"2010 could be our best Christmas in years," despite severe winter weather, said Kai Falk, a spokesman for the HDE retail association.
The association forecasts total retail sales of €77 billion ($101 billion) in the vital last two months of the year, a gain of 2.5 percent from the same period last year.
"This would be a return to normality" after years of crisis, Falk told news agency AFP.
After a devastating recession in 2009, when the economy shrank by nearly five percent, Germany has rebounded strongly, with growth of 3.4 percent expected this year.
Analysts say the economy is also becoming more broad-based, with domestic demand supplementing Germany's already powerful export sector. In its latest reading of German business sentiment released last week, the Ifo economic research institute found that confidence ended the year at an all-time high thanks notably to gains in the retail sector.
"We are also expecting booming post-Christmas trade," Falk said.