Retail Sales Monitor 1/2025: New trends in online fashion retail

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.

Issue 1/2025 focuses 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 per cent in 2024, but the fashion segment will remain almost stable with growth of 0.1 per cent.
• Technological innovations: Virtual fitting rooms, personalised 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 per cent. 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.

The German retail sector grew by 2.2 per cent in nominal terms in 2024, but only by 0.9 per cent in real terms. While bricks-and-mortar retail fell short of expectations at +2.0 per cent, online retail grew much more strongly with nominal growth of 3.5 per cent. Despite initial restraint, Christmas sales developed positively and reached 123.5 billion euros. Online and mail-order retail in particular stabilised 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 bricks-and-mortar fashion sector lost 3.1 per cent 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.

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 per cent is expected, but only 0.5 per cent in real terms. Uncertainties remain due to high prices, geopolitical tensions and cautious consumer sentiment. In order to remain competitive in the long term, companies must increasingly focus on efficiency improvements, technological innovations and sustainable business models.

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.