By Maria Martinez 
 

Despite the coronavirus pandemic, the German retail sector is expected to record a 1.5% sales increase this year, mainly due to strong growth in online shopping, German retail association HDE said Tuesday.

In its latest forecast for 2020, HDE said sales will reach 552 billion euros ($651 billion) this year. In its July forecasts, the association still expected a 4% drop in sales for the year.

HDE said that in 2020 price-adjusted sales will reach the previous year's level. Following the reduction in value-added tax, or VAT, "a clear process of recovery in the retail sector" has been observed from the middle of the year onwards. According to HDE, this process is still continuing today.

Online sales should increase 15% to EUR68 billion this year, while stationary trade is stagnating, it said. The situation is significantly worse in sectors that were affected by the temporary lockdown to contain the spread of the coronavirus, HDE said. This sector is expected to record an 11% drop in sales this year to around EUR21 billion, according to the forecast.

"The solid sales growth of 1.5% for the retail sector as a whole shouldn't hide the fact that the existence of many companies and jobs is still at risk," HDE's secretary general Stefan Genth said, adding that the situation remains critical especially for many clothing retailers in city centers.

A current HDE survey of 1,000 retailers from all sectors, locations and company sizes shows that more than 90% of clothing retailers reported a deterioration in the business situation for the first half of 2020.

Write to Maria Martinez at maria.martinez@wsj.com

(END) Dow Jones Newswires

September 22, 2020 05:33 ET (09:33 GMT)