Slump in retail

Empty tills despite full shopping streets

There is a lot going on in the cities, but retailers don't notice much of it in the stores.

(Bild: APA/ERWIN SCHERIAU)

Full shopping streets currently present a deceptive picture. Despite some good footfall, Austrians are not spending much in the retail sector and the hoped-for recovery has not materialized. Nevertheless, the traditional wage rounds are coming up soon - employers are preparing for tough collective bargaining negotiations.

"Rising consumption is not currently getting us out of the crisis as we had hoped," regrets Rainer Trefelik, Head of Retail. At the moment, only costs are going up, but sales are remaining the same. People prefer to spend their money in restaurants rather than in stores - schnitzel beats T-shirts, so to speak. 

The hope that higher wages would translate into higher retail sales has not been fulfilled. Only a third of the increased income flows into retail, the rest is saved or spent elsewhere. Even though many tourists and locals are out and about in the cities and on the shopping streets, the purse strings are no longer as loose in many cases.

The hoped-for recovery has failed to materialize. Only a third of the additional income is flowing into retail, the rest is being saved or spent elsewhere.

Rainer Trefelik, Handelsobmann

Bild: APA/MAX SLOVENCIK

In the first six months of the year, revenue actually fell by 0.8% overall compared to the previous year. Food retailers and clothing retailers recorded a small increase. The car trade performed best in a year-on-year comparison with a plus of three percent, but there is a need to catch up here, as dealers and customers were previously plagued by delivery problems.

Furniture retail is deepest in the crisis
The biggest problem child, however, is the furniture trade with a decline of 12.7 percent. This is also where most employees lost their jobs in the first half of the year, a consequence of the major kika/Leiner bankruptcy. The fact that the construction industry is currently very weak is also dampening sales.

The furniture trade is particularly hard hit by the crisis. The bankruptcy of kika/Leiner is having an impact.

(Bild: APA/EVA MANHART, APA/HELMUT FOHRINGER, Krone KREATIV)

Across almost all retail sectors, competition from Chinese stores Temu, Shein and Co. is hurting. Trefelik is calling for the 150-euro duty-free limit to be abolished quickly, saying that Europe must protect domestic retailers. They cannot keep up with the low Asian prices.

Tough collective bargaining negotiations ahead
Due to the difficult situation, employers are once again preparing for tough collective bargaining negotiations. The traditional wage rounds are due to take place again in the fall. Last year, these lasted until late December. Trefelik at least sees no reason why they should be any easier this year. Some of the trade unionists are also in "election campaign mode".

The fact that inflation is lower this year hardly eases the situation. "We've had wage cost increases of 20 percent over three years. At some point, it won't be enough," emphasizes the sales representative.

One small ray of hope is that there is new potential, at least as far as the labor shortage is concerned. According to a study by retail researcher Christoph Teller from the JKU, ten percent of employees are willing to continue working after retirement age. Among the over 55s, who are closest to retirement, as many as 20 percent say they are.

Continuing to work in retirement is not worthwhile enough
"We should mobilize the workforce where they are," says Teller. One fly in the ointment, however, is the less than ideal framework conditions. For tax and legal reasons, it is currently not particularly attractive to work beyond retirement age.