North German retail is suffering: decline in sales unsettles retailers!

North German retail is suffering: decline in sales unsettles retailers!

The economic mood in northern Germany is tense. According to the latest results of a survey by the AGA business association, almost half of retailers and service providers are struggling with falling sales in the second quarter of 2025. Retail in particular appears to be a problem child in the current economic survey, and final figures from older quarters, such as the fourth quarter of 2024, demonstrate the difficult situation. At that time, 52 percent of the companies surveyed reported a decline in sales and 44 percent reported a decline in demand.

The current statistics speak for themselves: the AGA indicator for the second quarter of 2025 fell to a modest 90.3 points, followed by a dramatic slump in wholesale and foreign trade, which reached 79.3 points, the lowest level since the second quarter of 2020. The retail sector can't really boast either, with 74.1 points, a significant decline from 86.7 points in the previous quarter, as the Food Practice reported.

Rising costs and falling demand

Also alarming is the feedback regarding companies' total costs, which increased for 78 percent of the companies surveyed in the fourth quarter of 2024. This development goes hand in hand with a dampening outlook for the first half of 2025, with 29 percent of companies expecting a decline in sales. As has already been found in previous surveys, bureaucracy is the biggest obstacle to value creation, at 38 percent. Global political uncertainty is seen by 36 percent of companies as a further disruptive factor, which reduces value creation by an average of 10.4 percent.

AGA President Hans Fabian Kruse warns that politicians must act urgently to provide relief and incentives for investments. More than half of companies, 54 percent, plan to invest heavily in environmental and energy expansions. But the need for investments is there, and yet planning remains cautious: 54 percent of companies intend to invest to the same extent in the coming year, while 32 percent even expect the investment volume to be reduced.

Profit situation and future prospects

As far as the profit situation is concerned, the situation is also challenging. 51 percent of those surveyed expect a constant profit, while 41 percent expect a decline. This is in stark contrast to the 13 percent of companies that rate their profits as good. In companies in the service sector, the AGA indicator stands at 118.5 points, which remains relatively stable between previous quarters.

Personnel planning also reflects the uncertainties. 24 percent of companies plan to increase the number of employees, while 60 percent want to keep their current workforce. The situation is similar for trainees: 17 percent intend to increase the number, while 64 percent want to keep the number the same and 19 percent want to hire fewer new trainees.

The results come from the AGA business association's economic test, which was carried out between June 5 and July 4, 2025. Although the overall situation for wholesale and foreign trade with an annual turnover of 288 billion euros is anything but rosy, the hope remains that companies with a good knack for investments and strategy can master the coming challenges AGA and Northern economy report.