ING predicts that the ''malaise on the shopping street'' is not yet over

The "malaise on the shopping street" has not yet ended, despite consumers' increasing desire to make purchases, according to ING economist Katinka Jongkind. She says retail sales will still be down slightly this year, mainly due to an expected decline in supermarket sales. There is also limited space for sharply increased consumer prices to fall back down again.

Retail sales were down three percent last year, and they will probably drop another 0.5 percent this year, Jongkind expected. In addition, turnover in the food segment, including supermarkets, will likely decline by two percent.

Jongkind has said that supermarkets are seeing a decline in sales due to the upcoming ban on cigarette sales. "Supermarkets will lose over 1.5 billion euros in turnover due to the tobacco sales ban that comes into effect on July 1st," she calculates.

Many smokers will have to go elsewhere to buy their tobacco, unless they quit. Because of this, the bank expects petrol stations and tobacco specialty stores to earn more revenue. But the tobacco sales will partly move to shops outside of the Netherlands.

ING predicts that consumers will spend more money on clothes, furniture, and personal care products. Due to the substantial wage increases, many people will have more money to spend.

The main shopping districts have been "in dire straits for some time now," Jongkind said. "Retailers have been faced with one crisis after another in recent years," she said. "On top of that, retailers must repay their tax debt accrued during the coronavirus pandemic." The result is that shops sometimes have no money to invest in staff, for example.

There were relatively few bankruptcies for a couple of years, but the bankruptcies have started to rise lately. "Electronic stores like BCC, sports stores like Perry Sport and Aktiesport, and the bargain chain Big Bazar all went under. The number of bankruptcies is almost back to the pre-Covid level of 2019."

ING believes there will be even more company closures and bankruptcies this year. The bank also sees that many online stores are closing down. According to ING, the times that online stores showed robust growth are now "a thing of the past." E-commerce sales continue to increase but at a slower pace.