German Suburbs Log Strong Gains In Consumer Spending Due To Remote Working: Ifo Study

(RTTNews) - Retail sales growth in Germany's residential areas and suburbs has grown strongly, while spending in city centers remain below the pre-pandemic levels as many people continue to work from home, results of a study by the ifo Institute showed Monday.

The ifo study covered locations in Berlin, Munich, Hamburg, Stuttgart and Dresden. The study found that private spending in the city center was still 5 percent lower than in 2019, Oliver Falck of the ifo Institute, one of the co-authors of the study, said.

On the other hand, consumer spending surged up to 30 percent, particularly in areas where many people could work from home.

The study is based on aggregated and anonymized retail sales data provided by Mastercard as well as on small-scale data about employees' potential to work from home collected by infas 360 on behalf of the ifo Institute.

Almost 25 percent of employees have been working from home since the pandemic, at least one day per week, Carla Krolage of the ifo Institute, another co-author of the study, said. This led them to do more of their shopping in areas where they live and recent analysis found that this shift in consumption was especially prevalent on weekdays. "We expect this change in shopping behavior to persist," Krolage said. Meanwhile, the share of online shopping in total private spending have decreased after the pandemic. Online sales accounted for 21.2 percent of total private spending in the summer of 2022, ifo said. That was over 2 percentage points less compared to the same month of the previous year.

"The pandemic has had a lasting effect on the world of work and people's shopping behavior," Falck said. "A lasting increase in remote working and online shopping as well as small-scale changes in consumption make it all the more critical for city centers to adjust their concepts to the new normal and become more attractive."