Consumer sentiment in Germany is taking a turn for the worse ahead of the Christmas shopping season

HDE Consumer Barometer Drops Sharply in October – Propensity to Spend and Income Expectations Weaken

Hopes for a noticeable uptick in private consumption toward the end of the year have been dampened. The HDE Consumer Barometer fell significantly in October. This marks a continuation of weak consumer sentiment—despite some recent, slightly more positive signs regarding the overall economic outlook.

The decline in consumer spending is particularly relevant for the retail sector. It is weighing on expectations for the fourth quarter and, consequently, for the upcoming holiday shopping season. At the same time, current figures are significantly below last year’s levels.

Less Optimism About Incomes and the Economy

Consumers’ income expectations have also deteriorated noticeably. At the same time, many respondents expect their disposable income to decline. The HDE cites rising energy and fuel prices as the main contributing factors. Added to this is the expectation that inflation will continue to rise.

What is noteworthy here is the discrepancy between consumer sentiment and the overall economic outlook: While research institutes and companies have recently taken a somewhat more optimistic view of the economy, consumer expectations are once again deteriorating.

There is one small positive aspect: According to the respondents, the propensity to save is not expected to rise any further in the coming weeks. However, this does little to change the fact that there are currently no signs of a pickup in private consumption.

A More Challenging Environment for Higher-Priced Purchases

For the jewelry and watch retail sector, the trend in consumer spending is particularly relevant. Watches and jewelry are often considered planned purchases that can be postponed. Declining confidence in future income and higher living expenses can therefore lead to greater caution, especially in the mid-price segment.

This does not necessarily mean a slump in Christmas sales. However, it does increase the likelihood that purchasing decisions will be made more selectively. Brand strength, specific occasions, clear product value, and personalized advice are likely to play an even greater role in determining whether interest actually leads to a purchase.

This is especially true in a market environment where nominal sales can be supported by higher prices, while real demand remains subdued.

Holiday Sales Without a Tailwind

The October Barometer is not a sales indicator; rather, it measures consumer expectations for the next three months. That is precisely why the current decline is an important signal: Retailers are entering the most important sales period of the year without any economic tailwind.

In the coming weeks, therefore, it will be crucial to see whether the uncertainty surrounding incomes and prices eases somewhat—or whether the weak propensity to spend persists well into the holiday shopping season.