Professor Dr Werner Reinartz from the Chair for Retailing and Customer Management at the Faculty of Management, Economics and Social Sciences provides an answer.
From strolling around to looking for a specific product or an extensive shopping spree on a Saturday afternoon – city centres are places of encounter and retail. But if you look at German city centres these days, you can’t avoid terms like these: desolation, vacancies, bankruptcy and revitalization. The retail landscape in German city centres is undergoing disruptive changes, not least since COVID-19. In 2023, Galeria Karstadt Kaufhof made headlines with the announcement of closing around a third of its stores. And the long-standing department store chain is by no means alone in this development. If we only look at the beginning of 2024, many other well-known retail chains such as the fashion group Esprit, the tour operator FTI and the luxury department store KaDeWe were forced to undergo financial restructuring.
The trend in retail development in German city centres appears to be clear. Digital transformation has led to a boom in online and mail-order retail, while sales in stores are decreasing. During COVID-19 in particular, consumer behaviour shifted even more towards the online shops of established retailers. Measures to contain the pandemic made shopping locally less attractive. The drastic rise in energy prices due to international crises and the collapse of supply chains increased the pressure in subsequent years. To this day, retailers are also struggling with dampened consumerism caused by high inflation.
Together with Vincent Weidenbörner, Thomas Scholdra and Julian Wichmann, we are researching the vitality of German city centres and the role of retail trade. In an innovative approach, we combine OpenStreetMap geodata, passer-by surveys and economic time series data on retail. Our analysis of the data confirms that city centres are increasingly losing their ability to absorb the local purchasing power in the form of retail sales. As a result, the retail landscape appears to be becoming less and less attractive. But how can the retail in city centres be made more resilient? In particular, a balanced mix of independent shops and larger chains appears to play an important role in the vitality of the retail sector. While larger chains are characterized by lower prices and a wider product range, independent retailers are attractive for their more specialized products and a more personal shopping experience. Especially in combination with a lively city centre ambience (e.g. additional leisure activities and events), independent retailers in particular appear to improve the attractiveness of city centre retail.
The results of the research project indicate that the days of shopping being the sole purpose of a city centre are over. Instead, the focus is now on the shopping experience in an appealing and individualized environment. Programmes to revitalize the city centre should therefore aim to improve its ambience as well as promoting a wide variety of shops and business concepts. Because one thing is clear: the city centre of the future should be just as diverse as the reasons for visiting it.