The retail sector in the Czech Republic witnessed a decline in sales in October, with the year-on-year fall slowing down to 1.4 percent compared to a 4.3 percent drop in September. This marked a year and a half of continuous decrease in sales for retailers. Interestingly, despite the overall decline, a month-on-month comparison showed a 0.6 percent increase in sales, according to data from the Czech Statistical Office (ČSÚ).
Items that saw a drop in sales were predominantly food and non-food goods. Compared to the previous October, sales of food products were down by 2.7 percent, while non-food items saw a 1 percent decrease. On the other hand, fuel sales saw a slight increase of 0.8 percent. In a month-over-month comparison, sales of non-food items grew by 1.6 percent, food sales remained stagnant, and fuel sales dropped by 2.1 percent.
“Every type of store recorded a decrease in sales, except stores selling cosmetics and toiletries,” stated Jana Gotvaldová, head of the ČSÚ’s trade, transport, and services statistics department. Clothing and footwear stores saw a year-over-year decrease of 6.1 percent in sales. There were also declines in sales for computer and communication equipment (3.1 percent), household goods (2.9 percent), pharmaceutical and medical goods (2.2 percent), and cultural, sports, and recreational goods (1.9 percent). Cosmetics and toiletries stores, however, saw a revenue boost of 5.9 percent.
Internet and mail-order businesses experienced a year-on-year increase in sales by 5.3 percent in October. “Sales of food in non-specialized stores with a predominance of food decreased by 2.7 percent, and in specialized food stores by 2.4 percent,” said the ČSÚ. In non-specialized stores with a predominance of non-food goods, sales increased by 7.8 percent.
Analyst Tomáš Volf of Citfin was surprised by the year-on-year drop, as retail sales significantly fell by 10.4 percent last October, marking the worst result in Czech history. “But even that couldn’t reverse today’s disappointment. Czechs simply aren’t spending, and even Christmas hasn’t changed that yet,” he said. According to Volf, Czechs will start spending more in the second half of the following year when three positive factors converge. Lower interest rates will open the door to consumer loans, foreign demand will likely be more robust, and people might open their wallets more due to less concern about their future financial situation.