Technological innovations, market consolidation and more intense competition with platforms from China: German online fashion retailers are currently dealing with numerous issues. Although the market is growing slightly again after years of decline, high return rates and ongoing market consolidation remain key challenges for the industry.
Key findings of our analysis
The focus in issue 1/2025 is on online fashion retail in Germany. Important findings from our analysis:
- Trend reversal in online retail: after three years of decline, German online retail will grow by 1.1% in 2024, but the fashion segment will remain almost stable with growth of 0.1%.
- Technological innovations: Virtual fitting rooms, personalized size recommendations and AI-supported style advice will go from being interesting additional features to decisive success factors in the future.
- Chinese platforms are gaining market share: Shein, Temu and AliExpress have tripled their market share to 6 percent. Shein reached 7th place among the largest online fashion retailers in Germany with a turnover of 567.1 million euros.
- Market consolidation sets in: The takeover of About You by Zalando is changing the competitive landscape. The deal could be just the beginning of a broader wave of consolidation.
Online growth defies weak consumer sentiment, fashion sector under pressure
The German retail sector grew by 2.2% in nominal terms in 2024, but only by 0.9% in real terms. While bricks-and-mortar retail fell short of expectations at +2.0%, online retail grew much more strongly with nominal growth of 3.5%. Despite initial restraint, Christmas sales developed positively and reached 123.5 billion euros. Online and mail-order retail in particular stabilized with nominal growth of 6.0%. Brick-and-mortar retail, on the other hand, was only able to increase slightly.
The fashion trade remains under pressure: the stationary fashion sector lost 3.1% in real terms and the online sector also stagnated. While premium and luxury brands remained stable, low-cost Chinese suppliers continued to increase their market share.
Outlook 2025 - no rapid impetus expected
The German retail sector is facing another year of subdued growth. According to forecasts by the German Retail Association (HDE), nominal sales growth of 2.0% is expected, but only 0.5% in real terms. Uncertainties remain due to high prices, geopolitical tensions and cautious consumer sentiment. Companies must focus more on efficiency improvements, technological innovations and sustainable business models in order to remain competitive in the long term.
As usual, the KPMG Retail Sales Monitor provides a detailed analysis of all key figures and developments in the retail sector. Read the full edition now.
