German retailers warn of worsening business conditions as costs rise

German retailers are facing worsening business conditions as rising energy, labour and purchasing costs squeeze profits while sales remain weak, the German Retail Association (HDE) said on Tuesday, urging the government to act quickly.

A survey of 600 retail companies found that 42% rated their current business situation as poor, while nearly two-thirds said conditions had deteriorated in the first half of the year compared with the same period in 2025.

A year earlier, 51% had reported a worsening situation.

"The situation is even more dramatic than it already was in the rather modest previous year," said HDE president Alexander von Preen.

He added that sentiment among consumers and companies was as weak as during Germany's second coronavirus lockdown.

The survey showed 69% of companies reported lower profits than a year earlier.

Looking ahead, 65% expect sales this year to be slightly or significantly below 2025 levels, compared with 53% in last year's survey. Only 18% forecast higher sales.

The HDE maintained its 2026 forecast for nominal retail sales growth of 2%, putting total turnover at €697.4 billion euros ($813 billion).

The association called for better business conditions, warned against curbs to mini-jobs and urged a cap on non-wage labour costs at 40%.

(Reporting by Maria MartinezEditing by Linda Pasquini)