German Retailers Eye Golden Holidays

The Associated Press
Sunday, December 17, 2006; 2:46 PM

FRANKFURT, Germany -- Shopkeepers in Europe's biggest economy have a grin on their faces _ and not only because Santa is coming to town.

Hard-pressed retailers are betting heavily on a fat Christmas shopping season this year after a string of duds, with Germany's economy finally showing solid growth expected to hit 2.5 percent this year.

The shopping areas have been packed at night and on weekends, particularly in major cities like Berlin and in Frankfurt, where the Zeil shopping avenue extends roughly a mile with an array of shops from luxury retailers Hermes and Vertu to decidedly more frugal fare such as Woolworth's and the 1-euro store.

"I've already been out doing my shopping," said Inger Bohnstedt. "Normally I don't buy before Christmas, but I bought a washing machine to beat the tax increase."

Germany's value-added tax is rising to 19 percent from 16 percent on Jan. 1 and retailers are hoping that customers will spend big to avoid the hike.

"Saturday fulfilled all the high expectations of our members," the German retail trade federation, HDE, said in a statement issued Sunday. "Finally, Christmas has arrived."

Since the start of Advent, shoppers had been out in force, but were reluctant to fork over fistfulls of cash for high-priced items like flat-screen televisions, MP3 players and kitchen appliances like mixers, dishwashers and ovens.

Many retailers had reported increased sales in electronics, too, including LCD TVs, portable GPS-based navigation systems and DVD recorders, along with digital cameras.

In the three weeks since the traditional holiday shopping season began after the first day of Advent, no major retailer has released figures or projections.

Forecasts for German retailers show a slight uptick from last year. A year ago, sales fell a seasonally adjusted 0.8 percent in December, the federal statistics agency Destatis said. This year, that figure is expect to grow 1 percent.

The sentiment is similar in other countries. In Italy, the small business association Confesercenti is forecasting modest increases with the only segments expected to experience a downturn being jewelry and cosmetics.

And with consumer confidence rising again, analysts say people may be willing to spend.

CONTINUED     1        >

© 2006 The Associated Press