individual retail sectors were very different, both in terms of sales and price developments,” explains retail researcher Peter Voithofer from the Institute for Austrian Economics (iföw). Specifically, his analysis based on Statistics Austria data showed that the retail sector was able to generate nominal sales growth of +3.0% to a total of around €86.2 billion (net), but adjusted for prices this means a real economic decline of -3 .4%. “This corresponds to the sharpest decline in the last decade,” said Voithofer. In wholesale, the real decline in sales was even greater at -5.3% to net sales of around 187.8 billion euros – even with a falling wholesale price index. Things went better in the third trading segment, the motor vehicle industry: after declines in 2022, the motor vehicle industry was able to achieve a nominal sales increase of +12.5% and also price-adjusted growth (+4.7%), albeit with new car registrations have not yet reached pre-crisis levels.
Clothing trade is back to pre-crisis levels for the first time, some others are still below
The development within the retail sector was also different: the food retail sector achieved the highest nominal growth (+8.3%). In real terms, the economic development here is also negative (-1.0%). Only the clothing retail sector achieved a small real increase (+1%), which was able to return to pre-crisis levels for the first time. Many other sectors such as the jewelry trade, the toy trade, the furniture trade and the book/magazine retail trade are still below the sales level of 2019. “The problem, however, is that many fashion retailers offer both clothing and shoes and therefore they still have everything anything other than rosy. This is also shown by the many bankruptcies and closures in the shoe and fashion trade, but also in a number of other retail sectors,” said Voithofer.
More bankruptcies and slightly declining employment in retail
A total of 944 retail companies were insolvent in the previous year – an increase of +14.3% compared to 2022. Retail was particularly affected. “The high costs – from energy to rent to wages – coupled with consumers’ reluctance to buy, were no longer manageable for many companies,” says Trefelik. Above all because the earnings situation of many companies leaves something to be desired in view of strong (price) competition.
Last but not least, one consequence of the high wage cost increases is the development of the number of employees: employment in retail fell slightly (-0.9%) and the number of vacancies was also significantly lower than in 2022.
Incidentally, in the vast majority of cases, those who work in retail are happy to stay in the industry: as a recently published study by the Johannes Kepler University (JKU) on behalf of the WKÖ federal trade division showed, eight out of ten retail employees describe their job as attractive . More than half have worked in the same company for more than five years and around a third for more than ten years.
Consumer climate: turning point reached, trade cautiously optimistic for 2024
“Even if there is little positive to report about 2023, we have initial signs that make us cautiously optimistic about 2024,” summarizes Trefelik. Although the overall economic upswing forecast by economic researchers is likely to be delayed somewhat, traders are less pessimistic about the development than in the previous year. The inflation dynamic is also decreasing from month to month and the slightly lower energy prices are now reaching companies – with a time delay. “But we hope that consumer confidence will continue to improve and that we will finally experience a normal trading year again in 2024,” says Trefelik.
However, this also requires some setting of the course. “There must be an end to the exorbitant cost increases of the last few years. We need energy security at competitive prices and a reduction in non-wage labor costs – also to compensate for the increases in wage costs a little,” said Trefelik. He also calls for it to become more attractive to work full-time and for stricter controls when it comes to imports from third countries: “The EU has ensured more legal fairness here by, among other things, eliminating the 22 euro import sales tax limit for imports from third countries . The next step should be the abolition of the 150 euro duty-free limit. But without appropriate controls, it is toothless if, for example, an Asian platform does not correctly declare the true value of goods and thus gains a competitive advantage over European providers,” criticizes Trefelik.
There is an urgent need to reduce bureaucracy
There is also an urgent need to reduce bureaucracy, as Iris Thalbauer, Managing Director of the Federal Trade Division, adds: “Instead of there being relief here, retail companies are struggling with more and more bureaucratic hurdles. The EU is currently introducing numerous legal acts, all of which have the same goal of climate protection and respect for human rights. In the pipeline are, among others, the supply chain law, the deforestation regulation, the EU taxonomy regulation and the regulation banning products manufactured using forced labor. The Federal Trade Division is committed to the goals of the EU and supports them. The problem is that all legal acts are completely incoherent, the system and methodology are different in each regulation and companies are confronted with a flood of different bureaucratic recording, monitoring and control obligations. “We urgently need to slim down here and let the companies do their real work again,” says Thalbauer. (PWK058/DFS)
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