The home office trend is weighing on retailers in city centers. In residential areas and suburbs, on the other hand, spending on private consumption has risen sharply, as a study by the ifo Institute shows.
According to a study, retailers in German city centers are also clearly missing the sales level that was reached before the corona pandemic, also due to the trend towards working from home. “In March 2023, private spending in the center was still five percent below 2019,” said Oliver Falck from the Munich ifo Institute today on the study of the regions of Berlin, Munich, Hamburg, Stuttgart and Dresden. “At the same time, residential areas and suburbs are seeing strong revenue gains.” In particular, where a lot of work could be done from the home office, private consumer spending increased by up to 30 percent.
“This change will remain”
According to the data, almost 25 percent of all employees have been working from home at least one day a week since the pandemic. “These employees also shop more locally,” said study co-author Carla Krolage. “We assume that this change in shopping behavior will remain.” The current analysis shows that this shift in consumption is particularly evident on weekdays.
Overall, retail was able to regain market share compared to online shopping last year. In the summer of 2022, online sales accounted for 21.2 percent of private consumer spending. That is a drop of more than two percentage points compared to the same period last year, according to the ifo researchers. The trend towards online shopping slowed down again after the pandemic.
Adaptation to the changing world of work
“The pandemic has permanently changed the world of work and shopping behavior,” said Falck. “The combination of permanently more working from home, more online shopping and the small-scale changes in consumption make inner cities all the more challenge to adapt their concepts to the new normal and to increase their attractiveness.”
The results were obtained by analyzing anonymized and aggregated retail sales data provided by payment processor Mastercard. Small-scale data on home office potential, which the market researcher infas 360 collected on behalf of the ifo Institute, was also used.