Are traditional forms of credit bound to be renewed?
The German consumer climate is supposed to decrease for the fourth time in a row in February according to the report of GfK (Gesellschaft für Konsumforschung).
The main reason stated in the report is the threat of higher unemployment rates and the weak recovery of the general economic situation, which as a consequence means that private spending won’t be able to play a significant role in the economy’s pickup.
Especially the retailing sector is now forced to provide incentives to consumers in order to empty the stores and generate room for new products still to be delivered.
Thus, the existing discount battle is no surprising one. If the desired effects will occur is to be observed in the next couple of weeks.
Question is: What happens with small family led companies that don’t have high margins and are not able to realize economies of scale. At the moment, they suffer even more from the pressure applied on them by global companies.
It is not only the discount battle that forces them to take action, but also the unwillingness of the banking sector to support small and middle class entrepreneurs in a more flexible way.
