Hardly any consumer sentiment despite the end of many corona measures

The gastronomy, events and retail sectors, which have been badly hit by the pandemic, are still a long way from normality anyway. And the Ukraine war is also depressing consumer sentiment. How is the situation? An overview.

gastronomy

“Despite Freedom Day, the mood of the guests is still very subdued,” says Silja Schrank-Steinberg, who runs the Hofbräukeller in Munich. The beer garden has 2000 seats. The unvaccinated, who have been allowed to come with a test since March 4th, have nevertheless brought a sales increase of 30 percent.

Financially, however, the Hofbräukeller is dependent on events. “Events are very difficult despite the expiry of the infection control measures. Nobody dares to plan a wedding with 200 people.” Occasionally there are spontaneous, smaller birthday parties. Company parties and Christmas parties are rarely booked. “The bosses don’t want to risk half of the workforce being absent with Corona afterwards,” says the restaurateur. “Others think it would be irreverent to celebrate in wartime.”

In 2020, the Hofbräukeller had lost 53 percent of its sales, and in 2021 even 65 percent. According to a Dehoga survey at the beginning of March, 48 percent of hotels and restaurants saw their existence at risk. In January it was still almost 59 percent. More than 90 percent see the current cost increases as a heavy burden.

Landlady Wardrobe-Steinberg also feels compelled to raise prices because of the inflationary wave. She hopes that won’t deter guests. The lack of staff is worrying her about the restart. Many temporary workers have migrated to crisis-proof industries. “For the first time in 15 years I had to place an ad.” Despite everything, the restaurateur remains confident: “Beer gardens are a part of life, people are starving for them.”

Events

“Culture and business are eager to finally hold events again,” observes Tom Koperek, head of the LK Group. The group includes an event agency, a company for event technology and the event location Grand Hall at Essen’s Zeche Zollverein. “When even the old gentlemen from the Rolling Stones dare to tour again, that’s a sign of departure for the event industry.”

Koperek’s order books are full from mid-April to the end of July and in the fall. There is also a large congress with 2,000 participants, but this takes place under 2G-plus rules. Bookings for the winter are extremely cautious – for fear of a new corona wave.

The LK Group had set up a studio for live streaming. But customers report increasing fatigue from online events. “If only 70 of the 500 registered take part, the financial effort is not worth it,” says Koperek. Online events hardly paid off for the company anyway – or not at all.

Before the pandemic, the fragmented events industry had annual sales of 130 billion euros and employed 1.5 million people. In 2020 and 2021, the LK Group only generated three million euros, previously it was 15 million. Koperek praises the bridging aids III and III plus. “The help worked extremely well and prevented equity from bleeding further.” If sales dropped by more than 70 percent per month compared to 2019, the LK Group only had to bear ten percent of its uncovered fixed costs itself.

The entrepreneur is concerned about the lack of skilled workers, which is hindering the restart. The events industry lost around 30 percent of its permanent employees and up to 50 percent of its self-employed during the pandemic, estimates Koperek, who is involved in the industry initiative Red Alert. Sound and stage technicians have looked for secure jobs.

Personnel service providers who provide temporary workers for large events have gone out of business. Koperek believes in the events industry: “Even if it will take until 2024 before normal business is back.”

retail trade

The restart is also longed for in retail after two years of the pandemic and months of lockdowns. “In 2020 and 2021, the retail trade in Germany lost a total of 15 billion euros in sales as a result of the consequences of the corona crisis,” explains Stefan Genth, Managing Director of the German Retail Association (HDE).

The fear of setbacks is great. “We are not out of the crisis yet, the virus will be with us for a long time,” said Genth. According to the hotspot regulation, the federal states can reintroduce the obligation to wear masks regionally. That would be fatal: “Retailers report that the obligation to wear a mask in the shop costs them ten percent of sales because it spoils the desire of many customers to shop.”

The market research company GfK had already reported falling consumer sentiment for March. The Ukraine war is also exacerbating this situation. “The purchasing power would be there, but many consumers are unsettled and would rather save than spend the money,” said the HDE managing director.

“The bridging aid and the KfW loans carried most retailers through the pandemic, there were almost no insolvencies,” observes Frank Schuffelen, spokesman for the ANWR trade cooperation. The represents the more than 5000 independent companies in the shoe, sports and leather goods trade. But now the ability to invest is damaged.

In order for the new start to succeed, retailers would urgently need to invest, for example in digitization. However, according to an HDE survey, 38 percent of dealers have used up their equity. “If the state did not support now, all the bridging aid would have been for nothing,” warns Schuffelen. He sees an unlimited loss carryback as a possible solution: “Companies that were previously healthy and only got into problems as a result of the pandemic would benefit from this.”

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